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The Cities and Local Government Devolution Bill - much ado about nothing?

The Cities and Local Government Devolution Bill (the Bill) has completed its third reading in the House of Lords and has now moved to the House of Commons for consideration after the summer recess.

The Bill has been heralded by the Chancellor, George Osborne, as the means to deliver "radical devolution to the great cities of England" and empower them to operate the "levers to grow their local economy".

Many commentators have focussed on the potential of the Bill to rebalance our economy and enable the development of powerhouses outside of London and the south east of England. Crucially, the Bill also promises a fundamentally different approach to local democracy - as George Osborne said, a "revolution in the way we govern England". 

Where local authorities are prepared to cooperate and endorse a city-region mayor, the impact on how a range of services are delivered at a local level could be profound.

Key points in the Bill

Directly elected mayors and combined authorities

The Chancellor has made clear that the transfer of major powers is linked to directly elected mayors leading combined authorities. The government argues that a directly elected mayor provides a "powerful point of accountability" and facilitates the devolution of both powers and budgets.

In essence, the government proposes that mayoral combined authorities will be a single entity comprising the mayor and members of the combined authority. In the Greater Manchester model, the mayor will lead the Greater Manchester Combined Authority. The mayor will chair its meetings and allocate responsibilities to a cabinet made up of the leaders of each of the ten constituent councils.

General functions of the mayor and public authority functions

Under the Local Democracy, Economic Development and Construction Act 2009, local authority functions are limited to economic development, regeneration, and transport matters. Under section 5 of the Bill, this limitation would be removed for combined authorities. 

Section 6 of the Bill provides that the Secretary of State may make provision for the transfer of functions from a Minister of the Crown or a government department (public authorities) to a combined authority. This could include the transfer of property, rights and liabilities from the public authorities to the combined authority. It could potentially mean the abolition of the relevant public authority where it no longer has any functions.

It is therefore possible that the transfer of both the general functions and public authority functions to a mayoral combined authority could have a profound impact on how services are delivered to citizens and the way we are governed.  

Policing 

The functions of the Police and Crime Commissioners (PCC) for an area may transfer to the mayor where the appropriate authorities consent. Under the Bill, appropriate authorities are:

  • each county council - where the whole or part only of their area is within the area for the combined authority;
  • each district council - where the whole or part only of their area is within the area for the combined authority; or
  • in the case of an existing combined authority, the combined authority.

Assuming the appropriate authorities consent to the transfer of the functions of the PCC to the mayor, this could lead to a more joined up approach across the wider public sector to unlock rental value in the estate as a means to protecting front line services.  

In a recent article, we looked at the pressures facing commissioners and police forces more generally and the increasing desire to realise revenue receipts from existing estates to address shortfalls in funding from Whitehall. 

Funding

The Bill provides for funding of combined authorities. It allows the Secretary of State to provide for the combined authority, applying a levy for transport and any specified functions with the consent of the constituent councils. It should be noted that specified functions cannot include functions which may only be exercised individually by the mayor.  

Subject to order by the Secretary of State, a combined authority may be able to borrow to fund the specified functions with the consent of the constituent councils.

General power of competence

The Secretary of State may, by order, confer the general power of competence, as set out in the Localism Act 2011, on a combined authority. It is expected that the combined authority will align its general power of competence with that of its constituent councils. The constituent councils must first consent to the general power being conferred on the combined authority.

Changes proposed by the House of Lords

The House of Lords proposed a number of changes to the Bill before it moves back to the House of Commons. The key change proposed was to decouple the devolution of powers from a requirement to elect a mayor – a move described as a "wrecking amendment" by Lord Heseltine.  

But this key change does chime with some of the criticisms of the Bill, in that a mayor may not be the appropriate solution for all areas. This could be because of geographical size or the inherent diversity in and between regions. It is also a concept that does not find favour with the leaderships of some of our cities.

It remains to be seen whether the House of Commons with a Conservative Party majority will accept the Bill as amended by the Lords. The government has been very public in its belief that only an elected mayor can deliver the level of accountability necessary to justify a major transfer of powers and budget.  

Key issues for further consideration 

Current government policy is to encourage closer cooperation between public sector organisations. The creation of city-regions with elected mayors may be a step too far for some. Cooperation is one thing but a loss of power is another - grand plans for cooperation between local authorities and the wider public sector have been trailed before and have often failed.  

It is refreshing that the Bill is not prescriptive about the form of a combined authority. Instead, it allows councils to come together and work with the Secretary of State to set out the right solution, in terms of transferring powers, for that area. This approach means we could have a number of radically different delivery models between areas/regions – an antidote to the one size fits all approach that has been a common perception of Whitehall's approach to local government.  

Recognising the scale of the opportunity for local authorities is only the first step. Working out what this actually means for a city-region, the powers it will include and how budgets will, in practice, transfer and thereafter be allocated – could be another. There is, however, an opportunity to deliver transformation both in terms of how services are delivered and the outcomes achieved at the local level.

A number of key issues need to be considered further as commentators, councils and citizens wait to see how the Bill progresses through the House of Commons and how the Greater Manchester model evolves. As ever, the devil will be in the detail but as things stand the Bill promises to deliver more than idle talk.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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