Devolution to local government in England

Devolution to local government in England
Standard Note:
SN/PC/07029
Last updated:
22 December 2014
Author:
Mark Sandford
Section
Parliament & Constitution Centre
After the referendum on Scottish independence on 18 September 2014, much attention has
focused on the prospects for devolution of power and additional funding to local areas in
England. This has taken place in the context of the Prime Minister raising the issue of
‘English votes for English laws’ in the aftermath of the referendum. Many proposals for
passing power to local areas have been made throughout 2014, and political party
commitments have begun to appear.
This note summarises the main political developments and political party positions on the
transfer of powers to local government. It covers the Government’s proposals for the transfer
of powers to Greater Manchester; the Labour Party’s proposals for new powers for local
authorities; and debates over the creation of unitary authorities and local government
finance. It also provides a list of reports on these issues which have been published during
2014.
This note addresses the debate around devolution of power to local government in England
only. Local government is a devolved matter in Scotland, Wales and Northern Ireland. The
Library has published separate notes on the West Lothian Question and on the English
Question.
This information is provided to Members of Parliament in support of their parliamentary duties
and is not intended to address the specific circumstances of any particular individual. It should
not be relied upon as being up to date; the law or policies may have changed since it was last
updated; and it should not be relied upon as legal or professional advice or as a substitute for
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content of this briefing with Members and their staff, but not with the general public.
Contents
1
Introduction
3
2
The Government’s proposals for Greater Manchester
3
3
The Government’s proposals for Sheffield
4
4
The political parties
5
4.1
Conservative Party
5
4.2
Labour Party
5
4.3
Liberal Democrats
8
5
6
Debate in Parliament and the media
9
5.1
Political and Constitutional Reform Committee report
9
5.2
Communities and Local Government Committee report
9
5.3
Local government reorganisation
10
Further reading
11
2
1
Introduction
Following the ‘no’ vote in the September 2014 Scottish independence referendum, the Prime
Minister announced that, alongside proposals for additional devolution to Scotland, Wales
and Northern Ireland:
It is also important we have wider civic engagement about how to improve governance
in our United Kingdom, including how to empower our great cities — and we will say
more about this in the coming days.1
This follows the production of several reports during 2014 making proposals for the transfer
of additional powers to local authorities, or to local areas. The rationales for the proposals
include greater efficiency in the provision of public services and more effective promotion of
economic development. Changes proposed include:

Giving new powers in specific policy areas to local authorities;

The transfer of additional budgets alongside those powers;

Enhanced power over local taxes (council tax and business rates), additional local
taxation powers, and more flexibility around borrowing and financial management;

The creation of combined authorities and/or directly-elected mayors.2
Policies in this area have also begun to emerge from the main political parties. The
Government has also made proposals for the transfer of a number of powers and funding
streams to the Greater Manchester Combined Authority and the Sheffield City Region
Combined Authority, together with the creation of a directly-elected mayor for the Greater
Manchester area.
This note addresses the debate around devolution of power to local government in England
only. Local government is a devolved matter in Scotland, Wales and Northern Ireland. The
Library has published separate notes on the West Lothian Question and on the English
Question.
2
The Government’s proposals for Greater Manchester
On 3 November 2014 the Government published a document entitled Greater Manchester
Agreement, which set out new proposed powers for the Greater Manchester Combined
Authority.3 The document follows extensive negotiations between the Greater Manchester
Combined Authority and the Government. The Government proposes to establish a new,
directly-elected mayor for the whole Greater Manchester area. This will require primary
legislation, and the document suggests that the first election to the position could take place
in 2017. The Government proposes that the new elected mayor will receive the following
powers and resources:

1
2
3
A consolidated, multi-year transport budget;
See BBC, David Cameron’s statement on the UK’s future, 19 September 2014
See the Library standard notes on combined authorities and directly-elected mayors.
See also a Written Ministerial Statement at HCDeb 3 Nov 2014 c36-7WS
3

Responsibility for franchised bus services, railway stations, and ‘smart ticketing’ (an
example of this is London’s Oyster Card) in Greater Manchester;

A Housing Investment Fund of £300m over 10 years;

