The practical implications of the Localism Act 2011

Power to the People 2 iStock 000010962216XSmall 146x219Olwen Dutton provides a checklist of the most significant Localism Act provisions which local authority lawyers should now have put in place, or should be considering putting in place, within their authorities.

The role and focus of local authority lawyers in the past year has been on implementing the various provisions of the Localism Act 2011 in a way that makes sense for their authority, and puts into effect as best they can both the wording of the Act itself and its underlying aims.

This has not been made easier by the piecemeal way in which the provisions have been implemented, the delay in receiving some of the regulations and the lack of necessary transitional provisions.

The general power of competence

Whilst not exactly the “big bang” approach that some of the Government’s rhetoric would have us believe, the anecdotal evidence is that local authorities are starting to utilise the general power of competence (GPoC) to allow them to do some things which otherwise they would struggle to find the vires for, particularly around charging and trading, where it does make things slightly easier to do for a commercial purpose. However, members and officers need to be aware of the limitations of the GPoC.

The problem is that, while the GPoC allows the local authority to do things that an individual with full capacity generally may do, some of the things that local authorities may very well want to do are matters that an individual does not in any way have the power to do! Those senior management teams and Cabinets who believe that they are now able to do anything whatsoever they wish using the GPoC may need to be disabused of this, hopefully sooner rather than later.

Governance arrangements

It is now much simpler for an authority to change its governance arrangements. For those authorities considering returning to the committee system, members and officers who have not worked under the pre-2000 Act system, need to understand how to put a committee system into effect and what it means.

The first step of the legal timetable is to pass a resolution at a Council meeting to change the authority’s governance system and that will follow at the next annual meeting of the Council. In practical terms, this means that authorities who are considering this change will need to pass their resolution around February/March 2013 in order to introduce it from May 2013.

It is important to get your politicians to really understand both the benefits and the disadvantages of a committee system of governance as once an authority has changed its governance arrangements, it cannot change back for five years.

The Community Right to Challenge

The true effect of Part 5 Chapter 2 of the Localism Act is simply to introduce a requirement for a procurement exercise. Although it has been sold as the way in which council services will be made to operate via the third sector, staff mutuals, etc, the take up for this has been patchy. There are some very practical things which authorities should either already have put in place, or should be in the act of doing so.

The administrative steps include making sure that there is the appointment of the appropriate officers to deal with the assessment of bids, carrying out of the procurement process, etc. On a more strategic level, authorities should be considering matters such as:

  • the various timescales for the acceptance of bids;
  • assessing their service areas by looking at where they already have contracts which they cannot legally break, and when those contracts will come to an end;
  • arrangements that they have around shared services and the implications of the best value legislation;
  • the services where they would be interested in some sort of community provision, in which case this can provide a defence to a challenge from a relevant organisation, and those parts of their service provision where it is possible that a staff mutual may emerge.

Even with the advent of the Public Services (Social Value) Act 2012, it will not be easy for some complex and difficult local authority services to be delivered by the parish council, local interest group or a staff mutual, not least because any small organisation will find the Local Government Pension Scheme arrangements make the cost of simply providing the service far too great.

However, if the provisions are not to be used as a Trojan horse for large private and third sector players, it would be advisable for local authorities to give some consideration to a timetable and whether they should provide a window once a year in which applications can be made. This could lead to a very heavy workload over an intense period for those involved in assessing the bids and could also have an undesirable effect upon the services of the local authority, if more care is not taken with the eventual service provision.

Assets of Community Value and Community Right to Bid

The Assets of Community Value (England) Regulations 2012 came into force in September 2012, with some quite alarming provisions in place regarding compensation payments. Once again, the rhetoric of the Government about what this would achieve, with its emphasis on the “much loved rural post office” has in reality often turned into the areas owned by the Council and used by the locals for dog walking, etc.

The fact that such land was often bought for development some time ago but that development has not actually happened, seems to be an encouragement to community groups in putting the various land on the list of assets of community value.

Local authorities should already have taken some implementation steps by prescribing the procedure to accept and assess nominations to the register, how decisions will be made, and notification of landowners.

The regulations provide that reviews of the listing decision can take a number of forms so the authority needs to agree what its procedures will be. The regulations also provide for appeal to the First Tier Tribunal, though it is unclear whether this is to be a new hearing or simply a review of the authority’s decision. At least two officers will need to be nominated as those who initially assess and then review the listing decisions, and care must be taken as to what may happen if there is a potential conflict of interest between the decision making on the asset and the personal or professional responsibilities of those officers.

When the moratorium period has been triggered, the authority also needs to make sure that it has the necessary processes in place for notification and, in addition, the necessary provisions and procedures around the assessment and award of compensation. The regulations leave all those decisions up to the authority itself. The guidance (surprisingly, but pleasingly) indicates that the Government will reimburse authorities their compensation costs over £20,000 per annum, but it would still be very wise for an authority to set a policy governing what it will or will not pay in terms of the compensation provisions.

We are not confident that the Government has fully realised the potential implications of its open ended reimbursement commitment, and authorities cannot take it for granted that this largesse will last forever.

Neighbourhood Planning

There is a massive amount of interest in neighbourhood planning up and down the country. An interactive map of the Neighbourhood Planning Front Runners (available via the Planning Advisory Service website) shows an impressive spread across England.

One of the points which local authority lawyers are having to face is the situation of competing potential neighbourhood forums, which could turn into a “beauty parade”, provided that all of the potential ones can satisfy the legislative requirements such as membership.

There is likely to be extreme interest in neighbourhood planning once the developers are able to build and sell their housing stock so, again, authorities need to ensure that they have the right processes in place for assessing and agreeing the necessary issues. The Government has refused to indicate whether or not this was an executive or a Council matter, depending upon whether or not it is about the drafting of plans or the decision making around development control, so in many authorities this matter is being dealt with by the development control committee, while in others it is the responsibility of the Cabinet or indeed a single cabinet member, and in yet others it has all been delegated to the Chief Planning Officer or Chief Executive.

Until there is a new Functions and Responsibilities Order, which is promised before too long, that makes clear where this and other provisions of the Localism Act sit in terms of governance, local authority lawyers will have to do the best they can and come up with a solution which is most effective for their particular council.

Standards

The so-called “freeing up” of the standards regime and all of its bureaucracy has not resulted in members behaving more appropriately nor in authorities feeling less likely to pursue instances of bad behaviour on the part of members. This has probably been one of the most problematic areas of the Localism Act, partly caused by the Government’s slowness in producing both the draft and the final regulations, and also by the lack of transitional provisions in relation to the introduction of such matters as the Disclosable Pecuniary Interest Regulations.

We are not seeing a diminution in the number of requests and instructions from Councils around standards matters, and it seems that now authorities are even more concerned than before to ensure that their members are behaving properly.

Conclusion

One DCLG minister allegedly described the Localism Act 2011 as the “best drafted piece of local government legislation in the last 50 years”, thus placing it head and shoulders above the Local Government Acts of 1972, 1989 and 2000, and a lot of others besides. Local government lawyers use the Local Government Act 1972 every day, and it has undoubtedly stood the test of time because, by and large, it makes sense and it works. But will the local authority lawyers of 2050 (presuming they still exist) be referring to the tried and tested principles of the Localism Act 2011 in the same way? Time will tell.

Olwen Dutton is a partner in the Commercial and Infrastructure team at Bevan Brittan. She can be contacted on 0870 194 5006 or by This email address is being protected from spambots. You need JavaScript enabled to view it..