Political and Constitutional Reform CommitteeWritten evidence submitted by Mr Clive Betts MP

Thank you for the invitation to submit evidence to the Political and Constitutional Reform Committee’s inquiry into the prospects for codifying the relationship between central and local government. This response will largely draw on the work in the previous Parliament of the Communities and Local Government Committee—a Committee of which I was then a member and am now Chair.

CLG Committee’s Inquiry into The Balance of Power

1. In 2008–09 the Communities and Local Government Committee conducted an inquiry into the balance of power between central and local government. Between June 2008 and January 2009 we took evidence from local authorities, think tanks, academics, Ministers from the Home Office and the Department of Health, among others, and undertook a visit to Denmark and Sweden to assist us in setting the English system in its wider European context. Our report was published in May 2009.1

2. Our principal conclusion was that there was a need for substantial change in the balance of power between central and local government because power in England remained too heavily centralised to be efficient or effective. We argued that local government should be given the autonomy necessary to apply local solutions in their areas, to innovate and to shape their communities, and that the current balance of power was not conducive to this. Local authorities remained subject to invasive central government scrutiny and interference, and the Committee noted the lesson from English history that, whilst the balance of power has been subject to pendulum swings, the predominant trend , particularly since the second world war, has been for central government to increase its powers and responsibilities at the expense of local government. […] we question whether enough has been done to counterbalance these historic centralising tendencies.2

3. The Committee pointed out that the relationship between central and local government in England deviates from the European norm in the level of constitutional protection afforded local government, but also in the level of financial autonomy and the level of central government intervention that routinely occurs. We concluded that “all serve to tilt the balance of power towards the centre”.3

4. We also concluded that the shift in the balance of power that we desired to see should be given a degree of permanency, to insulate local government from all-too-frequent changes in policy at national level.4 Consideration was given to different ways of achieving this. A “constitutional” solution was viewed by some as an important lever for embedding such changes; clarity, stability and the ability to resist central government encroachment on local turf were the main benefits identified. A number of witnesses to the inquiry called, for example, for the Central-Local Concordat to be put on a statutory basis.5 Some witnesses, however, favoured a more immediate, tangible transfer of powers, and other possible levers of change were proposed; a change in the Westminster and Whitehall-dominated British political culture was cited by many, and others argued that only substantial reform to the financing of local government could achieve a durable shift in responsibility and power.

5. The Committee concluded that, at the very least, the Concordat and the 1985 European Charter of Local Self-Government “ought to be guiding government departments’ relationships with local government far more obviously than has been the case thus far”. There was, we felt, obvious potential for a constitutional settlement to provide impetus to and sustain a substantial shift in the balance of power, and we therefore recommended that the European Charter be put on a statutory footing.6 To ensure that this had practical effect on government policymaking and legislation, we recommended that Government Ministers be required to declare the compliance of all domestic legislation with the Charter and to include consideration of this aspect within the impact assessment of Bills. The Committee went on to recommend that a Parliamentary joint committee be established to monitor compliance with the Charter as well as scrutinising the general state of the balance of power between central and local government.7

6. The Committee also urged the Government to deliver on its promises of “earned autonomy”: devolving more powers to those local authorities that have proved their capacity to deploy them.8 This approach underpinned the contract-like arrangements between central and local government in Local Public Service Agreements and Local Area Agreements, and some provisions of the Sustainable Communities Act 2007. “Earned autonomy”, however, is highly conditional on central government’s assessment of a council’s capabilities and the powers it should have. Although the Committee did not investigate this option in our report, it is my personal view that a system of “offered autonomy” should be investigated as an alternative. This would entail a central government offer to all local areas of all the powers that could be devolved, with local authorities able to choose which they wanted to exercise. The transfer of powers in this way could be subject to a local referendum, which would introduce some much-needed permanency into the arrangement. It would also take account of varying local circumstances, but according to local rather than central views.

