Richard Clayton QC analyses the complex scheme for the establishment of combined authorities under the Local Democracy, Economic Development and Construction Act 2009 and considers the lessons from the Derbyshire County Council case.
The recent history of English devolution has been very mixed. Since 1986 when metropolitan county councils and the Greater London Council were abolished, England has had no local government bodies with strategic authority over the major urban areas. In 1999, the Labour government created a strategic authority for London, the Greater London Authority, but did not replace the metropolitan county councils outside London. Instead, the Blair government pursued the idea of elected Regional Assemblies. However following an unsuccessful referendum in the North East, the region which most supported the scheme, the momentum was lost and the concept of city regions was then proposed.
In 2010, the Coalition Government accepted a plan to establish a Greater Manchester Combined Authority from the Association of Greater Manchester Authorities. Following the unsuccessful English mayoral referendums in 2012, combined authorities were used as an alternative means to receive additional powers and funding as part of 'city deals' to metropolitan areas.
Six other combined authorities have now been established: the Liverpool City Region, the North East Combined Authority, the Sheffield City Region, Tees Valley Combined Authority, the West Midlands Combined Authority and the West Yorkshire Combined Authority. Several other areas are in the process of working through schemes with central Government this year: Cambridgeshire and Peterborough, North Midlands and West of England; and other schemes to set up combined authorities are under discussion.
The statutory scheme
The devolution scheme proposed by the Local Democracy, Economic Development and Construction Act 2009 is a positive development. The Act enables the establishment of combined authorities whose core purpose is to deliver better outcomes for local communities through closer joint working and collaboration at a local level. According to DCLG’s Economic prosperity boards and combined authorities: Consultation on draft statutory guidance (Feb 2010 p 10)), combined authorities are intended to “support improved strategic decision-making on economic issues and better co-ordination and delivery of economic development interventions by local authorities”.
The 2009 Act permitted certain transport functions to be delegated from central government. The Localism Act 2011 allowed additional transfers of powers from the Secretary of State for Communities and Local Government and gave combined authorities a general power of competence.
The powers and functions to be shared are agreed by the metropolitan district, non-metropolitan district and non-metropolitan county or unitary authority councils by establishing a combined authority, which can assume the role of an integrated transport authority and economic prosperity board.
This gives the combined authority the power to exercise any function of its constituent councils that relates to economic development and regeneration, and any of the functions that are available to integrated transport authorities. For transport purposes combined authorities are able to borrow money and can levy constituent authorities.
More recently, the Cities and Local Government Devolution Act 2016 introduced directly-elected mayors to combined authorities in England and Wales with powers over housing, transport, planning and policing; and permitted an existing combined authority to extend outside county boundaries, inspiring the recent case brought by Derbyshire County Council.
The statutory scheme under the 2009 Act
A new combined authority can be established under s 108 if two or more of local authorities undertake a review of their exercise of statutory functions for the review area, with a view to deciding whether to prepare and publish a scheme for a combined authority under s 109. If they conclude under s 109 that establishing a combined authority would be likely to improve the exercise of statutory functions for the area, they must then prepare and publish a scheme for its establishment.
A public consultation must be carried out in accordance with s 110. When considering whether to enact delegated legislation, the Secretary of State has specific obligations under s 110(3A)(3B) in relation to those combined authorities where part of its area is separated from the rest by another local government area not within that area; or part of the combined authority is not within its area but is surrounded by local government areas that are within the area.
In these limited circumstances the Secretary of State must have regard to the likely effect of the creation of the proposed combined authority on the exercise of functions equivalent to those of the proposed combined authority's functions in each local government area that is next to any part of the proposed combined authority area.
Furthermore, in making the order, the Secretary of State must have regard under s 110(4) to the need to reflect the identities and interests of local communities, and to secure effective and convenient local government.
Broadly, the statutory process for extending an existing combined authority is similar to that which applies to establishing one in the first place.
