House of Lords - Explanatory Note
Local Government Bill [H.L.] - continued          House of Lords

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Clause 53: Disclosure and registration of members' interests

119.     Clause 53 gives the Secretary of State powers with regard to the disclosure of interests by councillors and the maintenance of registers containing those interests.

Clause 54: Code of conduct for local government employees

120.     Clause 54 gives the Secretary of State and the NAW power to issue a code of conduct for local government employees. The clause requires each of them, in drawing up a code, to consult representatives of local government and also of local government employees. This code of conduct is to be incorporated into the terms and conditions of every local government employee.



121.     Part IV of the Bill gives the Secretary of State a power to alter, by order, the frequency of elections to local authorities, and the years in which local elections are held.


122.     The pattern of elections to local authorities varies across England and Wales. Some local councils have 'all out' elections once every four years, whist others elect a third of their members in each of three years out of four—commonly known as annual elections. The timing of these electoral cycles also varies depending on the type of local authority.

123.     In the White Paper, Modern Local Government: In Touch with the People10, the Government proposed to build on this well-established system and introduce a form of annual accountability through the ballot box for all local authorities. The White Paper proposed that elections by thirds should become the standard pattern for all unitary councils, including London boroughs. In two-tier areas, the Government proposed a pattern in which both the district councils and county councils would elect by halves in alternate years.

124.     The Welsh White Paper, Modernising Local Government in Wales: Local Voices11, proposed giving the NAW a power to determine the frequency of elections for principal councils. The White Paper also proposed a power for the NAW to rationalise the timing of electoral cycles for all local authorities in Wales.

Commentary on clauses

125.     Clause 70 provides that powers under Part IV exercised by the Secretary of State in England will be exercisable by the NAW in Wales. It also provides that the Parliamentary procedures set out in clause 69(4) to (6) for orders and regulations do not apply to the NAW, which has its own procedures for scrutinising secondary legislation.

Clauses 56 to 61: elections

126.     Part IV deals with the times and frequency by which councillors are elected to local authorities. Clause 57 defines the three different schemes of elections that may be applied to principal councils (as defined in clause 56). These are:

  • all-out elections, with the whole council being elected once every four years,

  • elections by halves, with half the councillors being elected every other year,

  • elections by thirds, with one third of the councillors being elected each year for three years out of four.

In each case, councillors have a four-year term of office.

127.     Clause 58 provides for the Secretary of State to be able to specify, by order, that a particular scheme of elections should apply to a particular principal council or description of principal council. The scheme of elections must be one of the three schemes set out in clause 57. The order may also specify the year or years in which elections are to be held.

128.     Where the specified scheme of elections involves the election of only a proportion of councillors in any one year, the order may include provision for identifying the wards, electoral divisions and councillors that may be affected by such a change. This is necessary because the number of councillors representing a ward in a principal council may not be evenly divisible by the frequency of elections that is being specified for the authority. In such cases, there is a need to be able to identify which seats are to be elected at which elections. Similarly, in the electoral divisions of counties (which only have one member per division), it will be necessary to identify which divisions will have elections in any particular year.

129.     Subsection 58(6) allows the Secretary of State to specify the method to be used for identifying the electoral divisions, wards and councillors in such cases. It also allows the Secretary of State to direct principal councils to propose to them methods for identifying electoral divisions, wards and councillors.

130.     Clause 59 provides for the Secretary of State to be able to change, by order, the years in which elections take place for any local authority (including parish and community councils). The purpose of this provision is to change the phasing of electoral cycles without changing the scheme (or frequency) of elections.

131.     Clause 60 allows the Secretary of State to make further orders, should the need arise, making supplementary and transitional etc. provisions in relation to earlier orders, under clauses 58 or 59.

132.     Clause 61 makes minor amendments to the Local Government Acts of 1972 and 1992 to allow the creation of multi-member electoral divisions in non-metropolitan counties in England.



Surcharge etc.

133.     Alongside the introduction of the new ethical framework in Part III, Part V makes a number of ancillary provisions relating to the audit framework for local government (as set out in the Audit Commission Act 1998). These include the repeal of the current surcharge provisions. They also cover the Secretary of State's power to sanction items of account; this enables the Secretary of State to protect individuals from surcharge and becomes unnecessary once surcharge is repealed. Finally, it includes arrangements to introduce a new system of advisory notices to enable auditors to seek a Court decision about the legality of what an authority wanted to do. This would replace existing arrangements for auditors to issue a prohibition order.

