England & Wales Communities and society

Briefing: Localism Bill – a review

Briefing: Localism Bill - a reviewThe Localism Bill receives its second reading in the Lords on today, where it will without doubt be subject to some rigorous scrutiny.

Given the interest in the House of Lords on constitutional and governance matters, it can be expected that a number of aspects of the provisions for elected mayors will be thoroughly scrutinised. The Lords will also be interested in the retention of powers – Henry VIII clause – to introduce change through regulation on the Community right to Challenge, as well as the use of delegated legislation more generally in the Bill. Peers will also take a lively interest in the section on Assets of Community Value, and its capacity to address what is emerging as a heritage issue for localities.

After consideration by the Lords, the Bill will return to the Commons for consideration of Lords amendments. It is not anticipated that this will occur until after the summer recess, and that the Bill will receive Royal Assent in late October or November of this year. Particular provisions will be introduced in stages after the Bill passes into law

This blogpost outlines changes that have been made to those aspects of the Bill that impact on Localism, and provides an indication of issues that may well be debated in the Lords.

The topics covered are:

  • The general power of competence
  • Local referendums
  • Elected mayors
  • Community Right to Challenge
  • Assets of Community Value
  • Local Planning Regime

The most recent version of the Bill and other relevant documents, and an earlier LGiU briefing on the Bill can be found through the accompanying links.

Blogpost in full

General Power of Competence

The general power of competence provides a general discretionary power for local authorities to undertake wide-ranging activities, subject to a number of conditions. While the Secretary of State will have a reserve power to intervene and place limits on what authorities can do (note that a similar power under the well-being power was not used) he or she will also be able to introduce regulations removing constraints in other laws that restrict or prevent use of the new power.

Concerns have been expressed about the scope of this delegated power, and an opposition amendment listed the protective legislation and a number of statutory responsibilities that it was thought might fall within the scope of this regulatory power, and be open to repeal.

In response, the government has introduced a set of conditions that must be complied with in considering whether any particular piece of legislation should be varied. In summary, the new conditions are intended to ensure that the use of the provision is proportionate to the policy objective intended, that there is a fair balance between the public interest and the interests of any person adversely affected, that there is no removal of any necessary protection, that no person will be prevented from continuing to exercise any right or freedom that they might reasonably expect to exercise, and that any provision is not of constitutional significance.

The minister gave an assurance that, “The provision is about removing barriers to the legal capacity of authorities to act innovatively and in the best interests of their communities. It is not aimed at removing duties, nor is it, nor could it be, a general-purpose tool to remove any legislation that places a burden on local authorities”.

Local Referendums

A number of the practical issues involved in fielding and managing the proposed referendum scheme were raised in debates. The Bill will enable local people to petition for a referendum to be held on a subject of local concern. There is also provision for ward councillors to request a referendum. It will be possible for a referendum to be held on a ward basis.

The cost of holding referendums was raised – there is the potential for several to take place annually – as opposed to managing the existing system for public petitions which will be repealed. Government estimates the cost of a referendum as 50p a head if held at the time of an election and £1.50 if held at another time. The minister gave an assurance (the practical value of which may be uncertain) that the costs of holding referendums would be covered by the new burdens doctrine, which prevents the cost of new policies being imposed on local government collectively.

Other aspects of the referendum scheme that were raised include the setting of the petition threshold at 5%, which may be considered too low; the timing of referendums which could mean that a decision had to be taken before a referendum could be set up; and the non-binding nature of such referendums that could lead to expectations locally that would not be matched by the outcome. Concern was also expressed that the Secretary of State will retain the power to determine the extent of local matters that can be subject to a petition for a referendum.

The principal issue on council tax referendums was the retention of the initiative in determining levels by the Secretary of State, rather than enabling local people to determine council tax levels.

Elected Mayors

The Bill will trigger the creation of directly elected mayors, subject to confirmatory referendums, in twelve local authorities specified by order by the Secretary of State. This part of the Bill provoked some stringent criticisms, but remained unchanged. In addition to concern over the requirement to hold a mayoral referendum, the proposal that existing council leaders be transformed into shadow mayors in the pre-referendum period were reported as having provoked strong objections in a number of the cities concerned.  In defending the proposal the minister stated his belief that the new system will provide a short period in which people can see an elected mayor in practice and get a sense of what is on offer.

