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cuts and freedoms?Settlement reveals average 10.2% cut

2011-12 figures range from 17.3% to 4.8% cutsLocalism Bill imposes ‘shadow mayors’

10.2%cut

Localism bill

12-page special issue

LGCplus.comfirst edition 1855 £4.40

Localism Bill and finance settlement: full coverage from this week’s LGc

tNews review t

The week’s top news and views plus a digest of the most important LGCplus.com stories

Finance settlement and Localism Bill

Exclusive LGC research into the small print of Eric Pickles’ local government finance settlement reveals his cost-cutting will

hit deprived councils hardest. Our detailed analysis of the settlement and the Localism Bill also includes:l The winners and losersl The effect of the four-band modell The lowdown on the fate of the ‘missing in action grants’l Claims that English councils could obstruct the sale of RDA assets

t Agenda 1, p10-17

Goodbye to all that2010 has been a momentous

year in local government. We look at the key issues, events and personalities in a

special month-by-month review.

t Agenda 2, p18

Challenging CRCCould a legal case involving Eric Pickles’ regional strategies decision set a precedent for those looking to challenge the policy change over CRC?

t Briefing, p23

Engaged councilsLGC Awards aside, the only honour really worth the name is Loo of the Year.

t Diary, p29

Agenda

CUTS AND FREEDOMS?Settlement reveals average 10.2% cut

2011-12 figures range from 17.3% to 4.8% cuts

Localism Bill imposes ‘shadow mayors’

10.2%CUT

Localism bill

16/12/10LGCplus.comfirst edition 1855 £4.40

Brentwood to keep sharingKillian to keep both jobs despite critical finance report findings

Row over fruit picking claimLeading Tory under pressure after north of England comment

Pay talk deals spelled outUnions unlikely to

be offered £250 pay rise for allworkers

Improvement changes likelyLGA concedes productivity programme ‘cumbersome’

Inside 9 7 7 0 0 2 4 5 5 3 0 6 6

5 0

LGCplus.com

sECond LGC60

16 December 2010 Local Government Chronicle 1

Jobs t

ExECuTivE foCus: 27

Excellent remuneration Chief executive, Leeds Community Healthcare

onlinE foCus: 28

£120,620-£130,909 Deputy chief executive, Bristol City Council

onlinE foCus: 28

£38,906-£46,672Business audit managers, Cornwall Council

nEws Councils struggle with ‘toughest settlement in living memory’

Sector unimpressed by ‘spin’ on double-digit cutslGC [email protected]

Ministers were accused of “spinning” their decisions on allocating local government funding this week after coun-cils learned their individual fates in the “toughest settle-ment in living memory”.

Communities secretary Eric Pickles has been accused of presiding over cuts of up to 20% next year for some of England’s poorest councils. However, he sought to present the results of the set-tlement as protecting those authorities most reliant on council grant, while freezing council tax.

Mr Pickles managed to find £85m of transitional grant from his departmental budget to soften the effects of the front-loaded cuts. But he came under fire after claiming no council would see its ‘spending power’ – broadly government grants added to council tax – shrink by more than 8.9%, with reductions averaging 4.4%.

“By adopting an intelligent and fair approach to the way funding is allocated we have been able to ensure those … most reliant on central fund-ing continue to get the lion’s share of the taxpayers’ money that is available,” Mr Pickles said.

In fact, comparing the changes to formula and spe-cific grants, the cuts totalled 10.2% in 2011-12 and 5.9% in 2012-13. When the transition grant is taken into account, the former figure becomes 9.9%. The settlement pro-vided figures for the first two years of the spending review period to allow the findings of the resource review to feed into the last two years.

Mary Orton, chief execu-tive of Waverley DC and hon-orary secretary of the Associ-ation of Local Authority Chief Executives, said she was “reeling” at the news of a 17% formula grant cut “being sold as a 4% cut”.

“I’ve never seen spin like it”, she added. “I thought that Alastair Campbell had retired.”

Aylesbury Vale DC was the

worst-hit council in year one, seeing formula and specific grants drop by 17.28%, while North East Lincolnshire Council was the worst-hit upper-tier authority, with its grant cut by 15.8% next year.

“We can expect to lose well over 30% in real terms over the next two years alone,” Neil Blake (Con), Aylesbury Vale’s cabinet member for resources, said (see p12).

As well as the transitional grant, the settlement also ‘banded’ councils according to their dependence on cen-tral government grant (2 December, LGCplus.com/5022590.article). Despite this, Baroness Eaton, the Local Government Associa-tion chairman, described the announcement as “the tough-est local government finance settlement in living memory”.

“It remains the case the cuts are front-loaded rather than spread evenly across the four years,” she said.

Exclusive LGC analysis suggested that metropolitan and district councils had been hit the worst, as had authorities in the north.

And while the correlation between the size of cuts and deprivation was weak, the bottom quintile of councils in terms of deprivation suf-fered the largest cuts.l full analysis, p10

8-page special

The finance settlement and the Localism Bill p10-17

Eric Pickles announcing the local government settlement

2 Local Government Chronicle 16 December 2010 LGCplus.com

News review

LGCplus.com/PoliticsCommunity budgets fail to garner majority support Nearly half of councillors are not convinced plans for community budgets are the best way to redesign local public services, LGC-ComRes research suggested. Only 53% of the 432 members surveyed agreed proposals to pilot community budgets represented “a significant step forward for the redesign of local public services”.

t

Mixed fortunes for Lib Dems in by-elections Liberal Democrats celebrated a by-election gain from the Conservatives in Fareham BC but lost to Labour in Warrington BC.