The statutory scheme is surprisingly complex and there are a number of practical considerations local authorities will want to consider when deciding about whether to participate in a combined authority.
Some authorities have considered setting up a scheme, even before a striking an economic deal with central government. But there is little purpose in embarking on the statutory process under the 2009 Act, unless concrete benefits for economic regeneration or development benefits can be secured once the combined authority is up and running.
One concern which troubles some local authorities is whether they can be compelled against their wishes to join a particular combined authority. However, the statutory scheme prevents an authority from being forced to join a newly created combined authority regardless of whether it is set up by local authority initiatives or by the Secretary of State.
In contrast, once the combined authority is in place, the Secretary of State can extend the combined authority under s 106 and to force a district council to join it. Only county council must consent to extending a combined authority’s boundaries. Furthermore, as soon as a combined authority is up and running, a district authority cannot trigger the abolition process under s 107, and there is no legal means available to revoke the statutory instrument, which establishes the combined authority in the first place.
The Derbyshire County Council case
Judgment in the first case to challenge a proposal to extend a combined authority under the 2009 Act was recently given in December 2016. In R(Derbyshire CC) v Barnsley, Doncaster, Rotherham and Sheffield Combined Authority Derbyshire County Council judicially reviewed the Sheffield City Region’s combined authority's consultation exercise carried out under the 2009 Act. Sheffield had proposed a scheme to extend its area to include Chesterfield Borough Council, which was within Derbyshire and did not adjoin the existing combined authority. The new proposed scheme also included the transfer of some powers from Derbyshire to the combined authority.
Under s 113(2) of the Act the Secretary of State had to carry out a public consultation unless the authority preparing the scheme carried out "a public consultation in connection with the proposals in the scheme" and the Secretary of State considered that no further consultation was necessary. Sheffield carried out a consultation but did not target responses from Derbyshire residents other than those in the Chesterfield area though others provided responses.
Derbyshire argued that the consultation (1) was not "public" because of its limited geographical scope; (2) it was not "in connection with the proposals" in the scheme because of the general questions and omitted topics; (3) it had not been fair and lawful, because it failed to refer to other potential options including the status quo and a separate scheme for regional devolution, and the fact that Derbyshire and another county council would become constituent councils and could be required to relinquish further powers, and because it inaccurately stated that Derbyshire had "significant input" into the governance review.
Ouseley J held that s 113(2)(b) of the Act required consultation with those in the general public affected to a degree that might make their views significant. There was no geographical limit only to target the area constituting the new combined authority. The words "public consultation" were very wide. If, however, the combined authority did not wish to, there was no need to take other consultation responses into account.
Section 113 did not require a consultation to be undertaken throughout the whole county council area on the ground that the whole county, or one of its district councils, was to become a constituent member. That was not a requirement of the 2009 Act. It was up to the combined authority to decide on the target area for a consultation.
The judgment made by Sheffield on this issue was not so irrational as to be unlawful. Sheffield had acted reasonably, even though it had not made an equal effort through all the areas it had consulted. All responses from non-target areas had been considered. Derbyshire too had tried to involve its residents.
For the consultation to breach s.113, a claimant would have to show that significant areas, which the combined authority appreciated were likely to be affected sufficiently to warrant their views being obtained, had not adequately had their views obtained. It had not shown that, so Ouseley J held that the consultation was "public".
However, the judge decided it was a fundamental principle of the 2009 Act that all major scheme proposals should be identified and subjected to consultation. A consultation was not "in connection with the scheme" merely because it asked questions connected to the proposals if major issues had been omitted. Chesterfield’s new role as part of the combined authority was one of the scheme’s fundamental proposals. But no question had asked whether consultees supported this, with the result that the Secretary of State did not know the public's views on whether Chesterfield should become part of the combined authority.
Consequently, Sheffield will now have to redo the consultation exercise. But it is not difficult to imagine that Derbyshire will bring new judicial review challenges against the proposed scheme in the future.