Who needs the Localism Bill?

Although due to gain Royal Assent by the end of the year, the final shape - and potential effect of - the Localism Bill is still unclear in many respects. In the first of a series of articles, Derek Bedlow reports on the efforts of a group of leading local authority lawyers to make some sense of it all.

The main aim of the Localism Bill, as expounded by Eric Pickles on introducing the bill in December last year, is to “radically transform the relationship between central government, local government, communities and individuals”.

The ways by which the bill intends to meet this aim is by creating new rights for communities to influence - and challenge - council decision-making, give local residents more say over planning decisions and to provide local authorities with greater legal powers to act in the interest of their communities – the general power of competence.

Yet, in many respects, the Localism Bill as drafted raises more questions than it answers.

In practice, how willing will the government be to relinquish power to local authorities over key political issues such as planning and social care? For issues such as these on which central government will take the blame if they go wrong, will it really want to put itself in a position where policy and delivery is determined at a local level? To what extent will localism prove to be robust in the face of, as Harold Macmillan put it, “events, dear boy, events”?

One of the principles underlying the bill is that the public should both direct and scrutinise local authority policy to a far greater extent than they do now. But is there really likely to be a sufficient degree of engagement between the public and councils for many of the measures of the Localism Bill to work effectively?

How will it interplay with existing laws over which the government has less influence, such as the public procurement regime? For instance, how will transferring services to staff-owned mutuals be achievable without running full-scale tenders?

More generally, to what extent will the bill meet its own objectives?

With this in mind, law firm Pannone convened a roundtable of experienced heads of legal at Lambeth Town Hall at the end of June to examine the practical effect of the Localism Bill and to look at how councils can take advantage of it.

Those of most direct effect on legal departments are the operation of the general power of competence, the future of standards following the abolition of the Standards Regime by the bill, the challenges created by the proposed Community Right to Challenge and Assets of Community Value and how the desire for localism and the need for strategic planning can co-exist, if at all.

Held, perhaps ominously, in Room 101 of the Town Hall, delegates were not afraid to relate their greatest fears about the potential effect of the bill, as well as their hopes and realistic expectations.

The conclusions of the group will be published on this page over the next few weeks. In week one, we look at whether the general power of competence will live up to its name. In week two, the debate turns to the proposed abolition of the Standards Regime and its replacement.

Power play

The major question hanging over the proposed general power of competence for local authorities is whether it will, in practice, actually enable councils to do many things that they cannot do already.

Successive Local Government Acts have already provided fairly extensive powers to local authorities to expand their roles, not the least the Well-Being power introduced in 2000, which – in theory at least – significantly extended the ability of local authorities to get involved in activities outside of their usual remit.

Nicholas Dobson, consultant at Pannone, quoted the submission of Stephen Houghton, the Leader of Barnsley Council, to the CLG committee this year, when he suggested that when it came to the ability of local authorities to act, resources are usually much more of a constraining factor than vires issues.

In many cases, other delegates suggested, the existence or otherwise of a specific legal power was secondary to the attitude of a council towards taking risks. Some authorities were already quite bullish about what they were able to do under existing powers; others cautious and the creation of a general power of competence would be unlikely to change these councils' respective cultures overnight.

“There will always be a high water mark where an authority will do something where the courts will say: we're not comfortable with local authorities being in that sort of area,” - Andrew Frosdick

Looked at from the other end of the telescope, there was also some scepticism that even where the a general power did provide more confidence to local authorities, other legislation was likely to continue to constrain the ability of local authorities to act in other ways, not least equalities law, the public procurement framework and the fiduciary duty of local government members and officers to look after public money responsibly.

“The power itself seems to be quite well-drafted and does what it says on the tin, but the competence power is the bit of the iceberg that you can see on the surface – there are all sorts of other things that can sink the ship below the surface,” Nicholas Dobson said. “There's a narrative amongst ministers that all of this is the fault of local authority lawyers taking very cautious decisions and while there may be some truth in that, most local authority lawyers I know want to say yes, especially of they are brought at the genus of the decision and are able to construct the thing in a way that is going to work.”

