Political and Constitutional Reform CommitteeWritten evidence submitted by Andrea Hill, Chief Executive, Suffolk County Council

1. Please find below an Article-by-Article critique of the proposed Draft Code for Central and Local Government Relations. We have not discussed the overall implications of the code as these are addressed perfectly well at the end of the draft document itself. However, our general comments are:

This is very radical document and it is highly unlikely that any government would ever sign up to it. As it stands, if it is to progress further, both local and central government would no doubt identify elements on which they would or would not be prepared to give (potentially quite a lot of) ground, the upshot of which would be lengthy consultation and a compromise that may satisfy no-one. At this stage, a re-draft, based on comments received, would be more preferable.

In its current form, the code contains some contradictions that clearly would need to be ironed out. Also, in some areas it assumes an “as is” scenario and in others not, but not in a way that consistently ties up with the government’s current policy proposals.

Although the code is meant to govern relationships between central and local government, in defining the role of the latter it sometimes strays too far into relationships between local authorities and other local partners.

There is clearly a great deal of work to be done on the detail that would need to lay behind the code, both shaping it and being shaped by it. This may include a good deal of primary legislation, unless the code was introduced as a Bill in its own right, with appropriate consequential amendments. But this could be another reason why government would back away from it—too difficult to do.

Clearly, successful implementation of the code would rely very heavily on cultural change across central and local government. But everyone appears recognises this.

Article 1: To emphasise the independence and autonomy of local government and to secure the code as an agreement between central and local government

2. We would not take issue with any of the provisions of this article as they serve to set the purpose and legislative context of the code. In our earlier submission we suggested a role for a “local government commission” to oversee implementation of the code (though perhaps alongside the proposed Joint Committee) and in the event of the code being taken forward this option should be explored further.

Article 2: To agree a definition of the role, purpose, nature and constitutional status of local government; and to emphasise its accountability to people

3. Again, as they stand, we would not have a problem with any of these provisions, though perhaps referring to the role of local government, as opposed to its scope, would be better. The clauses avoid a lengthy definition of local authorities’ functions and responsibilities and stress their local mandate, both as suggested in our written evidence. However, we also previously stressed that the code should be clear enough to secure cross-departmental co-ordination of central government’s relationship with local government and better co-ordination of central and local funding, and therefore this draft may need more detail on the role of local government, along the lines originally suggested, ie:

Promoting the well-being of communities and citizens;

Shaping places so that they are attractive places to live, work and visit;

Promoting economic growth and prosperity;

Promoting local democracy and the role of councillors;

Co-ordinating spending and the delivery of services at the local level; and

Increasing levels of participation and engagement.

4. Noting the reference to the General Power of Competence, we continue to support this but also continue to argue it should be less restrictive and less subject to ministerial interference.

Article 3: To establish a consultative working relationship between central and local government based on a mutual acceptance of the broad remit of local government responsibilities

5. Clauses 1 and 2: These serve to underline other provisions within the code and we have no further comment on them.

6. Clause 3: This is very important and in practice will be a fulcrum of the central/local relationship. The government already consults widely, just not with any real cogency and, as perhaps local government would argue, without any real sense that consultation will make that much difference. Codification has the potential to change that.

7. However, the explanatory notes are right to draw attention to the likelihood that a more formal central/local negotiation process will slow-down decision-making, delay implementation and frustrate government intentions and we could well understand why any government, when faced with this prospect, would back away and perhaps cite its own democratic mandate as the basis to pursue its policies. Nevertheless, we welcome the opportunity to give central/local consultation a greater coherence and sharper focus, and share the code’s belief that it will improve policy-making and generate better policy outcomes.