The power to produce a statutory spatial strategy, equivalent to the power of the Mayor of
London: this would be subject to rejection two-thirds of the ‘combined authority cabinet’
(i.e. the ten leaders of the combined authority’s member authorities);

An enhanced form of the Manchester ‘earn-back’ agreement;

The elected mayor will also become the Police and Crime Commissioner for Greater
Manchester.4
Meanwhile, the combined authority itself will receive the following additional powers and
resources:

Devolved business support budgets: the Growth Accelerator, Manufacturing Advice
Service and UKTI Export Advice;

Power to restructure further education in Greater Manchester, plus control of the
Apprenticeship Grant for Employers;

Joint commissioning, with the Department for Work and Pensions, of the next stage of the
Work Programme;

The opportunity to plan the integration of health and social care.5
The new elected mayor will be subject to scrutiny by the existing scrutiny committee of the
combined authority. The mayor’s spending plans can be rejected by the combined authority
on a two-thirds majority. However, ‘public service issues’ will be subject to an ordinary
majority of the voting members.
The combined authority will be able to take on some of the powers set out above – health
and social care, business support, and skills – before the passage of legislation to create the
new elected mayoralty. In the meantime, the Government plans to amend the order setting
up the combined authority to create an eleventh member (alongside the ten borough
members), who will be chair of the authority and hence be the interim Mayor until the first
election takes place.6
3
The Government’s proposals for Sheffield
A more limited set of proposals for additional powers for the Sheffield City Region combined
authority was published on 12 December 2014, with a Written Statement following on 18
December. The Sheffield City Region will receive the following powers:

4
5
6
The majority of the Adult Skills budget, which will be used to ‘build a new skills system’;
HM Treasury, Greater Manchester Agreement, November 2014, p. 1
Ibid.
If one of the existing local authority leaders on the combined authority is chosen as the interim mayor, they will
not be able to continue as leader of their local authority too. See David Paine, “Manchester combined authority
chair signals interest in appointed mayor role”, Local Government Chronicle, 11 November 2014.
4

The opportunity to introduce ‘Oyster-style’ smart ticketing on the city-region’s public
transport system;

Funding for the Sheffield-Rotherham tram-train pilot;

Consultation with the Department for Work and Pensions regarding joint commissioning
of the next phase of the Work Programme, from 2017;

Close working between UK Trade & Investment and the Sheffield Local Enterprise
Partnership, plus devolved spending on business support;

Decisions regarding disposal or regeneration of assets and land held across the public
sector to be taken jointly by the city-region and Government.7
Sheffield leaders have not agreed to establish a directly-elected mayor for the city region: the
Written Statement states that further devolution may be forthcoming, and that “as part of this,
Sheffield City Region will consider different options for improving local governance and
accountability, including the possibility of a directly elected Mayor”.8 No fiscal powers are to
be devolved as yet.
4
The political parties
4.1
Conservative Party
The Conservative Party produced a statement of policy within the Government paper The
Implications of Devolution for England, published in December 2014. It did not make any
commitments to devolve specific further powers:
…in the next Parliament we wish to continue with the empowerment of
neighbourhoods and parishes in England, not least through a huge further increase in
neighbourhood planning. The aim is to extend community rights and thereby mobilise
what Edmund Burke called the ‘little platoons’, strengthening social and civic
responsibility and building social capital -- fostering the Big Society.
……….
In addition, we want to go further and deeper with the localist reforms that have taken
place in England during this Parliament. This will include delivering more bespoke
Growth Deals with local councils, including metropolitan mayors where locally
supported, and working with Local Enterprise Partnerships and councils to promote
jobs and growth. To save taxpayers’ money and improve front-line services, we
propose to continue the drive to help local authorities join up different public services,
taking forward projects such as Community Budgets, the Better Care Fund, joint
working between the emergency services, and the Troubled Families programme. 9
4.2
Labour Party
The Labour Party published a review of the Department for Communities and Local
Government in December 2014, which gave some indications of powers which the party
would devolve. The document references the Adonis Review (Mending the Fractured
Economy) and states that Labour would devolve £30 billion of funding over five years to city
7
8
9
See Deputy Prime Minister’s Office, ‘Oyster-style' cards for Sheffield as Deputy PM agrees devolution deal, 12
December 2014; HCDeb 18 Dec 2014 WMS 141
HCDeb 18 Dec 2014 WMS 141
Cabinet Office, The Implications of Devolution for England, Cm 8969, 2014, p. 22-23
5
and county regions “with a single economic plan for the area”.10 An ‘English Devolution Act’,
covering powers such as “transport and housing, business support, skills and employment
support”, will be passed.
The document also committed to ending the New Homes Bonus; merging fire authorities;
reforming the system of funding distribution for local government; and introducing multi-year
budgets for local authorities. Local authorities will also be able to seek unitary status if they
so choose.
Additional details were available in a letter to local authorities from Hilary Benn, shadow
secretary of state for communities and local government, published on 25 August 2014. This
states that Labour, if elected, would:

Devolve £30 billion, over five years, of current public spending to local authorities,
combined authorities and local enterprise partnerships;

Devolve 100% of business rate revenue to combined authorities;11

Enable a single commissioning budget for health and social care;

Pass funding for further education for 19-24-year-olds to local authorities;

Loosening the criteria for the Troubled Families programme to allow its extension to
additional families, at local discretion (though no additional funding is mentioned).
Mr Benn made a similar range of commitments in his party conference speech on 22
September 2014:
… we plan to take £30 billion from Whitehall over five years and pass it to local
communities – to city and county regions across the length and breadth of the land to:
give them the means to create jobs; help people into those jobs; train them in the skills
they need for those jobs, invest in the trams, the buses, the railways and the roads to
help them get to work and businesses to thrive, and build the homes for those workers
and their children.
That’s why we’ll say to local authorities: “Help us to commission our new Work
Programme.”
That’s why we will give local areas control of the funding for further education for 19 to
24 year-olds.
That’s why we will put together the money for health and social care so that local
communities can provide better integrated care for the old, and for those with long-term
conditions and disabilities.
In a speech on 1 November 2014, Ed Miliband also stated that local authorities and
combined authorities would be given the power to regulate bus services.12 He also linked the
10
11
12
Labour Party, Zero Based Review number 3: A New Deal for Communities and Local Government, 2014, p. 8
The document says that this was a specific request of the LGA. The LGA, in Investing in our Nation’s Future,
called for councils to be allowed to retain 100% of business rates growth, instead of the current 50%.
For further details on combined authorities, see the Library standard note Combined authorities.
6
issues of local representation to reform of the House of Lords, making initial suggestions for
an elected ‘senate’ that would represent the nations and regions of the UK.13
These commitments follow on from the Labour Party’s letter to local authorities from Ed
Miliband and Ed Balls on 8 April 2014. The letter states that, if elected, Labour would pursue
the following policies:
…city and county region authorities and LEPs will receive radical new powers to:

Directly invest in infrastructure such as transport and housing;

Have greater control over skills budgets, alongside business control of the funding
of apprenticeships through LEPs and sector bodies;

Lead on delivering the Work Programme, with city and county regions able to use
local knowledge to decide which providers to use to get people back to work;