The boundaries of the existing powers were clearly demonstrated by the LAML decision last year, which found that the scope of the Well-Being powers did not extend to the creation of a mutual insurance company by a group of London councils.

Given the complexity of local government law, the extent to which other legislation will impinge on the exercise of the general power is difficult to predict. The report of the CLG Select Committee suggested that the government should work with the LGA to determine where the general power of competence would be constrained by other legislation and regulation and to set out specific ways that the general power would enable local authorities to extend their roles beyond the Well-Being powers.

However, Nicholas Dobson pointed out that the government does not see its role as providing guidance in this way but rather, having granted local authorities the general power, it expected them to work out how it should be used.

In this scenario, the attitude of the courts to the use of the general power will be critical. Not everybody was convinced that the courts were ready to grant councils a significant degree of levity even after the general power is introduced.

“There will always be a high water mark where an authority will do something where the courts will say: we're not comfortable with local authorities being in that sort of area,” Andrew Frosdick, Borough Secretary of Barnsley Metropolitan Borough Council said. “Administrative law has always provided some natural boundaries where judges just weren't ready for things. For example, I could never get to the bottom of how the court reached its decision on the GLC's Fare's Fair policy based on the legislation, but the judges clearly just weren't comfortable with what was going on and they were able to find ways to prevent it from happening.”

Eleanor Hoggart, Assistant Practice Director of Legal Services Lincolnshire, suggested that if the courts continued to take a narrow view of local authority powers, then councils would remain cautious about pushing the boundaries. “The issue is about national appetite for risk and how the courts will approach these things,” she said. “Are local authorities going to be confident to take these steps and become the next LAML? I don't know if there's the appetite for that at present.”

There was also some feeling, however, that the creation of the general power would give a clear indication to the judiciary that the government deliberately intended for local authorities to enjoy wide powers, as Nicholas Dobson told delegates: “My take on the problem of wellbeing powers is an absence of confidence. LAML opened up a can of worms, which led to quite a narrow interpretation of wellbeing powers and led to a diminution of confidence in the market toward local authority powers.

“If the general power of competence increases confidence in the robustness of local authority powers, then it is likely to be effective. It gives a positive expression of the will of Parliament with regard to local authority powers which would be helpful in the event of a legal challenge.”

Mark Hynes, Director of Governance and Democracy at the London Borough of Lambeth agreed. “This is one of the more positive aspects of the bill,” he said. “There is this perception that the lawyers are saying: you can't do that while lawyers often complain that vires issues are thwarting the aspirations of fellow officers. But now we have the general power of competence - albeit subject to any prohibition that may exist - it should give us sufficient comfort to be seen to be more doers than naysayers.”

“The general power is wider than the existing powers because, before, it wasn't just a case of finding what might prohibit you from doing something, you also had to find the basis on which you could do something.”

“If the general power of competence increases confidence in the robustness of local authority powers, then it is likely to be effective. It gives a positive expression of the will of Parliament with regard to local authority powers which would be helpful in the event of a legal challenge.” - Nicholas Dobson

This does not mean, however, that the government could not take further steps to ensure that this is how the general power will be interpreted by the courts. Tony Kilner, policy officer for the Association of Council Secretaries and Solicitors (ACSeS), said that while he agreed that the general power should prove to be more robust than the Well-Being powers, the survival in law of a plethora of statutory permissive powers contained in a variety of legislation would send a mixed message to the judiciary.

He said: “It would more comforting in a way if the power was complemented by a repeal of all of the other powers that are now unnecessary. That would mean that the general power of competence would have a broad meaning to it because that would be the only power you would rely on rather than looking for a certain section in the Children's Act or the Highways Act that gives you the power to do something. The power does need to graduate a bit further if High Court and Appeal Court judges are not to get cold feet about what they are allowing local authorities to do.”

So, with some caveats, the general power of competence was broadly welcomed by the delegates, even though, as the delegates also noted, it may take some time for the cultures of individual councils to catch up with the possibilities it presents. Moreover, for the general power to achieve its stated aim, the government will have to hold its nerve when the consequences become apparent, for good or ill.

