Effectiveness of local authority overview and scrutiny committees Contents

7Scrutinising public services provided by external bodies

The conflict between commercial and democratic interests

83.We heard a lot of evidence that scrutiny committees are increasingly scrutinising external providers of council services, both in an attempt to avoid politically ‘difficult’ subjects and as a reflection that services are being delivered in increasingly diverse ways.86 We believe that scrutiny committees are ideally placed, and have a democratic mandate, to review any public services in their area. However, we have heard of too many instances where committees are not able to access the information held by providers, or the council itself, for reasons of commercial sensitivity (as further discussed in Chapter 3 of this report). Jacqui McKinlay from CfPS told us that there can be an “unbelievable barrier” with commercial organisations as they “do not recognise they are contracting with a democratic organisation that has democratic governance processes.”87

84.The conflict between commercial and democratic interests means that many companies are not set up to accommodate public accountability. This is in contrast with health services, which have a more established history of engagement (backed up by legislative requirements). The London Borough of Hackney explains that:

Health scrutiny has been luckier than other areas in that the duties to attend meetings and engage with scrutiny are well established and accepted. For health scrutiny in Hackney there is an understanding that if invited to attend to be held to account on an issue, the invitation cannot be refused. Where service providers have appeared reluctant to attend scrutiny is often linked to their accountability to local government and whether their management structures are local. We have found where structures are regional or national and the organisation has very limited local accountability there can be difficulty with engagement in the local scrutiny function.88

Scrutiny powers in relation to external organisations

85.Overview and scrutiny committees have a range of powers that enable them to conduct scrutiny of external organisations. The Health and Social Care Act 2012 gives local authorities the power to scrutinise health bodies and providers in their area or set up joint committees to do so. They can also require members or officers of local health bodies to provide information and to attend health scrutiny meetings to answer questions. Scrutiny also has powers with regard to the delivery of crime and disorder strategies, with those bodies which are delivering such strategies also being required to attend meetings and respond to committee reports. However, for all other organisations delivering public services, be they public bodies or commercial entities, their participation depends upon their willingness of both parties to do so and the ability of scrutiny committees to forge a positive working relationship. Attitudes to local scrutiny are varied, as Cllr Sean Fitzsimons from Croydon Council explained to us:

I would say that the smaller the organisation the better they are at coming along. The most difficult one I ever dealt with was probably the Metropolitan Police. Borough commanders do not think we have any legitimacy. Sometimes, you can see they are thinking about other things. As someone who has sat on a riot review panel, led by a judge, to get someone there was an effort. They may want to come and talk about a certain thing, but the moment you ask them anything specific it is like, “I cannot talk about it”. Policing is a really difficult area, and it is actually within our remit. The fire brigade has been quite a useful organisation, and they are quite keen. The ambulance service is desperate to turn up.89

Scrutinising council contracts

86.A significant obstacle to effective scrutiny of commercial providers is an over-zealous classification of information as being commercially sensitive (as discussed in relation to council-held information in paragraph 40). Council officers are wary of sharing the terms of contracts as they do not want to prejudice future procurements, and contractors do not always see why they should share information. As discussed earlier in this report, we can see no reason for withholding confidential information from scrutiny councillors, who can then consider it in a private session if necessary. We believe that councils and their contractors need to be better at building in democratic oversight from the outset of a contract. We note for example the views of Cllr Fitzsimons, who argued that scrutiny often gets involved in contracting situations too late:

It is only when the major recommendations can go to cabinet that you can say, “I am unhappy with that and I will bring it in.” My experience, particularly in my local authority, is that the failure of the authority, at the time, to engage in scrutiny early on in the process so that we could help shape the outcomes meant that a decision had been taken by the relevant cabinet member, and really it allowed itself to drift into party political flag-waving, to say, “We are just not happy with the letting of this contract.” If we had been allowed to look at it six months or a year beforehand, we may have been able to have had some influence for the betterment of the service. I have found that contractors are quite keen to talk, but what it again goes back to is how comfortable the executive is having their decisions challenged, when they may have done 18 months or two years of private work on it and they think they already have the answer.90

87.It is imperative that executives consider the role of scrutiny at a time when external contracts are still being developed, so that both parties understand that the service will still have democratic oversight, despite being delivered by a commercial entity. Scrutiny committees have a unique democratic mandate to have oversight of local services, and contracting arrangements do not change this. We therefore support the recommendations made by the scrutiny committee at Suffolk County Council, as described to us by Cllr Evans:

We had a task and finish group that did a lot of work on procurement and contracting, and we are asking that, in future, when the council signs any contracts, those people who are making the contract are aware that we could well expect to see them in front of scrutiny at some point. They cannot sign a contract with the authority and expect never to be put on the spot and be accountable.91

88.We heard examples where committees had successfully engaged external providers, such at Suffolk County Council where the contractors for highways and for social care come to scrutiny willingly.92 However this is not always the case and such variance is an issue of concern for us. We are of the view that scrutiny committees must be able to scrutinise the services provided to residents and utilise their democratic mandate and we therefore agree with the Minister, who told us:

When councils put contracts out to external bodies, they should look at that in the context of how open and transparent those arrangements can be. That can quite often be difficult because of commercial confidentiality, but, as I say, that should not be a cover-all for everything. I think that that should be considered in the context of when a contract is let, in terms of making sure that a particular provider can be called to a scrutiny committee. However, when a particular local authority lets a contract to a particular company, I do not think it should lead to a situation where that particular local authority is able to sit back and just blame its contractor. The local authority in question should, when tendering out, put together a process over which it has a level of control that enables it to scrutinise a particular contractor and take enforcement action should that contract not be fulfilled.93

Following the ‘council pound’

