To Boldly Go….
So was it worth the wait? Nicholas Dobson looks at what the Localism Bill has to say about competence, predetermination and standards
Whilst individuals can do what they will within the law, local authorities as statutory creatures cannot. They must identify a statutory power for all actions. But all is set to change. For the man who on 13 December 2010 announced first year spending cuts for local government of up to 8.9%, also cast himself as an unlikely fairy godfather to the sector. For with a wave of his ministerial wand Eric Pickles also announced prospective powers in the Localism Bill to put local authorities on a similar legal footing to individuals. Subject of course to one or two buts.
This was of course the much trailed competence power which now appears in Part 1 of the Bill. The Communities Secretary said this will “expand councils’ freedom to act in the interest of their local communities” for “rather than needing to rely on specific powers, councils will have the legal reassurance and confidence to innovate and drive down costs to deliver more efficient service”. So how does it work?
General Power of Competence
Clause 1(1) gives local authorities (i.e. English counties, districts and London Boroughs, and parish councils meeting conditions prescribed by statutory order as ‘eligible’) “power to do anything that individuals generally may do”. This (per clause (1(2)) applies to things an individual of full capacity may do even though such things are unlike “in nature, extent or otherwise” anything the authority may do outside the scope of the competence power and unlike anything that other public bodies may do. Whilst this is reminiscent of King Lear (I will do such things – what they are, yet I know not) the provision is undoubtedly intended to be positive and not (with Lear) to unleash the “terrors of the earth”. Nevertheless many in local government will think that the financial settlement has done just that.
Clause 1(4) specifies the breadth of the power. For this enables things to be done: “in any way whatever” including: anywhere in the UK or elsewhere; for a commercial purpose or otherwise, with or without charge and also power to do things “for, or otherwise than for, the benefit of the authority, its area or persons resident or present in its area”. And (per clause 1(5) the generality of the competence power “is not limited by the existence of any other power of the authority which (to any extent) overlaps the general power. Furthermore (per clause 1(6)) any such other power is not limited by the existence of the general power (subject to action from the Secretary of State per clause 5 – see below). Dissonance with other statutory provisions was of course a key problem with use of the incidental power in section 111 of the Local Government Act 1972. For this, as a subsidiary power, cannot be used inconsistently with a substantive measure covering the area in question.
But there are limits
However, infinity is a rare commodity and the competence power is no exception. Clause 2 therefore stakes out its statutory boundaries. Opening the batting is clause 2(1) which provides that if the exercise of a power which precedes the commencement of the prospective Localism Act (as defined in clause 2(4)) is subject to restrictions, then those restrictions will apply also to the exercise of the general power, so far as this is overlapped by the pre-commencement power. And (per clause 2(2)(a)), the competence power does not enable a local authority to do anything which it is unable to do by virtue of a pre-commencement limitation. Nor (by clause 2(2)(b) does the competence power enable an authority to do anything which it is unable to do by virtue of a statutory limitation imposed ‘post-commencement’ (as defined by clause 2(4)) and which is expressed to apply to: the general power; to all the powers of the authority; or to all such powers but with exceptions other than the competence power.
Clause 2(3) contains some specific statutory exclusions from the scope of the competence power. This therefore does not confer power to make or alter arrangements about the discharge of authority functions by committees, joint committees or officers etc or to local authority governance (per a new Part 1A of the Local Government Act 2000 which sets out permitted forms of governance – see below).
There are also limits on charging (clause 3) and on doing things for a commercial purpose (clause 4). The charging restriction applies where (pursuant or potentially pursuant to the competence power) a local authority provides a person with a service “otherwise than for a commercial purpose”. Under these circumstances, the competence power confers power to charge for the service but only if: (a) the service is not one which the authority is statutorily required to provide; (b) the recipient has agreed to its provision; and (c) other than by virtue of the competence power and section 93 of the Local Government Act 2003 (power to charge for discretionary services) the authority has no power to charge for providing the service. As with the 2003 Act charging power, there is a duty on authorities to secure that taking one financial year with another the income from charges authorised by clause 3 does not exceed the costs of provision. Clause 4 seems to confer on authorities a power to trade in its discretionary services through a company to similar effect as that in section 95 (etc) of the 2003 Act and the current Local Government (Best Value Authorities) (Power to Trade) (England) Order 2009.
No doubt because of the uncharted waters into which the power may be thought to be taking local government (and the uncertainty of its interaction with the existing body of local authority law) the Secretary of State (SoS) has reserved certain powers in clause 5. So clause 5(1) enables the SoS to make an order amending, repealing revoking or disapplying any statutory provision which prevents or restricts local authorities from exercising the competence power.