The Government Responses to The Balance of Power Report

7. The Government published a response to most of the report’s conclusions and recommendations in September 2009.9 It responded to the outstanding recommendations in February 2010, taking into account the CLG consultation on Strengthening Local Democracy that took place between July and December 2009.10

8. The Committee’s recommendations on putting the Charter on a statutory footing and monitoring compliance were not accepted by the Government. The final response reflected on the results of the CLG consultation exercise, which the Government characterised as very varied, “with some respondents keen to legislate and others who felt this was too rigid. Some favoured the approach taken by the European Charter and others a more tailored set of rules either as a stand alone document or as part of a written constitution”. The Government committed only to “continue to give close consideration to this issue to ensure that the role of local government in the development of any broader written constitution is examined as appropriate”.11 The Government stated that there was merit in exploring further the idea of a joint select committee to examine how the work of central government impacts on the ability of local government to fulfil its role, but argued this should not be limited to compliance with the European Charter, and did not make any commitment to taking the idea forward.12 In a letter to the Chair of the Committee, the Government asserted the compatibility of the body of existing domestic legislation with the Charter, arguing that this demonstrated that enshrining the principle of local self-government in written law or a constitution would be redundant.13

9. In our report we supported the subsidiarity principle, which would ensure that decisions which primarily affect one area to a significantly greater extent than others should be taken within that area. The Committee recommended that the principle underpin a new hierarchy of decision-making which would place on a statutory footing the rights of a local community to determine a great deal more of what should or should not occur within their locality, and how the full range of public services are delivered in their area. The Committee also recorded its sympathy with the case for giving local authorities a power of general competence, and recommended it be introduced if it were to be demonstrated that the current “well-being” powers fall short of that power.14 With regard to specific new powers for local government, the Committee argued that local policing and health care services were insufficiently accountable to their local populations, and recommended moving towards a model in which local authorities would commission these services. We commented that “So long as two such important local services—arguably the most important for most local people—remain outside its scope, the full benefits of an empowered, autonomous local government cannot be realised”.15

10. The Government’s final response to our inquiry reported that:

the Strengthening Local Democracy consultation revealed that whilst there was an appetite amongst respondents for a power of general competence, the perceived benefits of this were seen to be around the broader relationship between central and local government. We do not consider that this issue should be addressed through the extension of powers. This is particularly as it is considered that action taken by local authorities that were held to be outside their powers in the recent court case on the development of insurance mutuals […] would not be rendered lawful by a general power of competence. In fact, government would question whether, once the inevitable prudential restrictions are applied, such a power would look very different to the current power of well-being. […] The well-being power remains as a power of first resort for councils acting in relation to the social, economic and environmental well-being of their areas.16

11. Despite the then Government’s rejection of the Committee’s conclusions on these matters, I believe that the recommendations continue to have merit. In particular, the proposal to put the European Charter on a statutory footing, and to establish a joint committee to monitor compliance, is a relatively straightforward measure which could nonetheless have a far-reaching and lasting impact. Its strengths lie in its application to domestic legislation issuing from all Government Departments, not just Communities and Local Government, and the fact that the mechanism of a joint committee is a tried and trusted one. Incorporation of the European Charter into UK law ought to be an uncontroversial matter if, as the previous Government asserted to us, current legislation and Government actions are already in compliance.

The Localism Inquiry

12. In the new Parliament, the CLG Committee continues to consider issues of relevance to the question of the relationship between central and local government. The Committee announced an inquiry into the Government’s plans for localism and decentralisation of public services in July 2010, with a deadline for written evidence on 1 October. To date we have received written memoranda from more than 100 organisations representing many different sectors, illustrating the wide interest that exists in this topic. The specific terms of reference to which people were invited to respond were as follows:

The extent to which decentralisation leads to more effective public service delivery; and what the limits are, or should be, of localism;

The lessons for decentralisation from Total Place, and the potential to build on the work done under that initiative, particularly through place-based budgeting;

The role of local government in a decentralised model of local public service delivery, and the extent to which localism can and should extend to other local agents;

The action which will be necessary on the part of Whitehall departments to achieve effective decentralised public service delivery;

The impact of decentralisation on the achievement of savings in the cost of local public services and the effective targeting of cuts to those services;

What, if any, arrangements for the oversight of local authority performance will be necessary to ensure effective local public service delivery;

How effective and appropriate accountability can be achieved for expenditure on the delivery of local services, especially for that voted by Parliament rather than raised locally.

