Political and Constitutional Reform CommitteeWritten evidence submitted by Stephen Hughes, Chief Executive, Birmingham City Council

1. Thank you for sending me a copy of Colin Copus’ paper on codifying the relationship between central and local government. I think overall it’s an excellent paper and has dealt with most of the complications that have to be tackled in an impressive and cohesive way. Naturally I have a few observations and comments, but notwithstanding those I think it’s a great basis for further discussion. Tony Smith may also write with observations.

2. There are two broad issues that I want to raise at the beginning. The first relates to the evidence I and others have previously given to the Committee. Some of us, particularly from the larger cities, argue that local authorities vary considerably in their ambition for their areas, capacity to deliver and capacity to manage risk. There’s an argument for recognising that explicitly and accepting that for some authorities there can be greater autonomy and self government than others. The code set out in Colin’s paper will be seen by some as very radical and threatening (particularly to the authority of Government) and it may be that its full applicability is differentiated between different local authorities.

3. The second broad point relates to the existing complex structure and division of responsibilities between different types of local authority. The code reads as if applicable to unitary local authorities responsible for all local services in their area. But in practice every area of the country has multiple levels of local governance—Shire Districts and County Councils, Fire, Police and Transport Authorities and Town and Parish Councils. There needs to be some thought given to how those parts of the code that relate to local citizen control over boundaries and functions are to work and how local government as a whole can gain influence over this architecture, as there is a risk that what we have now is stuck for all time, or until central government again intervenes.

4. Article Four raises some interesting questions not explicitly addressed in the code. Generally speaking where service standards exist they are set by central government as a means of ensuring that common standards for key services (eg child protection) can be assured everywhere. In the constitutional settlement, these services need to be specified and a method established of agreeing how these standards are to be set. It may need an Article One process. I don’t think they can be realistically set by an independent body, who would need guidance in any case.

5. The other question unanswered is the consequences of standards not being met. In more general terms what are the criteria and basis for outside intervention in the case of a failing authority? Local Government would like the ability to police itself and have peer scrutiny and improvement. Currently that depends on voluntary acceptance by the individual Council, but that would be unlikely to satisfy Government.

6. Article Six is a set of very practical statements. It has an implicit feeling that “Councils are to be controlled by local citizens”. It may be a generalised statement along those lines could be placed at the beginning of the Article with the subsequent clauses effectively being the ways in which the objective is achieved. Such a statement could also cover the types of authority in an area and the division of functions and finance between them.

7. Article Seven is radical and ambitious, but I agree it’s at the core of what is needed to make the whole work. In this context it may be worth taking a view on the current Finance Review which is dealing with localisation of Business Rates. The key question that the review raises is the tension between the principle of local financial autonomy and equalisation of needs and resources. This is a fundamental issue. If equalisation continues (as seen by sub para 4) then there cannot really be financial autonomy as Councils will be dependent on other bodies taking financial decisions and influencing local choice about service standards. It’s a point that needs real debate.

8. Sub para 3 sets out a real proposal to achieve financial autonomy for the sector as a whole. If it were to be implemented you wouldn’t need sub para 7 in so far as that sets out a mechanism for Government to set funding envelopes for Councils. Councils would be able to do their own financial planning without Government interference!

9. Sub para 5 is effectively the current situation, although some limits are now being proposed for the reformed HRA.

10. I hope you find these comments helpful.

April 2011

Prepared 28th January 2013