Welfare services

134.     Part V of the Bill includes provision for a new framework within which local authorities work jointly with other agencies and partners to plan and commission welfare services for vulnerable people. Part V creates a new central government grant to replace current fragmented funding arrangements for welfare services with one single budget from April 2003.

135.     Funding which will be transferred to the new grant includes:

  • Housing Benefit paid in respect of support services;

  • Housing Corporation Supported Housing Management Grant;

  • Home Office Probation Accommodation Grants;

  • grants made by DETR to Home Improvement Agencies;

  • relevant elements of DSS Resettlement Programme Revenue and of local authority Total Standard Spending.

Other provisions

136.     Part V also provides for changes necessary to the Local Authority Social Services Act 1970 resulting from measures in Part II of this Bill and provisions on allowances and pensions for local authority members.

137.     Finally, Part V also repeals section 2A of the Local Government Act 1986, which prohibits local authorities from promoting homosexuality.


Surcharge etc

138.     The White Paper Modern Local Government: In Touch with the People12 set out proposals to repeal the existing surcharge provisions contained within s.17 and 18 of the Audit Commission Act 1998; these provisions enable the auditor to surcharge councillors for recovery of unlawful items of expenditure. It also suggested replacing the current system of prohibition orders (set out in s.20 to 23 of the 1998 Act) with advisory notices.

Welfare services

139.     The Government's proposals for a new role for local authorities to take a lead in partnership working to address support needs in the community were set out in the consultation paper Supporting People: a new policy and funding framework for support services13. The responses to the proposals were published in the paper Summary of analysis of responses to the 'Supporting People' consultation document14.

140.     The provisions on welfare services follow the proposals that were put forward in the consultation document. They address a number of issues in the current system of funding:

  • they respond to the 1997 court ruling on the role of Housing Benefit in funding support services;

  • they are based on a system of joint commissioning at local level. This will replace current funding arrangements where support is funded through a variety of funding streams;

  • they allow more transparency about support needs and provision around the country. The new system of funding will clarify what is happening in this area, as well as allowing checks on the quality of support provision.

141.     The proposals are consistent with the principles of promoting independence, as set out in the White Paper Modernising Social Services15, and with the proposals for welfare reform set out in the Green Paper New ambitions for our country: a new contract for welfare16.

Social services functions

142.     The proposals for changes to the Local Authority Social Services Act 1970 are consistent with the White Paper Modernising Social Services (see footnote 15).

Repeal of prohibition on promotion of homosexuality

143.     Section 2A of the Local Government Act 1986 (inserted by section 28 of the Local Government Act 1988) prohibits local authorities from intentionally promoting homosexuality, or from promoting the teaching in local authority maintained schools of the acceptability of homosexuality as a "pretended family relationship".

* Maintained schools are defined by paragraph 63 of Schedule 37 to the Education Act 1996 (previously defined by the Education Act 1944, which is amended by the 1996 Act).

Commentary on clauses

Clause 62: Surcharge etc.

144.     Clause 62 has the effect of repealing the current 'surcharge' provisions set out in the Audit Commission Act 1998 and also the Secretary of State's power to sanction an item of account. The changes will affect all bodies to which the surcharge provisions apply.

* Although the term surcharge is not used in the 1998 Act, it describes the existing powers of the auditor to effect the disqualification of a local authority member or ascribe a financial penalty to a person.

145.     This may arise either as a result of unlawful expenditure (under s.17 of the 1998 Act) or where an item has not been brought to account or a loss incurred from wilful misconduct (under s.18 of the 1998 Act). Removal of the relevant surcharge provisions from s.17 of the 1998 Act does not affect the auditor's ability to apply to the courts for a declaration that an item of account is contrary to law. However, removal of s.18 of the 1998 Act also removes an elector's ability to appeal to the court against an auditor's decision not to act on his objection that a loss has arisen as a result of misconduct (contained in subparagraph 16(1)(a) of the Act). Instead, under these arrangements, the Standards Board and Adjudication Panel, rather than the auditor, will determine whether there has been misconduct and any issue would be pursued through them.

146.     This clause also removes the Secretary of State's power to sanction an item of account. Under the 1998 Act, if a council has done (or wants to do) something contrary to law, it may seek sanction from the Secretary of State for the item of account relating to it. The granting of sanction protects individuals authorising unlawful expenditure from the possibility of surcharge by preventing the auditor from applying to the court for a declaration that an item of account is unlawful. Removing the surcharge provisions removes the need for the Secretary of State to grant sanction.

