| SPOTLIGHT |
Peter Keith-Lucas looks at what the future holds for local authority corporate governance, and analyses whether this offers a positive or troubled prospect.
Say what you like about the Local Government Act 2000, but it was a comprehensive review of the structure and rules of local government.
What I will refer to as “the 2000 Act Settlement” comprised a package of the move to executive government and the Code of Conduct. If authorities were to move from decision-making in open multi-party committees, and 95% of decisions were now to be taken in single-party executives, with reduced public access, there needed to be a governance framework to ensure that this did not result in wholesale corruption and abuse of power. So council retained control of the budget and policy framework, non-executive functions including employment of staff were defined in regulations, and council took on the new role of scrutiny to control a runaway executive.
On the standards side, Nolan recommended and the government agreed that it was unacceptable that executive members could seriously misconduct themselves, damaging the reputation of their authorities and of local government as a whole, and yet, if they did not attract a three-month custodial sentence, they would remain in office and continue that abuse until the next elections in four years’ time, and even then the absence of real competition in the electoral system in many areas meant that most of the abusers would still be returned to power. So the old National Code was revamped to introduce a set of conduct rules and to replace the pecuniary interest regime with personal and prejudicial interests, and the Standards Board / Adjudication Panel regime was introduced to enable serious offenders to be removed mid-term.
It gave a new dynamic with formal statutory status and powers to the political leadership of an authority, but put in place a balancing set of safeguards.
We can criticise the 2000 Act Settlement. We can say that it largely disenfranchised the ordinary councillor, and by reinforcing party control it does not cope well with balanced authorities. We can point out that it has taken nine years and we still have not got the standards regime in balance. We have precious few examples of really-effective scrutiny, and even fewer of executive decisions being changed as a result of call-in; but overall, for such a radical change, and with a bit of subsequent fine-tuning, it has worked.
But at a certain point, repeated fine-tuning becomes meddling and begins to upset that settlement. When you examine the Hazel Blears legislative legacy, it is sometimes hard to discern the Big Idea. So the 2007 Act brought us a further piecemeal introduction of unitary authorities, parts of which are clearly heading back into the courts if they are not lost in the general election. It introduced ward councillor decision-making, which was the answer to a question that we had a better answer to. And it completed the devolution of the standards regime to local standards committees, which has resulted in more tit-for-tat complaints between members and has de-mystified the standards system, but none of that was fundamental to the 2000 Act Settlement.
Leadership challenges
More critically, it introduced a mandatory uber-strong leader with a four-year term of office which guarantees a public bloodbath if the leader loses control mid-term, and threatens balanced authorities with repeated adjournments of annual council as they simply fail to agree to trust one party and one party leader with these powers for the next four years. Such a strengthening of the position of the leader might have been acceptable if the other elements of the 2000 Act Settlement, the safeguards, were retained. But the 2007 Act also started a re-invention of the role of scrutiny, turning it away from scrutinising the executive and keeping it honest, and re-inventing it as an outward-facing, partnering function.
So the 2007 Act quietly repealed s.21(5), it abolished Best Value Reviews, which in 2000 had been established to ensure that the executive was actually providing effective, efficient and economic services. In future, internal scrutiny was to be limited to reviewing specific decisions, and scrutiny was to be given new powers to invite in members and officers of a wide range of partner authorities, to produce reports and recommendations on the activities of such partner organisations and such partner organisations were bound to have regard to the recommendations of the scrutiny in the further discharge of their functions – and I am sure that your PCT has welcomed your councillors’ views on reducing the rate of clinical infections.
The Local Democracy, Economic Development and Construction Act 2009 contains at its heart a fundamental conflict between seeking to reinforce democracy within authorities, trying to create a real role for the ordinary councillor, and seeking to increase public involvement in local authorities, giving members of the public the ability to secure that items of concern to them are placed on the agenda and considered within the authority. So it contains a huge new infrastructure of information about opportunities to volunteer, a vacuous duty to secure public involvement in decision-making, but no new power to delegate decisions to third parties, and statutory provision for petitions.
But at the same time it reinforces the role of the leader by establishing leaders’ boards which will sit beside the regional development agency and determine the regional economic and special strategies which underlie the local development framework, determining how many new houses must be provided within each authority’s area. With the Conservative Party committed to abolishing RDAs, regional strategy may yet fall entirely to local authority leaders, but entirely outside the reach of scrutiny.
Look a little deeper
More recently, on 21 July 2009, the government published a consultation paper misleadingly entitled “Strengthening local democracy”, and claiming to provide “the biggest transfer of power to elected councillors for a generation”. Actually, the only new power which it proposed was a power of mutual insurance to resolve the difficulties arising from the LAML judgment – although my personal view is that the power to enter arrangements to defray costs of other authorities on concurrent functions, s.136 of the Local Government Act 1972, coupled with a trading company for the commercial purpose of saving insurance premiums, more than answered that problem. But what it does is, without legislation, to advance the outward–facing role of scrutiny, promoting the Total Place role of collating and examining the proposed expenditure of every public authority or agency in the area and seeking to co-ordinate and align them behind LAA and CAA targets. A very valid role, promoted by DCLG as “putting local authorities at the centre of local decision-making.”