8. Our only concern here is with the scale and scope implied by the wording of Clause 3. As it stands, this appears to suggest that any public or private sector organisation should consult with local authorities, and does not adequately explain what is meant by “policy” or “expenditure” that may have an “effect” on a council or its communities. Such a requirement could be well understood in the context of strategic matters (be they, for example, national, regional or countywide) but we do not believe it is a matter for the code to bind small local-level organisations to a particular duty in respect of matters that may be really quite minor. We would also like to draw attention to the fact that in Suffolk, as an example of a two-tier area, consultation could be with up to 8 local authorities and more if towns and parishes were to be involved.

9. Therefore, we would like to stress that local level consultation and co-operation should be a local matter, though the code could strengthen this by quite legitimately referring to local authorities’ role in seeking to co-ordinate the development of policy and organisations’ expenditure in their area.

Article 4: To ensure that central and local government can work together to create inspection regimes to set and maintain service standards

10. Where inspection and the maintenance of standards is a matter for central government then a codified requirement to work in collaboration with local government will help ensure regimes are efficient and effective and do not impose unnecessary burdens. However, the code should not prevent local authorities from having the freedom to design and implement local regimes where they are required to meet local needs and circumstances.

11. Furthermore, although we broadly support this Article as it stands, we believe it would be worth considering its expansion to take in the totality of central/local co-operation.

Article 5: To establish the territorial autonomy of local government and that local authority boundaries and are a matter for councils and their citizens

12. We believe the code’s explanatory notes are right when they say that local control of boundaries “…exemplifies local autonomy and independence.” There is no need for central government involvement in Periodic Electoral Reviews and other forms of re-organisation; and perhaps, short of final sign-off, there is no need for the involvement of the Local Government Boundary Commission either, though we accept there are arguments as to why it should be involved, for matters of probity and transparency. Either way, the shift to such an approach could be easily achieved.

13. In considering whether local authority boundaries should be a matter for local people alone to determine, we would argue that local authorities should still be able to initiate proposals, even if their final acceptance depended on public approval. However, it should be noted that in two-tier areas, such as Suffolk, boundary reviews can be doubly expensive and time-consuming, given the need to consider each tier separately. If decisions on local authority boundaries were to become a local matter, we would expect there to be provision to allow for cross-tier reviews where required or practicable.

Article 6: To establish the freedom of local authorities and local people to decide their own political decision-making arrangements and local voting systems

14. These clauses and the explanatory notes complement and expand on comments made in our previous submission ie that any code should allow for differentiation in practice at a local level and for new forms of local government and governance to develop, appropriate to local needs and circumstances, and beyond those allowed by the Local Government Act 2000/Localism Bill. This is particularly pertinent in the context of Suffolk’s current strategic policy direction. Any arguments that the development of a multiplicity of local government forms would somehow inconvenience central government are largely specious.

15. Again, there is no need for central government control of these matters. Instead, we would agree with the suggestion that changes should be subject to local referenda and an authority’s regular review of its decision-making structures and processes. The suggestion of every eight years seems about right.

16. As regards changes to electoral systems, we would have no objection in principle but in two-tier areas, where electors may cast votes for two or even three councils at the same time, there should perhaps be an expectation that local authorities would look to adopt a common standard of voting.

Article 7: To recognise the financial freedom concomitant with political autonomy, to clearly link that freedom with local accountability and to align central and local government financial processes

17. Clause 1: This recognises that without financial independence local government will be the poor relation and unable to assert its political autonomy. The proposed reforms to the likes of Business Rates for example, in the Local Government Resource Review, are a step in the right direction but, if they come to pass, we would expect codification to prevent the re-imposition of any centralised regime without consent.

18. Clause 2: We would support in principle the power to raise additional income by any means subject to local consent, but in two-tier areas such as Suffolk, care would have to be taken to avoid an unnecessary complication of levies across the tiers and the extension of double taxation. The latter is already an issue here and though not significant at the moment it may become more so if local communities are charged for services they take on themselves, a key feature of the council’s current policy direction. Given these points, and given also that the government has recognised there are particular issues to resolve around retention of Business Rates in two-tier areas, we would perhaps expect such areas to develop a more collaborative approach to local taxation etc.