“I think that it is really welcome,” said Susan Tovey, Head of Legal and Democratic Services at Test Valley Borough Council and the current President of ACSeS. “I think it will give people comfort that they can do something rather than initially assuming that they can't. My concern is that of somebody goes and does something really innovative that the government doesn't like, they will come in with regulation to restrict the general power. But we should embrace it.”

Determining how to deal with the new standards regime suggested by the Localism Bill is a difficult task when - despite Royal Assent being only months away - it remains very unclear what the final form of that regime will look like.

The situation is complicated further still by the apparently contradictory measures contained in the bill in its present draft. While on one hand, local authorities will be under a duty to “promote and maintain high standards of conduct by local authority members”, the existing national code of conduct will be abolished.

Instead, local authorities will be free to determine their own codes of practice for members, with the bill suggesting that misconduct by members should be treated as a criminal and a new offence of “A deliberate failure to register and disclose interests” will be created, punishable by a fine of up to £5,000 and an order for disqualification.

According to the government, the present Code of Conduct regime has encouraged “frivolous and malicious complaints” against councillors whilst the cost of maintaining Standards for England creates an unnecessary “burden” for taxpayers.

At the time of writing, however, a group of peers was proposing an amendment to the bill to re-introduce a national code of conduct, to require councils to have independently chaired standards committees and to remove criminal sanctions from member misconduct, except where such misconduct would already constitute a criminal offence.

“My concern is that the whole basis of the 2000 legislation – targeting low level behaviour - will be lost. They could have looked at the code, improved the code, but what we're left with currently is a real mess. How do you moderate behaviour without a statutory deterrent?” - Mark Hynes

These amendments will be proposed when Parliament reconvenes in September, but in the meantime, the roundtable delegates would broadly concur with the Lords’ suggestions.

Most agreed that doing away with a national code for member conduct seemed almost perverse at a time when public confidence in elected politicians was at a low ebb - and when organisations in the corporate sphere were under increasing pressure to improve their governance arrangements and ethical behaviour.

“How do you fulfil the statutory requirements under the bill as it is drafted, to promote good behaviour, without the deterrent of a mandatory code?” Nicholas Dobson asked. “It's a bit like abolishing the driving test and the highway code and expecting people to drive safely.

“What I really don't understand is that they are taking out the statutory instruments that underpin the general principles of public life, which are mother's apple pie in terms of corporate governance and would make an excellent basis for a mandatory code. When all sorts of organisations have a code of conduct for their staff, as do MPs, why should councillors be exempt?”

There was also some uncertainty about how effective in practice criminalising member misconduct was likely to be.

“There are already ways of dealing with serious misconduct in public office of that sort, but the police and CPS are often not interested in technical breaches of the law like this,” Mark Hynes told the meeting. “We see that often with electoral law, where you very rarely get prosecutions for minor infractions.”

The other issue identified with abolishing the code is that many important but ‘low level’ requirements imposed on  councillors’ behaviour - such as the requirement to show respect to other members and officers - would simply disappear if the only offences for which members would be held to account were ‘criminal’ ones.

Although it was suggested that councils could be held responsible for councillors’ bullying of officers by the Equality Act, much of the behaviour which can be currently addressed by the mandatory code may go unchecked in future.

For these reasons, the majority view was that some form of mandatory code should be retained by the Localism Bill - and that that code needs to have teeth if it is to be effective.

Mark Hynes told delegates: “My concern is that the whole basis of the 2000 legislation – targeting low level behaviour will be lost. I know we all rely on censure, but I do have difficulty with this part of the bill. I don't disagree necessarily with the abolition of Standards for England, but they've got their saving there now, so why don't they allow local authorities to just get on with it in the way they have done since? They could have looked at the code, improved the code, but what we're left with currently is a real mess. How do you moderate behaviour without a statutory deterrent?”

Although the Lords’ proposed amendments are suggesting that criminal sanctions be removed altogether, the delegates saw no reason why criminal sanctions and a code for less serious offences could not co-exist.