What you may have missed is an apparently innocuous paragraph:
“69. There is also the question of whether, and how, in extending scrutiny, executive members could be further involved in these activities in relation to the full range of local public services. This would have to be consistent with the need to avoid conflicts of interest between the executive’s decision making role and the ability of the non-executive councillors to scrutinise those decisions.”
This is asking, and government does not ask questions to which it does not already have the answer, whether executive members should not now be allowed to become members of scrutiny committees. But we know that as soon as you allow executive members into scrutiny, any pretence that it can act as an impartial control over the executive is shot. You cannot have cabinet members scrutinising cabinet decisions.
Conservative proposals
So what else is in the wind? I now turn to Control Shift – Returning Power to Local Communities, the Conservative Party’s Green Paper on local government policy. Once the present government has disabled scrutiny as a means of containing a runaway executive and checking that it is actually delivering quality services, a new Conservative government promises us “light touch regulation”. Well, it actually proposes to abolish the Standards Board and the Code of Conduct, and legislate to restrict the common law doctrine of pre-determination.
Further, at the recent party conference, Caroline Spelman committed the party to giving directly elected mayors, and perhaps other executives, hire-and-fire powers over chief executives and other senior staff. And having fundamentally upset the 2000 Act Settlement, what is proposed as a counter-balance: a power of electoral recall, enabling electors to require that an elected member submit to a fresh election mid-term.
Let us look at these proposals in a bit more detail.
Abolish the Code of Conduct. Simple. But you know, memory is a strange and ephemeral thing. How many of you remember life before the 2000 Code? I certainly do not recall it as a complete vacuum. I recall that there were pecuniary and non-pecuniary interests, and that failure by a member to declare and withdraw for a pecuniary interest was actually a criminal offence. There was a National Code of Conduct backed by maladministration, enabling offending members to be named and shamed. And there was something called Surcharge – personal liability of members (and officers) for loss caused to their authority by wilful misconduct. Unless the intention is to have a complete free-for-all, any abolition of the Code requires the re-enactment of many of the pre-2000 controls, and I have not detected a huge appetite among councillors for the return of personal liability and surcharge, or criminal liability for failure to declare and withdraw.
But consider that some 75% of local authorities in England and Wales are currently Conservative-led. After an election which brings the Conservative Party to power nationally and coincides with local elections in London boroughs, unitaries and one-third elections in many districts, we can expect some 85% of local authorities to be Conservative-led, with an influx of new and inexperienced Conservative members in positions of authority. What message would the abolition of the Code send out to those members?
Recognising the dominance of the Conservative Party in local authorities for the next few years, and therefore that the opportunities for abuse of power will overwhelmingly fall to Conservative members, and that every example of abuse reflects adversely on the Conservative Party and rouses memories of the John Major years and Tory sleaze, it would be a brave decision to go not for a 1999 solution but for a 1973 solution.
Facing the music
Electoral recall is an interesting concept, but requires a bit of development. What percentage of electors would be required to precipitate a new by-election? If 50%, then why hold the election, frankly, as the electorate will have spoken on the petition. If 25%, there is a risk of repeated recalled elections, as often as the legislation allows. The idea is that a recall by-election might be triggered by public concern at the member’s apparent misconduct.
But that fails to pick up the internal misconduct, the bullying by the leader, which disables an authority, drives out good officers and members, starts a spiral of decline, and yet has no external visibility. Further, the absence of serious political competition in many areas means that members would have little to fear from electoral recall. And there is a question as to why, if electoral recall is such a manifestly democratic idea, it should not be appropriate to extend it to another group of elected representatives of unsullied probity and virtue.
It remains as true today as it did in 1999 that there are some types of conduct which so damage the reputation of an authority or of local government as a whole that we cannot leave the perpetrators in positions of power for the balance of their four-year terms. Indeed, the record of the Standards Board in taking out the serial offenders has evidenced the need for some minimum standards of conduct. It is true that the current Code is too long and too complex, but if we have any rules at all, we need a means of enforcing them. The last couple of years have not reinforced our belief in self-regulation, whether in the City or in Parliament.
But it is hardly fundamental whether that enforcement agency is called the Standards Board, or the Ombudsman, or the Audit Commission. And it would hardly reflect well to see elected Conservative members misbehaving in England without check, whilst a devolved administration in Wales retained a Code, retained the Public Service Ombudsman for Wales in place of the Standards Board, and retained the Adjudication Panel for Wales, and continued to address member misconduct.
Now the doctrine of pre-determination merely says that, if you are taking a decision in a public authority, you must take that decision on its merits on the basis of all the relevant information. You must not make up your mind and stop listening before you have all the relevant information. So I am watching with interest to see if someone can draft legislation which says that members in local government, in contrast to any other branch of public service, may take their decisions on the basis of partial information, without regard to material considerations, and even more looking forward to the judicial response to that legislation.
For healthy local government, there must be corporate governance, there must be a balance between the power of the executive and the checks and balances, in terms of council and scrutiny holding the executive to account, and an enforceable set of minimum standards of conduct. I am seriously concerned that the checks and balances which were an essential part of the 2000 Act Settlement are under attack. That promises a prosperous New Year for lawyers, but not a happy time for local government.
Peter Keith-Lucas is a local government partner at Bevan Brittan.