19. Clause 3: If our interpretation is correct, this suggests that at least 50% of income tax is retained at a local level. If so, it is at odds with Clause 4’s proposal that equalisation should be maintained, even if the intention is that the proportion of tax retained is in fact passed to and re-allocated by the independent body Clause 4 goes on to refer to. It may also run contrary to Clause 7, which is couched in terms of a three-year budget cycle and does not allow for any significant changes by central government.

20. Clause 4: Please see our comments on Clause 3, above. Also, given that this clause “Rests on the assumption that existing rules will be agreed for equalisation…” it appears to propose retaining a system that does not work well. Although we would accept it is always difficult to assess fairness in this respect, the current system is supposed to be needs driven whereas in reality the damping mechanism ensures resources are distributed less on need and more on historic grant patterns. So, wealthy areas can receive damping grant and more needy areas can lose out. A distribution mechanism based on fairness and need will always create winners and losers but it is how these are dealt with that will determine the acceptability to the wider council population.

21. Clause 5: This seems to allow local authorities to not only borrow for capital purposes but also for revenue, so long as they can afford the payments. As this is not allowed at present, we would welcome the greater freedom, though cautiously given its potential to make local authorities less stable in the future, as past borrowing can cause financial difficulty later on. Also, the explanatory notes are right to draw attention to the implications for PSBR and the possibility that linking loans to credit ratings may be limiting for poorer areas with lower ratings and thus less scope to borrow. So again, there would be equalisation issues to consider. There may also need to be credit rating “protections” for prudent authorities who may otherwise suffer from any who fail to manage their borrowing effectively.

22. Clause 6: The suggestion that central government should not limit or cap local authorities’ powers of taxation chimes with our argument for genuine abolition of Council Tax capping, and also underlines the proposal that local authorities should have much wider tax-raising powers, subject to local consent. The suggestion that central government must consult with local government on its distribution and allocation of funding would be covered by Article 3 but there is no harm re-emphasising it here, although the notion of central distribution and allocation runs contrary to Clause 1’s provision that “Local councils shall be financially independent of central government.”

23. Clause 7: We would welcome funding based on a rolling three-year budget cycle to coincide with the CSR process, and of course the fact that once the medium term process has been agreed the government could make no significant changes in funding. We also agree with the suggestion in the explanatory notes that a set of emergency provisions would need to be agreed to allow for mid-cycle financial emergencies or a change in government.

24. However, as already referred to above, it is not clear how this would square with Clause 3, which talks of an annual allocation process; and again it appears to contradict Clause 1’s assertion of financial independence.

25. Finally, overall, we would like to stress the important role of financial freedom in re-invigorating local democracy.

Article 8: To set the parameters for and establish clarity on the extent to which local authorities can co-operate with each other and with other bodies

26. As co-operation and collaboration both within the public sector and across other sectors becomes increasingly important, any provision that serves to strengthen and clarify this would be welcomed. It may also serve as a useful adjunct to the General Power of Competence. Presumably, it would need to apply equally to co-operation and collaboration sought or initiated by bodies other than local authorities.

Article 9: To provide for local referendums to be the responsibility of the Electoral Commission

27. We would accept the argument that such independence would improve public confidence in the referendum process, though the extent to which referenda are or are not binding would still be the key factor. But we would question whether it would be practical to expect the Commission to oversee all referenda, including any initiated under the Localism Bill such as for Neighbourhood Planning etc.

28. The draft code suggests that linking local referenda to electoral cycles would help reduce costs but in two-tier areas where different authorities operate on different cycles, with some electing only every four years, this would be impractical. And in general, the financial burden of referenda should not be under-estimated.

Article 10: To allow local authorities to take legal action in defence of their autonomy

29. We would welcome the additional protection this afforded in the context of clarifying that local authorities would have recourse to the courts in the event of any breach of the code. Presumably the same option would be open to the government.

December 2010

Prepared 28th January 2013