Clause 63: Advisory notices

147.     Clause 63 replaces sections 20 to 23 of the Audit Commission Act 1998, revoking the existing arrangement for prohibition orders and replacing them with a system of advisory notices. Advisory notices will apply to all bodies subject to audit under this Act other than health service bodies.

148.     The advisory notice gives auditors time to seek the opinion of the courts on the legality of an authority's actions where they consider that the authority is contemplating a decision or course of action that would result in unlawful expenditure or other financial loss. This clause gives the auditor power to issue an 'advisory notice' in such circumstances, and specifies the form of the notice and how it should be served on the authority concerned.

149.     An authority in receipt of a notice must first consider it. If they then decide that they want to proceed with the action specified in it, this clause requires them to provide the auditor with written notice of their intentions. Furthermore, it prevents them from proceeding with the activity for a period (of up to 21 days) specified by the auditor in the advisory notice. During this period, the auditor may then choose to seek an opinion from the court on the legality of the proposed course of action. The authority may then only proceed with the action if the court decides that it is lawful or if the auditor does not seek legal opinion within the notice period.

Clauses 64 and 65: Welfare services

150.     Clause 64 creates powers for the Secretary of State, with the consent of Treasury, to determine and pay a grant to local authorities to enable them to contribute to the cost of welfare services. Similar powers are given to the National Assembly for Wales.

151.     Other powers in this clause include powers to determine the purpose of the grant, to attach terms and conditions to the grant, and to provide guidance and directions to local authorities. The clause defines which local authorities will receive the grant.

152.     Clause 65 enables entitlement to housing benefit in respect of certain support services to be withdrawn. This clause will apply to Scotland as well as England and Wales.

153.     The new well-being powers in Part I facilitate these new arrangements both by ensuring that local authorities have broader powers to provide support services for people who may need them, and by creating a framework for community planning.

154.     It is intended that the commencement orders under clause 72 for the welfare services provisions will allow for the new funding arrangements to be brought into force for different geographical areas at different times, i.e. to be phased in.

Clause 66: Allowances and pensions for local authority members

155.     Clause 66 enables the Secretary of State to make secondary legislation on councillor allowances and pensions.

Clause 67: Social services functions

156.     Clause 67 removes the requirement in the Local Authority Social Services Act 1970 that local authorities discharge their social services functions through social services committees, where they adopt one of the new forms of executive in Part II of the Bill. The requirement that an authority appoint a director of social services remains but the requirement that the Secretary of State's approval first be obtained if a director of social services is to be appointed to any non-social services post is repealed.

157.     Clause 67(1) removes the statutory requirement for a local authority to discharge its social services functions through a social services committee (s.2 to 5 of the 1970 Act) where the authority adopts one of the forms of executive in or under Part II of the Bill. Clause 67(2) removes the requirement that an authority's director of social services cannot discharge non-social services functions without the prior approval of the Secretary of State (section 6(5) of the 1970 Act). Clause 67(3) inserts a definition of social services functions and replicates the order-making power in section 2(2) of the 1970 Act which applies to authorities which have adopted one of the forms of executive in or under Part II of the Bill and therefore to whom s.2 to 5 of the 1970 Act no longer apply.

Clause 68: Repeal of prohibition on promotion of homosexuality

158.     Clause 68 repeals section 2A of the Local Government Act 1986 (inserted by section 28 of the Local Government Act 1988), which prohibits local authorities from intentionally promoting homosexuality, or from promoting the teaching in their schools of the acceptability of homosexuality as a "pretended family relationship".



Clause 69: Orders and regulations

159.     Clause 69 makes general provision for the exercise of orders and regulations under the other Parts of this Bill. It provides for orders or regulations made under clauses 5 (power to amend or repeal enactments), 6 (power to modify enactments concerning plans etc), 10(5) (local authority executives), 29 (power to make provision about elections), 30 (provisions with respect to referendums), 32 (powers to modify enactments) or 34 (principles governing conduct of members of relevant authorities) to be bound by the affirmative resolution procedure in both Houses of Parliament, and for all other statutory instruments, other than commencement orders under clause 72, to be subject to the negative resolution procedure in either House.


