LGA urges Pickles to lift restrictions on general power of competence

The Local Government Association has urged Communities Secretary Eric Pickles to remove barriers preventing councils from making greater use of the general power of competence (GPC).

At a joint event in London today (23 July) with the National Association of Local Councils, the LGA will outline successful examples of where the general power has been used.

According to the association, there are a number of barriers to the wider use of the GPC, which was brought in through the Localism Act 2011.

They include restrictions on trading, with a limited number of company structures permitted, and charging, as charges made under the GPC “can only be made for discretionary services which recover costs and do not generate a profit or surplus”.

The LGA also highlighted legal restrictions, with the general power not extending the ability of councils to create byelaws or undertake enforcement.

The Association is campaigning for greater autonomy to be given to local authorities as they face up to a further 10% cut in funding unveiled in the latest Spending Round.

Sir Merrick Cockell, chairman of the LGA, said: “The GPC is giving councils greater freedom and confidence to think outside the box, be innovative and develop new services and partnerships. This is having a significant impact in the communities where it is being used and we are encouraging all councils up and down the country to look into how they could use it to best effect.”

However, Sir Merrick said what was needed was further devolution of decision making and power to local areas, so that government agencies, councils, the police, head teachers and health professionals work together to design services that work for their communities.

“This will ultimately save money and lead to better services,” he argued. “However, despite the impressive examples of GPC use…., it remains limited by constraints set by central government. Easing those restrictions would certainly help encourage others to unlocking the potential of using it.”

The case studies to be cited at the LGA/NALC event include Oxford City Council using the GPC to develop a school improvement support programme.

The programme has two main elements – leadership and teaching skills – and represents a £1.6m investment over four years.

Other cases where the general power has been used include:

• Newark & Sherwood District Council establishing a £2m Think Business Investment in Growth fund, financed by the New Homes Bonus. The scheme will provide loan finance to local businesses with growth potential.
• Stoke-on-Trent City Council taking forward the green energy agenda through a council-owned holding company and promoting regeneration.
• Hertfordshire County Council setting up a Local Authority Mortgage Scheme alongside district councils in the county, Lloyds TSB and the Leeds Building Society. The scheme indemnifies lenders and enables buyers to access the terms of a 75% mortgage with only a 5% deposit.

Under s.1 of the Localism Act a local authority has power to do anything that individuals generally may do, unless the action is prohibited by other legislation.