Tony Kilner told the meeting: “It seems that the Department for Communities and Local Government (DCLG) is under the impression that there will be either a criminal set of sanctions and a voluntary code or a mandatory code. This doesn't seem correct to me: you could have criminal sanctions for some offences, and still have a mandatory code for others. There is no reason why you cannot have two frameworks.”

Eleanor Hoggart suggested that the Local Government Ombudsman could be given more teeth when dealing with member misconduct, not least by being given the power to make mandatory awards against local authorities. The Ombudsman is likely to be fielding many more complaints if the national code of conduct is abolished, but will still lack real teeth with which to deal with them.

“The elephant in the room for me is the Ombudsman,” Eleanor Hoggart said. “The issue of mandatory Ombudsman's awards keeps slipping in and out of bills, but I would have thought that you could get a double win by making member misconduct an Ombudsman issue rather than a matter of law.

“If we’re saying that some issues are criminal but others are less serious, then you're talking about issuing fixed penalties which is bonkers. Why bother with law? By making it a matter of maladministration, you can cover a wide range of issues. And you can cover the parishes as well, which has always been a huge gap for me.”

“It seems to me that there's a good opportunity to lobby for a standard code which doesn't produce different results in different local authorities and creates a recognisable set of standards." - Tony Kilner

Support for retaining some form of  mandatory code was not unanimous however. Mirza Ahmad suggested that a new mandatory code would be “entirely against the spirit of localism”, pointing to the model code that ACSeS is in the process of drafting. The project to produce a model code is being led by Julie Belvir and Deborah Collins at the London Boroughs of Croydon and Southwark respectively. When complete, ACSeS intends to promote to the code councils through the Local Government Association.

“One size doesn't necessarily fit all,” Mirza Ahmad said. “There's no reason why councils couldn't adapt it for implementation in their own codes. Authorities can take the provisions and incorporate them into their own codes. That's localism at its best.”

It was generally agreed that, in the absence of a mandatory code, a model code would be a useful benchmark for councils to utilise, in whole or in part. Again, however, adopting a voluntary code is one thing - being able to impose the sanctions required to enforce it quite another. While it is well established that local authorities are fully entitled to publicly name and censure members that have moved out of line, suspending members is specifically prohibited by the bill.

The most popular suggestion amongst the delegates - levying fines from member allowances - was considered to be possible, but potentially difficult to enforce in the absence of central government guidance, which few expected to be forthcoming.

The road from here

It is clear from the debate that most of the delegates had significant concerns about the maintenance of member conduct once the Localism Bill comes into effect.

The good news at least is that unlike, perhaps some other aspects of the bill, the future of the standards regime is not yet set in stone and there remains time and space for the government to be persuaded that its plans need more work.

“There does seem to be a hiatus with the standards measures in the bill,” Tony Kilner told the meeting. “It seems to me that there's a good opportunity to lobby for a standard code which doesn't produce different results in different local authorities and creates a recognisable set of standards.

“That could be produced by the LGA as a platform, subject to the bill mandating that councils should have a code. If we don't campaign for it, we may end up with an even more impractical compromise than what's in the bill already.”

List of attendees:

Mirza Ahmad, Corporate Director of Governance, Birmingham City Council

Jonathan Carr-West, director, Local Government Information Unit (LGIU)

Stephen Chalcraft, head of public sector, Pannone

Nicholas Dobson, consultant Pannone

Rachel Dooris, Head of legal and Governance, Redcar and Cleveland Borough Council

Andrew Frosdick, Borough Secretary, Barnsley Metropolitan Borough Council

Eleanor Hoggart, Assistant Practice Director, Legal Services Lincolnshire

Philip Hoult, editor, Local Government Lawyer

Mark Hynes, Director of Governance and Democracy at the London Borough of Lambeth

Tony Kilner, policy officer, the Association of Council Secretaries and Solicitors (ACSeS)

Victoria McNeill, head of law, Norfork County Council and practice director,  nplaw

Susan Tovey, Head of Legal and Democratic Services, Test Valley Borough Council and President of the Association of Council Secretaries and Solicitors (ACSeS)