And if the SoS thinks that the competence power is to any extent overlapped by another power then the SoS may (by clause 5(2) take similar action by order to remove or reduce such overlap. If any local authority oversteps what the SoS of the day may consider to be “the mark”, then clause 5(3) will enable the SoS to make an order preventing authorities from doing under the competence power anything specified in the order. The SoS may also provide for the general power to be exercised subject to conditions specified by order. However, before making any order empowered by clause 5 the SoS must consult such local authorities, local government representatives and others as the SoS considers appropriate. So one way and another a range of pumpkins from the fairy godfather into which vires magic could potentially dissolve.
Fire and Rescue Authorities
Under section 5 of the Fire and Rescue Services Act 2004, fire and rescue authorities include non-metropolitan counties in England and district councils which are beneficiaries of the proposed new competence power. A new section 5A of the Fire and Rescue Services Act 2004 (inserted by clause 8 of the Bill) gives other authorities (metropolitan county fire and rescue authorities, the London Fire and Emergency Planning Authority and combined authorities under sections 2 and 4 of the 2004 Act) a suite of general powers in addition to their other powers.
These (per clause 5A(1)) give those authorities power to do anything they consider appropriate: for the purposes of discharging any of their functions and incidental purposes (including indirectly incidental purposes ‘through any number of removes’). It also empowers anything that such an authority considers to be connected with any of its functions or things directly or indirectly incidental to these, as well as commercial activity. For clause 5A(1)(e) empowers such authorities to do any of the above actions to be carried out “for a commercial purpose” which are authorised other than for a commercial purpose.
As with the general competence power, there are limits, which in many respects reflect those applying to that power. However, relevant fire and rescue authorities are not empowered under these provisions to borrow money (clause 5B(5)). Whilst clause 5B(6) provides that the above provisions do not authorise charging, sections 18A, 18B and 18C nevertheless make detailed provision for charging by English fire and rescue authorities. This includes power to charge for persistent false reports of fires at domestic and non-domestic premises caused by malfunction or misinstallation of warning systems.
Well-being
But what of well-being in all this? Well, it seems to be upping sticks and moving to Wales. For the general power of competence is proposed to apply to authorities with an English designation, even though (per clause 205) the Bill is generally expressed to extend to England and Wales. And the well-being power is to be limited to Wales (see Schedule 1 to the Bill).
Administrative Law
The courts of course will continue to apply administrative law principles to the exercise of the new powers in whatever form they reach the statute book. Whilst the competence power is a widely drawn substantive power, expressly broader in its scope than the current well-being power, councils as public authorities will still of course need to act reasonably, fairly, conformably with any relevant Convention rights and consistently with their fiduciary duty to the public purse.
These ‘invisible constraints’ should not prevent reasonable exercise of local authority creativity in the public interest. However, it is the function of the courts on application by those aggrieved to ensure that public power is exercised properly and without abuse. For increased power inevitably brings increased responsibility.
Predetermination
Much myth has attended the law on bias and predetermination which has in fact matured quite reasonably and sensibly at judicial level. Unlawful predetermination in essence requires some specific evidence that the decision-taker had closed his or her mind at the time of taking the decision. And this is not lightly to be inferred. As with bias (per Porter v. Magill [2001] UKHL 67: “whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility” of bias) the law is part of the common law doctrine of fairness.
Essentially this holds that when public authorities take decisions they must do so and be seen to do so fairly. However, whilst judgments in this area are inevitably context-sensitive, (as the Court of Appeal pointed out in Persimmon Homes Teeside Limited v. R (Kevin Paul Lewis) [2008] EWCA Civ 746) “clear pointers” will be required if a councillor’s “….state of mind is to be held to have become a closed, or apparently closed, mind at the time of decision”. For predisposition to a certain point of view is always lawful since the decision-taker’s mind remains open. It is only when a mind is closed that unlawful predetermination occurs.
However, since perception is so often reality and since many local authority advisers had apparently been taking an over-cautious line on perceived boundaries of bias and predetermination in local government decisions, the government decided to give some statutory clarification in Chapter 4 of Part 1 of the Bill.
This essentially seems to replicate the existing common law position. So clause 13(2) provides that a decision-maker (being a relevant authority member) is not to be taken to have had or to have appeared to have had a closed mind when making the decision just because that decision-maker had previously done anything of relevance to the decision that directly or indirectly indicated what view the decision-maker took, or would or might take, in relation to a matter.
The “just because” is significant since this effectively maintains the current common law position that there needs to be particular evidence of predetermination at the point of making the decision. However, whilst the law on bias remains unaffected, in that local (and all other public) authority decisions must be and be seen to be taken fairly and without bias, the proposed provisions in the Bill effectively enshrine in statute the common law position on predetermination. The key point is that councillors have a primarily democratic rather than a judicial role and their actions should be judged in that context.
Given the political grandstanding around bias and predetermination in the run-up to the introduction of the Bill on 13 December 2010, this may seem to echo Shakespeare in being Much Ado about Nothing, However advisors of a less informed or more sensitive and cautious nature may find in these provisions the confidence to acknowledge the lawful bounds of local authority member activity and behaviour.
