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Are Local Authorities being given too much power under the ‘LOCALISM BILL’

After some delay the Localism Bill has been published. It was certainly worth waiting for with its radical local government changes incorporated within its 207 clauses, 24 schedules and over 400 pages weighing in at 2.1 lbs. However, the Bill is particularly important in three respects. Firstly, the key promises in the Coalition Government’s Programme are included. Secondly, the Bill has radical provisions in the local government, planning and housing areas and thirdly, the Localism or Big Society zeal is striking, particularly for its potential within urban areas.


Pride of place is given to the power of general competence in Section 1. Long sought after by local authorities the implications are far reaching, particularly as the existing “well being” powers are not as wide ranging as previously thought following the 2004 LAML Case judgement which outlawed creation of a mutual insurance company. The “general power” as it referred to in the Bill will essentially enable any local authority “to do anything that individuals generally may do”.


The general power will only apply in England and be in substitution for the well-being power which under the Bill will then only apply in Wales.


Not surprisingly, there are some restrictions on the exercise of the power. It cannot be used where local authorities are not permitted to operate, such as making laws or levying new taxes. In exercising the powers there will always be an overriding requirement that a local authority must act reasonably and, where expenditure is involved, have the available finance. In addition, the Secretary of State has certainly reserve powers to amend the arrangements.


Whereas the LAML decision on the well-being powers has been seen as constraining authorities, the new general power should catalyse entrepreneurial local authorities and their officers to undertake innovative enterprises and seek new methods of service delivery. Local authorities will no longer have to review their sustainable community strategies or ensure activities are for the social, environmental or economic well-being of their areas. The new general power can be exercised “anywhere in the United Kingdom or elsewhere, for commercial purposes, with or without charge”. Whilst an authority must undertake commercial activities through a company or industrial and provident society or are unable to commercialise statutory activities, other provisions in the Bill provide opportunities to engage in new areas. By way of example, changes in the hitherto constraining housing revenue account could enable authorities to undertake commercial house building for sale or rent utilising their CPO powers and creating their wholly-owned estate agency. Indeed, local authorities could engage in property development generally adopting the planned tax incremental financing regime and encouraging external investment through issuing bonds. A great opportunity to stimulate renewal programmes in our towns and cities.


The power is so wide that authorities could, through their own arms length company, fund and operate any commercial activity provided it was “for the benefit of the authority, its area or persons resident or present in its area”. Thus in theory an authority in Lancashire could kickstart textile manufacturing and an authority in London could open a cookery school with a chain of restaurants.


The most striking aspect of the Bill is the emergence of the parish or town council as the anointed localism vehicle for the future. Parish councils will not only have the power of general competence (without the best value obligations imposed on other authorities) but also be able to exercise a range of other powers or promote activities within their area. These include:


  • the “right to challenge” through expressing an interest in providing any service run by a county, district or London borough council or any other designated public body. Such right is principally aimed at encouraging employee co-operatives and voluntary bodies but equally could enable services to be run by the parish council with its new found powers
  • the “community right to buy” is exercisable through the designation of land with “community value”, whoever owns it, and its subsequent purchase under arrangements set out in the Bill when the owner wishes to dispose of the land in question. This power will have implications for any unused or under used land in the area.
  • the right to trigger the creation of “neighbourhood development orders” requiring a simple majority of those voting at a referendum. This will enable the parish council or a neighbourhood forum to take over planning and, in conjunction with a community organisation, to exercise the “community right to build” affordable housing and local facilities. These particular powers could be supplemented by the existing public request to order disposal (PROD) provisions in the Local Government, Planning and Land Act 1980 which currently applies to local authority owned land
  • furthermore, Parish Councils will also be able to put other proposals to the community by way of referendum under the Bill and gain support for new projects


The parish and town councils generally thrive in rural areas. However, powers within the Local Government and Public Involvement in Health Act 2007 now permit a comparatively small number of local government electors within a specific area to trigger a community governance review which might then lead to the establishment of new parish councils in urban and suburban areas. We may find parish councils springing up in the villages of Bermondsey, Battersea or Bramhall if the electors within those three areas became dissatisfied with the services being provided by Southwark, Wandsworth or Stockport respectively. The new powers of parish councils could be extremely attractive to community activists and be a catalyst both for greater participation in, and improvement of, local public services wherever provided in England and thus enable the Big Society approach to flourish.


The principal restraint upon any authorities in the anachronistic procurement rules which, following the Roanne case, now affect local authority redevelopment schemes which are at odds with the Big Society ethos of the Bill and will unnecessarily stifle innovation and partnership with the private or voluntary sector. If the government is wishing to encourage such innovation and the creation of employee co-operatives under the general power, the procurement rules could prove an insurmountable hurdle and need to be amended.


Simon Randall CBE

Acting Chairman - CCM

E: [email protected]

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