Part I: Promotion of economic, social or environmental well-being

160.     The provisions in Part I specifically preclude local authorities from using the new power of well-being to raise finance. No impact on public sector finance is expected to arise from these provisions. Nor is any significant financial effect from the power to prepare community strategies expected. Where this is exercised, authorities may incur some short-term costs, but it is expected that these costs will be absorbed within existing budgets, and lead to longer-term efficiency savings.

Part II: Arrangements with respect to executives

161.     The intention behind the new arrangements is to bring about more effective and efficient use of resources by local authorities. Savings arising are expected to offset, or more than offset, any additional costs that may fall to local authorities as a result of adopting new decision-making arrangements—in particular the costs associated with the holding of referendums on the question of the introduction of a directly-elected mayor, and with the conduct of elections for the office of directly-elected mayor.

Part III: Conduct of local government members and employees

162.     Any increased costs for local government associated with the introduction of the new ethical framework should be offset by savings arising from the introduction of new decision-making arrangements. Budgetary provision of £7 million a year has already been made available by the DETR for the cost of establishing and running the new Standards Board. This is comparable to the cost of funding the local government Ombudsman.

Part IV: Elections

163.     Expenditure on the conduct of local government elections would increase in any area where the overall frequency of such elections is increased as a result of an order made under the provisions of clause 58. If these provisions were used to alter the frequency of elections to elections by thirds in all single-tier authorities and elections by halves in all two-tier authorities, there would be an increase in total local government expenditure in England of some £8 million a year on average.

Part V: Miscellaneous


164.     Repeal of surcharge should have minimal impact on public sector expenditure. As at present, local authorities will still be able to pursue losses arising through criminal misconduct through the courts.

Welfare services

165.     There are no direct costs arising from these provisions. However, while the new policy and funding framework for support services is intended to improve the management of resources and maximise value for money, there will be some administrative costs involved in the new arrangements. These will fall particularly on local authorities. Central government will use the current Comprehensive Spending Review to consider how best these costs might be met.

Repeal of prohibition on promotion of homosexuality

166.     The Bill provision would allow local authorities greater flexibility in their ability to support gay and lesbian groups. The repeal is not expected to lead to any overall increase in expenditure by local authorities.


167.     Parts I, II and IV of the Bill will not result in any significant impact on manpower levels in either central or local government.

168.     To implement the new arrangements on welfare services, local authorities will require additional staff to carry out work (with other agencies, service users and service providers) to assess support needs in the community, develop joint commissioning processes, and plan, fund and monitor support services. This will be the main element in the administrative costs being considered in the current Comprehensive Spending Review.

169.     In addition, although no significant impact on the manpower levels of local government is expected as a result of the introduction of the new ethical framework or changes in audit arrangements, the Bill also establishes a new NDPB. The Standards Board will need to recruit sufficient staff to allow it to carry out its function of upholding the principles which govern the codes of conduct of local authority members; as mentioned above, budgetary provision has already been made for this.


170.     None of the measures under Parts I-IV of the Bill will impose any burden on business, charities or voluntary bodies.

171.     The provisions on welfare services in Part V will not in themselves impose any direct burden on such organisations, but the new arrangements for funding welfare services that the Government intends to implement through the new provisions will have implications for service providers. Elements of the new arrangements to scrutinise value for money more closely and which will separate the funding of accommodation and support services to improve service flexibility are likely to involve additional management and administration for some service providers. This will be a factor that will need to be taken into account both locally—in decisions about the appropriate level of funding for each service—and centrally, in the Comprehensive Spending Review.

172.     A copy of the Regulatory Impact Assessment is available from DETR17.


173.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement, before second reading, about the compatibility of the provisions of the Bill with the Convention rights (as defined by section 1 of that Act). On 23rd November 1999 Lord Whitty, Parliamentary Under-Secretary of State at the Department of the Environment, Transport and the Regions, made the following statement:

    In my view the provisions of the Local Government Bill [H.L.] are compatible with the Convention rights.

10Cm 4014, July 1998. Back

11Cm 4028, July 1998. Back

12Cm 4014, July 1998. Back

13Published December 1998, DSS. Also available on the DSS website ( Back

14Published July 1999, DETR. Back

15Cm 4169, November 1998. Back

16Cm 3805, March 1998. Back

17Contact Melanie Hollinshead (telephone: 0171 890 3663 or e-mail: melanie_hollinshead@ Back

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Prepared: 26 November 1999