Objections were also made to the proposal to allow an elected mayor to be the chief executive of a local authority. The Bill will also allow the Secretary of State to require a specified local authority to confer a local public service function on its elected mayor, and to allow the transfer of functions to elected leaders as well as to elected mayors.

Community Right to Challenge

This part of the Bill will enable voluntary and community organisations, and groups of employees, to make applications to deliver services provided by the local authority. If successful, the council will be required to initiate a procurement process.

A number of amendments were aimed at ensuring that local authorities were responsible for managing the application process, rather than complying with requirements imposed by the Secretary of State. All these were rejected by the government, on the grounds that central controls would be there to prevent councils that were “determined to thwart the exercise of the powers”.

Amendments also called for an increase in the number of factors that would have to be taken into account by a local authority considering an application; one aim was to restrict the process to local applicants. Concerns were expressed about the potential of the scheme to create advantages for commercial bodies. The minister rejected this risk, relying on the title of the Chapter (not in itself a binding factor). He confirmed that the government intend that national organisations should be in a position to make applications to carry out services in particular local authority areas.

At Report stage a new clause was introduced, with agreement, which will allow the Secretary of State to provide advice and assistance to those taking part in application processes, procurement exercises, and service provision. Assistance will include funding and training. Bids by employees or former employees will be excluded from this scheme.

The government was also challenged on the extent of powers to fundamentally amend this part of the Bill, which it intends to be retained by the Secretary of State.

Assets of Community Value

The proposals for a Community Right to Challenge and for Assets of Community Value have both been subject to consultation processes this spring. During the passage of the Bill the government appears to be more conscious of the need to consider its plans in the light of the outcome of consultation in relation to Assets.

A number of issues that arose in debate – such as time limits for appeals – may be clarified at later stages of the Bill process, or may be resolved in regulations. Difficulties in defining general criteria to be taken into account by local authorities in categorising assets as being of community value were acknowledged, as were circumstances where assets straddled boundaries between authorities. Many MPs reported concern in their constituencies over the retention of local pubs and other privately owned businesses. Tensions over private interests will again be resolved in regulations.

Many MPs commented on the relevance of the Bill for the future of their communities, and the nature of the high street. There were queries as to whether the Bill goes far enough in protecting assets of community value from being transferred to the private sector.

Again, a new clause was introduced at Report stage, which will allow the Secretary of State to provide advice and assistance, include funding and training, to those taking part in application processes.

Local Planning Regime

The planning part of the Bill was not substantially altered in Committee – there were a few technical Government amendments as in other parts of the Bill. The debate covered several major topics on which the Government promised to reconsider with the option of bringing proposals at Report Stage. Most relevant to the community planning regime was a commitment to consider the potential role of local businesses.

The Secretary of State introduced this part of the Bill on Report, making a commitment to “genuine neighbourhood planning”, with the aim of ensuring that communities will develop in ways that make sense for local people. The overall approach is to remove national targets and rely on introducing incentives for growth to promote development.

Points made in debate included:

  • Reservations about the complexity of the community planning scheme, and ability of communities in less prosperous areas to contribute
  • That the duty on councils to cooperate would amount in practice to little more than a requirement to discuss
  • Reservations about the how far the promotion of sustainable development was built into the new framework.

The framework relies on parish councils as the basis of community planning, with local authority designated neighbourhood forums functioning in non-parished areas. Referendums will be held on neighbourhood planning proposals, to be decided on a simple majority of those voting. A move to create a 20% threshold of those eligible to vote was rejected by ministers.

Some progress was made in the Commons on the nature of neighbourhood forums, with points made in Committee leading to the introduction of an agreed revision of the constitution of forums at Report. The proposal is now for planning authorities to designate an organisation as a neighbourhood forum where:

  • There is no parish council
  • The organisation has been set up to further social, economic and environmental well-being of people living or wanting to live in the area, and / or promoting trades, businesses and professions in the area
  • Membership is at least 21, and is open to and includes people living or wanting to live in the area and elected members.

The government published its plans for engagement of the business community in Plan for Growth, a paper announced on 24 March, with two objectives. Parish Councils and neighbourhood forums will be required to consult and engage with local businesses.

This post is based on a LGiU members briefing written by Hilary Kitchin. Briefings are accessible to all officers and elected members of our member authorities. For more information on joining the Local Government Information Unit please follow this link