Ensure that city and county regions benefit directly from the proceeds of growth in
their area.
The letter also states that areas will require ‘stronger political leadership’ in order to draw
down these powers. It recommends the establishment of combined authorities or Economic
Prosperity Boards.14 The 8 April letter states that Labour would also require the reform of
Local Enterprise Partnerships so that their boundaries match the areas to which powers are
devolved. This idea has received support from other quarters.15
These proposals have affinities with more detailed proposals made by two reports published
this year by the Institute for Public Policy Research (IPPR), The Condition of Britain and
Decentralisation Decade. However, the Labour Party has not yet published a definitive policy
paper of its own on this matter.
Labour have also expressed support for the concept of ‘local public accounts committees’.
This would be broadly equivalent to an overview and scrutiny committee with the power to
review the financial performance of a wide range of public bodies at local level. Hilary Benn
spoke in favour of this idea at the 2014 Labour conference.16 The idea originated in a report
from the Centre for Public Scrutiny in December 2013.17
Additional reports which are associated with the Labour Party, but which are not official party
policy, are the Adonis Review of Growth, Mending the Fractured Economy;18 a report from
the Labour group at the Local Government Association, People Powered Public Services;
and the Smith Institute pamphlet Labour and Localism: Perspectives on a new English deal.
13
14
15
16
17
18
Labour Press, Labour announces plans to give regions and nations greater power and a stronger voice in
Westminster, 1 November 2014
See the Library standard note on combined authorities. Like combined authorities, Economic Prosperity
Boards can be established under the Local Democracy, Economic Development and Construction Act 2009.
None have so far been established.
David Paine, “Lord Adonis: reduce the number of LEPs”, Local Government Chronicle, 23 September 2014
See Kaye Wiggins, “Counties leader: 'Put us in charge and we'll save hundreds of millions’”, Local
Government Chronicle, 7 October 2014
See David Paine, “Benn: group together to gain powers”, Local Government Chronicle, 24 September 2014;
David Paine, “Labour tells councils: prepare for devolution”, Local Government Chronicle, 22 September 2014
Centre for Public Scrutiny, A local public accounts committee for every place: a CfPS proposal, December
2013
Lord Andrew Adonis, Mending the Fractured Economy, Policy Network, 2014, p. 7-8. Though published by
Policy Network, the report is described as ‘an independent review for the Labour Party’.
7
4.3
Liberal Democrats
The Liberal Democrats included a statement of policy in the Government paper The
Implications of Devolution for England. This reconfirmed their policy of ‘devolution on
demand’:
… the Liberal Democrats have called for a process of “Devolution on Demand.” We
would deliver this through an “English Devolution Enabling Bill” and Liberal Democrats
would introduce legislation in the next Parliament which would empower local areas
within England. The “English Devolution Enabling Bill” would provide for areas to be
able to demand from Westminster and Whitehall the powers that they want from a
menu of options. The menu would include many of the powers devolved to the Welsh
Assembly, though the exact details of the powers available would be subject to crossgovernment confirmation and the UK Government would retain a list of reserved
powers. In order to successfully claim the powers they wished, a given area would
need to demonstrate it met tests around geography / population, competence, local
democratic mandate, a fair electoral system and a transparent and accountable
governance structure. No area would have a specific governance structure imposed
upon it from Whitehall and Westminster as condition of new powers being granted.
There has been considerable work done that demonstrates how these tests could
work. There would always be a presumption in favour of powers being granted to an
area.
Under this proposal we would see cities, counties, regions and other appropriate
geographic entities develop their own elected bodies with their own suite of
administrative, legislative and taxation powers which worked for the people and
communities in their area. Our aim is that over time all parts of England would be
covered by these arrangements.19
This confirmed the Liberal Democrat policy, announced at their spring 2014 conference, of
‘devolution on demand’ for any area of England with a population over one million. 20
Following this, the party produced a policy document entitled Power to the People in April
2014.21 This paper proposed:
… an English Devolution Enabling Act whereby devolution is in principle available to
Cornwall (recognising its historic, cultural, and linguistic claim to autonomy), to London
(which already has its own limited, devolved institution in the shape of the GLA), and to
any principal local authority (or group of principal local authorities with contiguous
boundaries) outside London which has a population of a million or more people. The
