Political and Constitutional Reform CommitteeWritten evidence submitted by Baroness Eaton DBE DL, Chairman, Local Government Association

1. Thank you for your letter of 23 March and for inviting me to give oral evidence to the Political and Constitutional Reform Committee earlier this year.

2. I read the draft code of inter-governmental relationships in England that you sent, written by Professor Colin Copus, with great interest. As you will recall, during my oral evidence to the Committee I expressed the local government sector’s scepticism that creating a code of practice constitutes the best way forward in delineating the relationship between central and local government. This stems from years of experience with policies, such as the Central Local Concordat, which were created in good faith but failed to deliver on their promise.

3. This new draft code is an extensive and far-reaching document, and one which seeks to bring a fundamental change in the way in which central and local government do business with each other. It is immensely gratifying that the Political and Constitutional Reform Committee is wrestling with some of the thorny problems that have been at the heart of the debate on the central/local relationship, including local financial autonomy, and increased local accountability to residents, rather than to Whitehall. These are issues that the LGA has long campaigned on, and there is much food for thought in this interesting document.

4. There is also much that the Local Government Association fundamentally agrees with. The theme of Article Two is absolutely central to the LGA’s thinking on the localism agenda. We agree that councils are accountable first and foremost to their residents. We have argued that if the Government both stops issuing micro-managing guidance and regulation to councils and eradicates some of the most pointless and bureaucratic regulations from previous legislation, we will see a marketplace of ideas open up within the sector, and beyond, disseminating best practice and offering peer support. Micromanaged localism is no localism at all.

5. We support the General Power of Competence clauses in the Localism Bill. We have long stated that a clear, robust General Power of Competence for councils is absolutely key to supporting their role as local government, not simply administrators of central government policies. We are adamant that this, alongside a strong push to simplify and remove restrictions and unnecessary guidance from existing statute, is critical to giving councils the confidence to act ambitiously without fear of legal redress and ending the perceived “dependency culture”, with local authorities feeling forced to always be looking to Whitehall for guidance and direction.

6. Article 3 recommends that councils are “consulted, early within the policy-making processes, by any public or private sector body that is developing policy” affecting the councillor residents. This reflects one of the LGA’s main points in our 2008 paper One Country, Two Systems, in which we suggested that “Parliament should set up a committee charged with pre-scrutinising legislative proposals with local government implications and should involve local government leadership in this”. This reform, we argue, must be part of a package of significant reforms that would place local governance at the centre of national debate.

7. Article 6 would have citizens ultimately responsible for the type of local governance in their areas. The LGA agrees with this, and has been lobbying for a change to the current draft of the Localism Bill to prevent Central Government from forcing an elected mayoral model onto an area, then subjecting that change to a confirmatory referendum. The change should only come once the local desire for that change has been articulated, not before. We welcome proposals to allow councils to return to the Committee system if that is the model deemed most suitable in the local area, as the ability to choose is one of the central tenets of true localism.

8. The central theme of Article 7 is the financial independence of councils. Increased financial autonomy goes hand-in-hand with any true localist agenda, and we have continually argued that it is a serious problem that councils continue to be financially dependent on central government. In conjunction with the current Local Government Resources Review, the LGA is currently consulting with our members on this issue. We have long argued for the re localisation of business rates, which will link the prosperity of local businesses with the finances of councils. This is only part of a package of measures we are considering which would ensure that the resources available to each council keep pace with the ·costs it incurs in providing services and put in place a practical transition between the current system and new one. I will ensure you are kept up-to-date with how this consultation develops.

9. We also agree that it is not the Government’s business to cap the finances of councils, in any way. This controlling mentality is fundamentally at odds with the brand of localism espoused by Ministers and it is one we have been fighting within the Localism Bill, which suggests powers for central government to dictate what constitutes an “excessive” level of council tax and to cap councils’ borrowing to invest in social housing. It is important that the Government realises the centralising nature of these policies and abandons them.

10. So there is a great deal in the draft code which chimes with the work that the Local Government Association, on behalf of its member councils, has been undertaking. I would reiterate my concerns, though, that placing undue emphasis on a code of conduct has historically proved unwise, and point to the significant amount of legislative change needed to take forward the reforms suggested in this draft. However, the work of the Political and Constitutional Reform Committee will be instrumental in taking these arguments forward, and it is extremely important that, in the current climate especially, these issues are publicly discussed and debated. I, and the LGA, look forward to assisting in any way we can with this work in the future.

May 2011