Standards
The Standards Regime is dead – long live a standards regime! Well not really, but sort of. For true, the large and complex standards machine installed by Part III of the Local Government Act 2000 is to be dismantled in England courtesy of clause 14 of and Schedule 4 to the Bill.
But in its place a local neighbourhood approach to standards is proposed. For relevant authorities (per clause 15(4)) will (by clause 15(1)) be under a duty to “promote and maintain high standards of conduct by authority members and co-opted members”. And whilst the power of the SoS to issue a model code of conduct in England will be removed (and consequently the duty on authorities in England to adopt it), relevant authorities in England will (by clause 16(1)) be empowered to adopt a code “dealing with the conduct that is expected” of authority members and co-opted members “when they are acting in that capacity”.
To this end (per clause 16(2)) a relevant authority may: revise its existing code of conduct, adopt a code to replace its existing one or withdraw its existing code without replacing it. But what happens if a written allegation is made to an authority (as at present) that a member has or may have failed to comply with the code of conduct? If so (and despite the absence of the formal legislative infrastructure) an authority must still “consider whether it is appropriate to investigate the allegation” and, if it decides that it is, it must “investigate the allegation in such manner as it thinks fit”.
If a member is found to have breached the code of conduct, an authority “may have regard to the failure” in deciding whether to take action and if so what action to take. As to publicity, an authority “may publicise its adoption, revision or withdrawal of a code of conduct in any manner that it considers appropriate”. But the function of adopting, revising or withdrawing a code of conduct must be exercised by the authority and cannot therefore be delegated under section 101 of the Local Government Act 1972.
On the question of interests, the Secretary of State may (by clause 17) make provision for requiring the monitoring officer to establish and maintain a register of member interests which may (amongst others) deal with the financial and other interests and other matters indicated in clause 17(2). This includes provision for potential sanctions which an authority may impose (other than suspension or disqualification) and requiring copies of the register to be made publicly available.
By clause 18 it will be a criminal offence for a member without reasonable excuse to fail to register or disclose a specified interest or to breach relevant regulations. On conviction the court may by order disqualify a member for up to five years. However, a prosecution under this section may be mounted only by or on behalf of the Director of Public Prosecutions. No prosecution may brought more than three years after the commission of the offence or (in the case of continuous contravention) after the last date on which the offence was committed. However, by clause 18(5) proceedings are usually likely to be brought within 12 months from “the date on which evidence sufficient in the opinion of the prosecutor to warrant the proceedings came to the prosecutor’s knowledge”.
However, whilst many will undoubtedly rejoice at the much-trailed dismantling of what was widely perceived to be an unwieldy and cumbersome regime, there is an equal concern that the conduct baby is being thrown out with the bureaucratic bathwater.
Sir Christopher Kelly, Chairman of the Committee on Standards in Public Life, makes a pungent point in relation to the proposed duty on authorities to promote and maintain high standards of conduct by members: “If this is to mean anything, in the committee’s view it is essential that there remains a national code of conduct so that both councillors and – most importantly – the public can judge what is acceptable behaviour and what is not. Leaving it up to each local authority to decide whether to have their own code and – if so – what it should contain, risks confusion. National codes of conduct govern the behaviour of MPs, civil servants and others in public life. Why are councillors judged to be different?”
At the very least a national code of local government conduct (such as there was before the current standards regime) and a measure to enshrine the principles of public life in a statutory order (the current one is scheduled for repeal) appear essential if there is to be a viable and credible approach to local authority standards. For whilst there is widespread agreement about the unsatisfactory nature of the present statutory regime, the proposed permissive approach to conduct may well see more local government conduct scandals hitting the headlines. And that would be bad news for politicians of all persuasions, at both local and national levels.
Finally
The Bill is a big beast spread across two volumes: one containing the substantive provisions (207 clauses) and the other with the 24 schedules – 406 pages in all. There are many other highlights including detailed provisions in clauses 10 – 12 and a new Part 1A of the Local Government Act 2000 concerning “permitted forms of governance” which will include “a committee system”, the community right to challenge, local referendums, directly elected mayors, neighbourhood planning and pay accountability. Those affected by the proposals will no doubt be giving very close scrutiny to each of them to ensure they are practicable and that any gremlins are surgically removed in the Parliamentary process.
It remains to be seen how the important new competence power will bed down and in particular the extent to which it will give authorities the creative confidence to make things happen differently. Whilst the power certainly does look like an improvement on well-being, the true scope and effect of the proposed limitations is likely to take some time to become apparent. And of course, as indicated, public authorities are always bound by the invisible threads of administrative law. But if confidence is the key to all positive action, then the measure looks likely to generate enough for “enterprising” councils “to boldly go where no authority has gone before”.
© Nicholas Dobson
Dr. Nicholas Dobson is a Senior Consultant with Pannone LLP specialising in local and public law. He is also Communications Officer for the Association of Council Secretaries and Solicitors.