authority or authorities acting together would then constitute a legislative assembly. A
condition of this change would be clear public support and a move by any authority
invested with, or created for, legislative purposes to elections by STV/MMC .22
In each case, the local authorities in the relevant area would negotiate a deal with the
Secretary of State based on the devolution of a bespoke package of powers. The paper
specifies that the proposals might lead to strengthened existing institutions (giving the
example of Cornwall Council), loose associations of authorities, or new directly-elected
assemblies in areas covered by more than one existing authority. The paper also states that
19
20
21
22
Cabinet Office, The Implications of Devolution for England, Cm 8969, 2014, p. 29-30
See Mark Smulian, “Lib Dems to call for devolution on demand”, Local Government Chronicle, 6 Feb 2014.
Cornwall would also be included in this offer, despite having a population of under one million, due to its
distinctive characteristics.
Liberal Democrats, Power to the People: Policies for Political and Constitutional Reform, April 2014
Ibid., p. 42-3. STV is the Single Transferable Vote; MMC refers to the ‘mixed member’ or ‘additional member’
system used in the Scottish Parliament and National Assembly for Wales.
8
“Liberal Democrats strongly advocate Devolution Agreements which do not entail any
increase in the overall number of politicians or cost of politics”.23 Additional local taxation
powers would not be immediately available to the new authorities.
Nick Clegg made a speech on 21 September 2014 maintaining the party’s commitment to
this approach:
Currently the best local councils can hope for is to be granted new powers when the
government of the day deigns to do so. Instead we must guarantee a new, legal right
for local authorities to demand powers - decentralisation on demand if you like - with
central government having to meet a much higher threshold before it can refuse.
My aim is a statutory presumption in favour of the decentralisation of powers away
from Whitehall. I see no reason why we cannot publish draft clauses for this early next
year alongside our other pressing reforms.24
5
Debate in Parliament and the media
5.1
Political and Constitutional Reform Committee report
The Political and Constitutional Reform Committee produced a report in January 2013,
Prospects for codifying the relationship between central and local government.25 This
proposed the creation of a code setting out the nature of the relationship between the two
levels of government, which would be constitutionally entrenched. It proposed that grant
funding for local government be replaced by the assignment of a proportion of national
income tax; and that the Parliament Act 1911 be amended so that the consent of the House
of Lords was required for any adjustment to the code.26
Graham Allen MP, the chair of the Committee, introduced the Local Government
(Independence) Bill 2014-15 into the House of Commons on 9 July 2014, with the aim of
introducing a statutory code as proposed in the Committee’s report. At the time of writing, the
Bill has not received a second reading.
5.2
Communities and Local Government Committee report
In July 2014, the Communities and Local Government Committee published a report entitled
Devolution in England: the case for local government.27 The Committee stated:
Fiscal devolution presents an opportunity to improve accountability, to hold local
politicians to account for their successes and failures and, therefore, to improve
democracy. By giving politicians outside Westminster the responsibility for raising, as
well as spending, money locally, fiscal devolution would bring decisions on how that
money is generated and spent much closer to local people—and make those who
make such decisions much more visible. This would enhance the standing of local
democracy and, by extension, democracy throughout the country. 28
The Committee also suggested that any fiscal devolution would have to include redistributive
arrangements. Some local authorities have far smaller taxbases than others, and would
23
24
25
26
27
28
Ibid., p. 43
Nick Clegg, “This opportunity cannot be hijacked”, Liberal Democrats, 21 September 2014
Political and Constitutional Reform Committee, Prospects for codifying the relationship between central and
local government, HC-656, 2012-13, 29 January 2013.
Ibid., p. 33
Communities and Local Government Committee, Devolution in England: the case for local government, HC503 2013-14, July 2014
Ibid., p. 17
9
struggle to deliver services if they were restricted to income raised from their own locality.
Powers should only be devolved to areas which can demonstrate that they function as an
‘economic entity’; the Committee did not argue that any particular type of area (i.e. cities or
counties) should have more powers devolved. They stated that it would not be necessary for
all areas to take on fiscal devolution at once, and that any area which did would have to
demonstrate:
fiscal competence, which would include the prudent management of borrowing; a
capacity for strategic planning and decision-making leading to economic growth; clear
plans as to what they would do with their enhanced powers, including how they would
