Political and Constitutional Reform CommitteeWritten evidence submitted by Sir Howard Bernstein

1. This attempt at a draft code is a welcome attempt at a very difficult task. To produce a code for local government which is very diverse in terms of types and tiers of authority is not easy. It is also difficult to draft a code in language which succeeds in bringing local and central government closer together without arriving at a document that appears too radical in one respect or another and in which the courts will end up being the arbiter of any disputes.

2. In places the draft code is likely to be too radical to be acceptable to central government at the present time. With some redrafting based on the comments below it may be possible to have a code that both central and local government can more easily sign up to. This would be a preferable option than a code that would require considerable lobbying to get agreement to.

3. In general terms the code focuses too much on local autonomy (and is fairly radical in this respect) and should perhaps emphasise more strongly central—local relations. By establishing mechanisms for improving the relationship there will hopefully be a consequential change in cultural attitudes in the civil service. This was an issue that was highlighted by many as a barrier in evidence presented to the Committee.

4. Whilst maintaining aspects of the draft code that seek to protect local government from central government control, ideally the code should help engender greater trust between local and central government; councillors and MPs; civil servants and local government officers so that the tiers begin to function more harmoniously together to serve local citizens and communities.

Section Two: A Draft Code of Inter-governmental Relationships in England

Preamble

Suggest amended wording to emphasise joint working for well-being and local autonomy : …Through this code Parliament confirms the importance of local government in the governance of England. It has equivalent status to central government in the role that it plays in improving the well-being of citizens and communities and both tiers will work together to achieve this . Local government shall enjoy increasing independence in both powers and finance and be able to do all that is required at local level to secure and improve the well-being of citizens and communities. Central government will assist and enable local government in this task.

Article One: Needs a Title suggest—Status of the Code

Whilst correctly setting out the legal basis for the code it may be helpful to emphasise that the code represents a consensual agreement between central and local government. Clause 3 suggests that the code may be subject to judicial review however this could be seen as a failure in implementation of the code.

Article Two: Local Autonomy and Local Self-Government

1.Councils’ accountability is to local citizens. Suggest add “and local communities”; and

4.should be “General Power of Competence”.

Article Three: Scope of Local Government. A better title may be Role of Local Government as the rationale is to develop mutual acceptance of the broad remit of local government responsibilities.

Insert a new Clause 1 to emphasise the place-shaping and community leadership role. Local authorities provide many essential services but moreover contribute to community wellbeing by co-ordinating services within their areas. They also provide leadership to identify and tackle shared priorities for places. Central and local government will work increasingly closely together to ensure that services are delivered efficiently and effectively, places are shaped and community needs are met.

With respect to defining the extent and scope of powers in other documentation allied to the code, we provided in a joint written submission with Birmingham and Suffolk the following suggestions as to what the “role” of local government could encompass:

1. Promoting the well-being of communities and citizens

Local government represents and promotes the economic, social and environmental well-being of its communities and citizens. It will utilise the General Power of Competence and other mechanisms to ensure that community needs are met. Central government should respect and support local government in the exercise of the Power.

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

Local government have a key role in “place-shaping” where local authorities and partners use their influence, powers, creativity and abilities to create attractive, prosperous and safe places where the economy grows and people want to live, work and do business.

3. Promoting economic growth and prosperity

Every place should have an identity and an economic purpose. Increasingly local authorities and private-sector led Local Enterprise Partnerships have a key role in promoting economic development and productivity in their areas.

4. Promoting local democracy including the role of councillors

Local government is the local democratic representative body for the local community. It provides community leadership and champions a vision for the local area and works with others to ensure it is delivered.

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

Local government provides local services to meet local needs. Increasingly it will work with others delivering services across its area to ensure that community needs are met effectively. It will also lead the co-ordination of local spending across its area to ensure that community well-being is promoted

6. Citizen engagement

Local government will work with communities to increase the levels of participation and engagement in local decisions to promote community well-being.

3.This clause may be unworkable in practice. Current wording suggests that councils are to be consulted “by any public or private sector body that is developing policy or that is proposing spending to spend public or private resources, which will affect any council and its communities.” It may be best to say something similar to the role suggested in point 5 above ie that that “Councils have a legitimate interest in the well-being of their communities and will seek to co-ordinate policy and spending by organisations across their Council areas and between adjoining council areas”.

