Arming local government

The Local Government Association this month published a draft bill that would give local authorities a power of general competence. Here it explains why this power is sorely needed.

The LGA has published a draft Local Government (Power of General Competence) Bill as a contribution to the debate about local democracy and the powers which councils need to innovate and to meet the needs of local communities.

This draft Bill has been discussed by a roundtable of eminent local government lawyers and academics. The publication of the draft Bill seeks to advance understanding of how a power of general competence would best be expressed in law, and whether such a power can be established in law in a way which could over-ride other legislation which conflicts with it, and ensure greater flexibility and certainty.

The draft Bill would create power for a council to do anything it considers likely to benefit its area and people who live there. This would only be restricted where there is explicit limitation created by statute.

There is also provision for review of existing legislation to identify where it may create a barrier to actions councils want to take.

The legal framework for local government

There is wide consensus about the need for strong local government as part of a healthy democracy. Local government law needs to underpin arrangements where councillors can, in dialogue with local people, make decisions about local services and the place where they live.

There is widespread agreement that the current legal arrangements provide an unsatisfactory combination of detailed legal prescription about specific services, and uncertainly about a general power. We need a clear power of first resort, and a framework to simplify and remove restrictions from existing statute, where these create a barrier. We need, as far as possible, to create a power which will not be interpreted in the courts in a restrictive way.

English local government is unusual among modern democracies in not having a written constitution or framework of basic law within which the role and powers of local government are defined. Seeking to provide a clear general power to strengthen local government within the English legal framework, parliament created the ‘well being power’.

The Local Government Act 2000 introduced a new, flexible power, the well being power, which enabled councils to do anything which was likely to improve the economic, social, and/or environmental well being of the area or its inhabitants.

The Act also provided an order-making power to remove conflicting elements of other statutes. This was intended to provide flexibility for new, innovative services and initiatives and the development of new service delivery architectures.

The need for a power of general competence

The well being power was intended to provide a power of first resort for councils, not simply to create an addition to the existing list of specific powers. Councils were encouraged to see this as underpinning a community leadership role, responsive to local citizens and places. It was at the heart of the government’s claim to be strengthening local democracy and empowering communities.

Many councils acted in this spirit, insofar as they were able in a wider climate where they had much other prescription from government, and were too often seen not as providing local government, but as the bottom of the delivery chain for central government departments.

On 9 June 2009, the Court of Appeal handed down its judgment in Brent LBC v Risk Management Partners. It upheld the position of the High Court, that the London Borough of Brent did not have the power to participate in the Local Authorities Mutual Limited (LAML), a jointly owned company, set up to provide insurance and risk management services to London borough councils. The judgement has created wide concern within local government about the scope of the well being power, Section 2 Local Government Act 2000, and Section 111 Local Government Act 1972.

At a time of recession and public spending pressures, where it is vital councils have the confidence to innovate, the LAML judgement seriously undermined council confidence in the well being power as a wide, general power of first resort.

The government responded to the LAML judgement by introducing an amendment to the Local Democracy, Economic Development and Construction Bill, in October 2009. This was passed, and creates specific powers to enable councils to establish mutual insurance arrangements. This does not resolve the uncertainty which has been created about the limits of the well being power.

Although the well being power has encouraged some councils to introduce new activities, there has been uncertainty about its exact scope. This concern has been very much amplified by the recent judgement. This has increased interest in the idea of a power of general competence for local government, which would be broader and create greater certainty.

Making the case for a power of general competence

A power of general competence for local government has longstanding support from the Local Government Association (LGA). This would support the role of councils as government and not simply administration, taking distinctive decisions to provide for the needs of the place the council represents, and not simply administering the decisions of central government.

The LGA’s publication on the powers and constitutional position of local government, One Country, Two Systems, expressed interest in the option to “legislate along the lines of Article 118 of the Italian constitution, providing that councils should be presumed to have the powers to provide any public service not explicitly reserved as the unique responsibility of a national body in the interests of assuring uniformity of service.”

We went on to suggest “Such a provision would either require a very large schedule of consequential repeals and amendments, or need to be phrased so as to have the quasi-constitutional force to override other statutes limiting the powers of local government. There is a precedent for such a quasi-constitutional provision in the Human Rights Act, which simply allows other statutes to be challenged if they appear to be in conflict with it.”

In May 2009, the House of Commons Communities and Local Government Select Committee reported: The balance of power: central and local government.  The committee said in its conclusions and recommendations: “We are clear that local authorities need both sufficient formal powers and more general autonomy to pursue a leading local leadership role. We have considerable sympathy with the case for local government to be given a power of general competence, to provide greater recognition of the local leadership role that central government is asking it to play and which we support. If local government is able to accumulate evidence that the well-being powers are falling short of a power of general competence to the extent that they are impeding its local leadership role, then we recommend that the government should introduce a power of general competence for local government.”

We believe the uncertainty subsequently created by the Court of Appeal in the LAML judgement shows the need for action.

Benefits of change

The draft Bill would provide a wide, permissive power of general competence. It would be wider than the well being power, create greater certainty for councils and encourage innovation.

The idea of a power of general competence has been supported in the past by all the main political parties. Support for a power of general competence for local government has been a longstanding policy of the Liberal Democrats. It was a Labour government which introduced the well being power, taking steps to provide a clear, general power within the Local Government Act 2000. The Conservative Party’s recent Control Shift policy paper advocates a general power of competence for local government.

Public spending is under pressure in the aftermath of the banking crisis. Well before that, councils were extensively involved in finding more economical ways to provide services through shared arrangements, particularly for back office and support services. Regional Improvement and Efficiency Partnerships had put particular emphasis on this work. The LAML initiative of London councils to create shared insurance arrangements, which were able to provide for their insurance needs more economically, were typical of this approach. It was therefore a particular blow to have confidence in the well-being power undermined as a means of underpinning efficiency savings.

In the LAML judgment, Lord Justice Moore-Bick argued that section two of the well being power cannot be used to empower any scheme expected to reduce an authority’s costs (paras 174 –182) “taking steps to improve the authority’s general financial position is not to be treated as something that will of itself promote or improve the well-being of its area”. The argument was put by Lord Justice Pill that: “Promotion of well- being is not an expression one would normally associate with a somewhat complex arrangement to save money . . . rather than with action directly to promote or improve a healthy or prosperous condition.”

It is vital that councils are given renewed confidence in their powers to continue this work to improve efficiency, for example through joint arrangements, in particular to provide back office and support services which may be defined as ‘incidental’ in law to their primary functions. Challenges such as climate change and energy security, changes in the make up of the population, economic change, and technological developments, make it vital councils can take reasonable risks, and provide new services.

Legislating to create a power of general competence for local government would contribute to councils’ confidence in their powers to tackle in new ways the challenges their communities face.

To view the LGA’s draft bill, click here.