cope with an unplanned and significant change in forecast revenue; and, importantly,
an appetite to make them work.29
The Committee also recommended that additional powers should also be made available to
combined authorities, separately from any fiscal devolution that takes place in the near
future.
5.3
Local government reorganisation
During 2014, some discussion took place about the possibility of further local government
reorganisation – creating further unitary authorities in areas which currently have two tiers of
local government.
In September 2014 Stephen Williams MP, Parliamentary Under-Secretary at the Department
for Communities and Local Government (DCLG), called for reorganisation around ‘cities’ and
unitary counties.30 Mr Williams stressed that he was speaking in his capacity as a Liberal
Democrat MP. Meanwhile, Kris Hopkins MP, also a minister at DCLG, opposed any further
reorganisation.31 He is supported by the Secretary of State, Eric Pickles.
The Labour Party’s Zero-based review supports unitarisation on demand, but the paper stops
short of recommending or exhorting reorganisation:
Two tier areas should explore scope to become ‘Virtual Unitaries’, creating a much
more tightly integrated and governed approach to collaboration, which preserves
individual districts but integrates many of their services under a single jointcommissioning structure and saves money.
…
We will also expect local authorities to collaborate and achieve significant savings
through collaboration, becoming Combined Authorities and reorganising where they
decide to.32
Several county councils have explored the possibility of creating unitary authorities.
Warwickshire and Leicestershire have commissioned internal reports; in Buckinghamshire,
29
30
31
32
Ibid., p. 33-34
Mark Smulian, “DCLG minister calls for reorganisation”, Local Government Chronicle, 6 October 2014
See Mark Smulian, “Minister opposes ‘disruptive’ unitary reorganisations”, Local Government Chronicle, 6
October 2014
Labour Party, Zero Based Review number 3: A New Deal for Communities and Local Government, 2014, p.
12-14
10
an organisation called Buckinghamshire Business First commissioned a report which claimed
a potential for £20m savings annually if a unitary authority was created.33
There have been no proposals from other bodies for a new round of reorganisation. The
NLGN’s paper As Tiers Go By, published in October 2014, analysed the potential costs and
benefits of future reorganisations, and concluded that the likely financial benefits would be
modest.34 It recommended that the incoming government in 2015 should immediately clarify
either that reorganisation is an option, or that it is entirely ruled out, during the 2015-20
Parliament.
6
Further reading
The following reports contain proposals to devolve power to local authorities, combined
authorities or local enterprise partnerships. The majority have been produced during 2014.
The powers and budgets proposed for devolution are very varied.
NLGN, Labour’s local offer: ideas for a radical local manifesto, November 2014
Commission on Non-Metropolitan England, How the other half grows, November 2014
CCN, County Devolution: Interim Findings, November 2014
Grant Thornton, 2020 Vision, October 2014
CIPFA, Things can only get worse: a call for sustainable public finance, October 2014
New Local Government Network, As Tiers Go By, October 2014
Independent Commission on Local Government Finance, Public money, local choice,
October 2014
Centre for London, The Brightest Star: A Manifesto for London, October 2014
City Growth Commission, Human Capitals, Connected Cities, Powers to Grow, Unleashing
Metro Growth [four papers], RSA/Core Cities Group, 2014
Key Cities, Charter for Devolution, September 2014
Cox, Henderson and Raikes, Decentralisation Decade: A plan for economic prosperity, public
service transformation and democratic renewal in England, IPPR/PwC, September 2014
Mark Morrin and Phillip Blond, Devo-Max, Devo Manc: Place-Based Public Services,
September 2014
Centre for Cities, A manifesto for a more prosperous urban Britain, September 2014
CCN, Our Plan for Government 2015-2020, 2014
Local Government Association Labour Group Innovation Taskforce, People Powered Public
Services, July 2014
33
34
See Buckinghamshire Business First, Strategic Financial Case for Local Government Reorganisation in
Buckinghamshire, 2014
New Local Government Network, As Tiers Go By, October 2014, pp.14-18
11
Lord Adonis, Mending the fractured economy, Policy Network, July 2014
Local Government Association, Investing in our Nation’s Future, June 2014
Lawton, Cooke and Pearce, The Condition of Britain: Strategies for Social Renewal, IPPR,
June 2014
John Healey and Les Newby, Making Local Economies Matter, The Smith Institute, May
2014
Wilcox, Nohrova and Williams, Breaking Boundaries, Centre for Cities, March 2014
Smith Institute, Labour and localism: perspectives on a new English deal, January 2014
Gash, Randall and Sims, Achieving Political Decentralisation, Institute for Government,
January 2014
London Finance Commission, Raising the Capital, GLA, 2013
Lord Heseltine, No stone unturned in pursuit of growth, BIS, 2012, plus Government
response, 2013
12

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