Article Four: Inter-Governmental Activities (suggest this is re-titled—Central—Local Government relations and identifies mechanisms whereby central and local government will co-operate in all areas rather than just maintaining and inspecting standards).

1.(new) Central government is represented in local constituencies by Members of Parliament and local government is represented by local Councillors. The respective roles and responsibilities of each tier of government will be respected whilst ensuring that local well-being is enhanced through co-operation, integration of services and activities and dialogue between tiers and elected representatives.

2.(new) Central and local government relations will be fostered through relationships established at the local level between Councils and government departments and agencies. At the national level local government representative bodies and government departments will maintain a dialogue through a central—local forum and a local government commission.

3.(new) A Joint Committee of Parliament, with local government attendance will oversee central-local relations and report to Parliament on progress and issues.

4.(new) Where a central government department or agency has an impact on well-being of the community in the local authority area the local authority shall be entitled to engage in dialogue with that department or agency about the activity and spending in the local authority area.

Article Five: Territorial Autonomy

The boundaries of local authorities are (suggest insert) primarily an issue for councils and their citizens. Add—Any proposals for administrative or electoral reviews of boundaries will come primarily from local councils.

Article Six: Council Governmental Systems

1. Changes to local political decision-making (suggest insert) must be suggested by local government and not central government. Delete final sentence, local referenda can be costly and time-consuming and may not be necessary.

Article Seven: Local Government Financial Integrity

The key factor in this section is to ensure it is consistent with the inputs being made by local government to the Local Government Resource Review (LGRR). Some of the clauses in this section are contradictory.

1.This point echoes the direction of travel of cities input to the LGRR, but at this stage only business rates and community budgets are covered in the LGRR terms of reference. These alone would not deliver independence. Suggest a change to: Local Councils will increasingly be self-sufficient in local financing or will raise an increasing proportion of finance locally. Clause 1 and point 7 appear contradictory: 1 asks for financial independence and 7 asks for three year rolling budgets.

2.Agree with the need for new income streams but this clause seeks blanket ability for anything that is democratically approved locally. The Core Cities submission to LGRR (and the City Finance Commission) are likely to table ideas for broader powers with respect to bed taxes, land value taxes and the like and will suggest Councils decide whether to use them or not.

3.The division of income tax is an example of the type of approach taken elsewhere in the world (including Scotland as outlined in the Scotland Bill) and may be a long term aspiration for England but is unlikely to come out of the LGRR. There are two aspects to the income tax question, one is a division of national income tax and the second is the institution of a local income tax. In both respects places such as Manchester would not be better off because income tax accrues to areas where people live and not where they work. As Manchester draws its workforce from a very wide catchment area and has high levels of deprivation and worklessness in its resident population it is likely to be areas outside of Manchester that would benefit and not the city itself.

4.The business rate retention modelling work being done as part of Core Cities input to the LGRR is looking at ways to balance incentivisation with equalisation. The two are inherently conflicting principles and therefore the key is getting a balance. A number of mechanisms could be used to seek to achieve this balance by “taxing” growth so that a cushion for relative need can be provided. Whatever is recommended by the LGRR need to be reflected here.

5.Council’s have prudential borrowing powers and the ability to use these effectively going forward should be retained. External borrowing could be attractive, but each authority would need the powers to be able to manage this effectively. A default by one authority could potentially be disastrous for debt pricing across the sector. Balanced annual budgets may not be the right thing in the long term—it depends on what risks local authorities are taking. For example, much of the macro economic risk is currently carried by central government—if this was transferred to local government (as implied by financial independence) local authorities would need greater flexibilities to manage such risk. In this respect it could be argued that this element of clause 5 is contradictory to point 1.

6.The second element (distribution of central government funding) appears to be contradictory to financial independence proposed under point 1.

7.As per point 1.

There is a need to add into this section the ability of local councils to co-ordinate all government spending in their area through mechanisms such as Community Budgets.

Article Eight: Councils Right to Co-operate and Associate

No objections. It may be worth referencing the General Power of Competence and also the Duty to Cooperate contained in the Localism Bill.

Article Nine: Local referendum

No comments.

Article Ten: Legal Protection of Local Government

The same comments as made under Article One apply.

Prepared 28th January 2013