13. These terms of reference concentrate on the practicalities of achieving more decentralised public service delivery, including the impact of a more “localist” system on public spending, inter-agency working and accountability. One of the major planks of our inquiry is investigating what the Government means by “localism”, whether this chimes with the interpretations of other stakeholders, and how the roles of those stakeholders might change in a more decentralised system. As with our previous inquiry, we have found at least as many respondents keen to emphasise the cultural and political factors in the relationships between central and local as those who seek solutions that might be termed “constitutional”. However, some respondents have indicated that they believe durable, structural change in the political system in England will be necessary to achieve such changes. In particular, submissions from several local authorities have stated their belief that a constitutional change is imperative. Barnsley Council, for example, argues that:

Localism can only work with the right local governance system and with the security of legal underpinning. the first and foremost principle is that there needs to be a constitutional settlement. If there is to be meaningful progress with this question then a settlement enshrined in law needs to happen. Without this, localism will continue to be buffeted by the winds of political preference, of changes to and within governments, in a permanent state of flux, which means that this question will be revisited every five years or so. A constitutional settlement would provide mutuality of understanding for each of the major participants; promote confidence and continuity, without the threat that powers could be withdrawn or transferred at the behest of a future government. It would also help the media and public better understand the distinction between central and local government responsibilities.17

14. An alternative legislative remedy is proposed by the New Local Government Network, which recommends a new “duty to devolve”:

Government departments should regularly assess whether their functions have been devolved to the lowest and most appropriate spatial level. If a function has not followed the principles of subsidiarity in this way, central Government should be under a legislative duty to devolve that function in line with specified criteria.18

15. The proposed power of general competence is also cited approvingly in some of the written evidence. However, it is important also to note that many more written submissions do not mention the need for a constitutional settlement or legislative innovation, so although it is a live issue it is not necessarily central to discussion of localism from all perspectives. One of our witnesses in oral evidence, Henry Peterson, a local government consultant and former local authority deputy chief executive, explicitly cited devolution to the Welsh Assembly and the Scottish Parliament as a model for budgetary devolution to large English local authorities, with those authorities being given responsibility for health and police as well as existing local government services, and complete discretion over how to spend those funds. However this is not necessarily tied to a constitutional change, but could be a development of the idea of “place-based budgets”, whereby discretion on how to use existing expenditure across the whole range of public services would be devolved to local level.19 Professors George Jones and John Stewart, however, expressed the view that such discretion had to be accompanied by the ability for local authorities to raise funds themselves rather than relying on grants from central government.20

16. Furthermore, not all respondents to our inquiry have interpreted “localism” as primarily something which will be enacted through local government, emphasising instead the potential of neighbourhoods, communities and individuals to exercise more influence and get involved in delivering services themselves.

17. The Committee’s inquiry into Localism is continuing to take oral evidence into January and February 2011, and we expect to report in the spring. We have not taken a view on any of the issues raised in the inquiry—including whether or not a constitutional settlement is a prerequisite of “localism”—but will continue to consider the question and put it to our witnesses. I look forward to reading the conclusions of the Political and Constitutional Reform Committee and sharing thoughts about these issues with you as our inquiries progress.

16 December 2010

1 Communities and Local Government Committee, Sixth Report of Session 2008–09, The Balance of Power: central and local government, HC 33-I

2 CLG Committee, The Balance of Power, summary

3 CLG Committee, The Balance of Power, para 38

4 CLG Committee, The Balance of Power, para 149

5 CLG Committee, The Balance of Power, para 129

6 CLG Committee, The Balance of Power, para 134

7 CLG Committee, The Balance of Power, para 138–142

8 CLG Committee, The Balance of Power, para 66

9 CLG, Government Response to the CLG Committee report into the balance of power, Cm 7712, September 2009

10 CLG, Final government response to the select committee report into the balance of power, Cm 7801, February 2010

11 CLG, Final government response, p.7

12 CLG, Final government response, pp.7–8

13 Secretary of State to Chair, 2 March 2009, published in CLG, Government Response to the CLG Committee report into the balance of power, Cm 7712, September 2009

14 CLG Committee, The Balance of Power, para 65

15 CLG Committee, The Balance of Power, para 77

16 CLG, Final government response, p.6

17 Memorandum from Barnsley Council, para 1

18 Memorandum from New Local Government Network, para 4.8

19 Uncorrected transcript of evidence taken on 15 November 2010, qq 54, 61

20 Uncorrected transcript of evidence taken on 15 November 2010, q 54

Prepared 28th January 2013