89.The CfPS highlight the difficulties that scrutiny committees can have monitoring services delivered in partnership, and notes that scrutiny has been effective when its formal powers give it a ‘foot in the door’:

We would therefore like to see these powers balanced across the whole local public service landscape. We would like to see the law changed and consolidated, to reflect the realities that local authorities now face–particularly the fact that much council business is now transacted in partnership. We would like to see an approach which uses the “council pound” as the starting point for where scrutiny may intervene–that is to say, that scrutiny would have power and responsibilities to oversee taxpayer-funded services where those services are funded, wholly or in part, by local authorities.94

90.Scrutiny committees must be able to monitor and scrutinise the services provided to residents. This includes services provided by public bodies and those provided by commercial organisations. Committees should be able to access information and require attendance at meetings from service providers and we call on DCLG to take steps to ensure this happens. We support the CfPS proposal that committees must be able to ‘follow the council pound’ and have the power to oversee all taxpayer-funded services.

Scrutiny of Local Economic Partnerships

91.We are also extremely concerned at the apparent lack of democratic oversight of Local Economic Partnerships (LEPs). There are 39 LEPs in operation across England, tasked with the important role of promoting local economic growth and job creation. However, we fear that they vary greatly in quality and performance, and that there is no public assurance framework, other than any information they themselves choose to publish. LEPs have been charged with delivering vital services for local communities and do so using public money, and so it is therefore right and proper that committees of elected councillors should be able to hold them to account for their performance. LEPs are key partners of mayoral combined authorities and we note that the relationship in London seems established. Jennette Arnold OBE AM, Chair of the London Assembly, told us:

The responsibility for the LEPs falls within the Mayor’s economic strategy, so for us the buck stops with the Mayor. He then has a LEP board. There are local authority councillors and businesspeople on that. There is a Deputy Mayor who is charged with business and economic growth in London. Both members of that LEP board and that Deputy Mayor have appeared in front of our Economy Committee. We also had questions about skills, because skills was linked, so our education panel raised questions. Business as usual for us is that where there is a pound of London’s money being spent, we will follow that and we will raise any issues as relevant.95

92.We applaud this approach and welcome the oversight of the London LEP provided by the London Assembly. In the next chapter we will consider the role of scrutiny in combined authorities, where we have concerns over the capacity of the newer organisations. Their relative infancy when compared to the London Assembly is reflected in unclear relationships with their local LEPs. Cllr Peter Hughes, Chair of the West Midlands Combined Authority Overview and Scrutiny Committee, told us:

There are non-voting LEP representatives on the board of the combined authority and there has been since the day it started. I have LEP representatives on the Overview and Scrutiny Committee. Again, they are non-constituent members, as are some of the rural authorities. Their commitment to overview and scrutiny and to audit is patchy, to say the least. There is one big authority or LEP area that does not contribute to scrutiny or audit … We have not done so yet, but I am sure before the 12 months are up that the LEP involvement in the combined authority’s work will be looked at.96

93.Whilst we welcome the established arrangements in London and the intentions of the newer mayoral combined authorities, we are concerned that there are limited arrangements in place for other parts of the country. We do note that examples exist, and call for such arrangements to be put in place across the country. Wiltshire Council states that:

Wiltshire Council is one of the few local authorities nationally to have a OS task group actively engaging with the region’s Local Enterprise Partnership, providing extra public accountability to the LEP funding spent within the county. All LEP reports and expenditure are published to facilitate further scrutiny by members of the public.97

94.In October 2017, a review of LEP governance arrangements was published by DCLG. The review makes a number of recommendations and noted that while many LEPs have robust assurance frameworks, approaches vary. For example, LEPs are required to publish a conflict of interest policy and the review found that “Whilst LEPs comply with this requirement, the content of policies and approach to publication varies considerably and is dependent on the overall cultural approach within the organisation.”98 The review also noted that:

A number of LEPs, but not all, refer to the role of scrutiny in overseeing their performance and effectiveness. Some LEPs are scrutinised from time to time by their accountable body Overview and Scrutiny function. This is an area for further development which would give increased independent assurance. Given the different structures across LEPs it is not appropriate to specify any particular approach to scrutiny. It is an area which could benefit from the sharing of good practice/‘what works’ to assist LEPs in shaping their own proposals.99

95.When we asked the Minister about the democratic oversight of LEPs, he told us that local authorities will usually have representation on LEP boards and that expenditure will often be monitored by the lead authority’s Section 151 finance officer. When we asked him about more public methods of scrutiny, he told us that:

in terms of the scrutiny there are ways in which a LEP can be scrutinised. At this point I do not believe that those arrangements need to be changed, but I will certainly be interested—I know you have asked this of a number of the witnesses at this Committee—in their views on local enterprise partnerships. Certainly that will be a Government consideration once the Committee has submitted its report.100

96.In light of our concerns regarding public oversight of LEPs, we call on the Government to make clear how these organisations are to have democratic, and publicly visible, oversight. We recommend that upper tier councils, and combined authorities where appropriate, should be able to monitor the performance and effectiveness of LEPs through their scrutiny committees. In line with other public bodies, scrutiny committees should be able to require LEPs to provide information and attend committee meetings as required.

86 See for example Q9

87 Q30

88 Overview and Scrutiny Team, London Borough of Hackney (OSG110) para 11

89 Q77

90 Q52

91 Q50

92 Q52

93 Q148

94 Centre for Public Scrutiny (OSG098) paras 149–151

95 Q103

96 Qq104–106

97 Wiltshire Council (OSG034) para 10

98 Department for Communities and Local Government, Review of Local Enterprise Partnership Governance and Transparency (October 2017), para 6.1

99 Department for Communities and Local Government, Review of Local Enterprise Partnership Governance and Transparency (October 2017), para 9.3

100 Q146

14 December 2017