73,000 council jobs at risk English councils are considering cutting 73,000 jobs, with libraries and leisure services facing most of the cuts, a survey by the Chartered Institute of Public Finance & Accountancy suggested.pa

news Councils will have to consider allowing community groups take over services

Spectre of CCT looms from bill Allister [email protected]

A new right for community groups and other bodies to challenge and take over council services could lead to 1980s-style competitive tendering for public services, experts have warned.

The ‘right to challenge’, set out in the Localism Bill, will allow bodies such as com-munity groups, parish coun-cils, charitable trusts and council employees to express an interest in delivering a council service. The council would be obliged to consider the request and, if deemed reasonable, open the service to competitive tender.

Councils will need to take into account whether accept-ance of the expression of interest would promote or improve the social, eco-nomic or environmental wellbeing of the authority’s area. They will only be able to reject the expression of inter-est on grounds to be speci-fied by the secretary of state

This week on LGCplus.com

Tony TraversSo now we know. Grants to English local government will fall by 9.9% in 2011-12, compared with a rise of 2.6% in the current year. These are not like-for-like figures, of course, because the 9.9% decrease covers a wider range of grants than last year’s total. This reversal of fortune will produce the sharpest reduction in council spending in modern times.

With grants falling, Whitehall has resorted to showing each council’s ‘spending power’ rather than its grant increase. Doubtless when we return to positive grant changes, the government will move back to showing grant increase percentages, because these will then be a bigger figure than spending power.

Inner-city councils that were big winners from the previous government’s targeted single-purpose grants have lost out badly because formula-based allocations are so much ‘flatter’.

The impact of central funding reductions has also produced big losers among councils that are heavily dependent on grants. ‘Banded floors’ have been invented to deliver protection that takes into account the percentage of each authority’s budget received from central government.

With a number of inner-city councils losing up to 8.9% of their spending power and most shire counties losing less than 3%, there is a clear relative shift of government funding from urban to rural areas. Dorset CC, which enjoyed a grant rise of 7.1% in 2010-11, has managed an even more remarkable increase (in the circumstances) of 0.25% in 2011-12. Shire districts fare less well.

all of the financial excitement of the settlement took place on Monday, when the Localism Bill was also published. This will shift some power to councils and some from local government to parishes and neighbourhoods. Big city leaders will be styled ‘mayors’ before referenda are held to decide whether to introduce the fully elected executive version.

There are many unknown unknowns. In the short term, some of the new localism will require resources. In the even shorter term, councils will have to work out how to balance their books in budgets that are only a few weeks away.

Happy Christmas.

Tony Travers, director, Greater London Group, London school of economics

‘‘ Inner-city councils that were big winners from targeted single-purpose grants have lost out badly

The week’s top news and views plus a digest of the most important LGCplus.com stories email the news desk on [email protected]

The police authority funding formula is to be reviewed in two years, Home Office min-ister Nick Herbert has announced.

Allocations have been damped to ensure an “equal share of reductions” across the country, with cuts limited to 5.1% in 2011-12 and 6.7% in 2012-13, but that levelling out may be removed in the last two years of the spend-ing review period.

Mr Herbert said the local government resource review due in July 2011 might also affect funding streams.

LGC reported last week (LGCplus.com/5022861.arti-cle) that home secretary Theresa May and chief secre-tary to the Treasury Danny Alexander could not agree on the use of damping. The announcement suggests that a decision has been postponed.

The police minister also announced that the neighbourhood policing fund would remain for the first two years until the new police commissioners took over budgeting.

settLement

Two-year review for police funding

16 December 2010 Local Government Chronicle 3LGCplus.com

LGCplus.com/FinanceWatchdog unveils fee cut The Audit Commission unveiled plans to cut inspection fees by up to 20% for 2010-11, despite previous concerns such a move would be threatened by its abolition. The watchdog said a 20% cut would save public bodies £11.8m.

Treasury welcomes deal over Icesave collapseMinisters welcomed a breakthrough in the £2.3bn

2011. A council meeting today will decide the process for appointing a successor.

Pension changes to cost workers £67bn Changes to public service pension schemes introduced in 2007-08 will cost teachers, civil servants and NHS staff a total of £67bn over the next 50 years, the National Audit Office calculated. The first major reform of the schemes since the 1970s achieved the saving for taxpayers by requiring

dispute with the Icelandic government over the collapsed Icesave bank. The Icelandic government in Reykjavik announced a draft deal on repaying the cash spent by the UK government on compensating tens of thousands of UK savers after the 2008 collapse.

LGCplus.com/Managementeden chief to retire Eden DC chief executive Kevin Douglas announced he will retire at the end of March

For these stories in full, go to LGCplus.com/Review

employees to make larger contributions to pension plans and work in most cases until 65 rather than 60.

Protection for pay and pension scrapped Ministers have scrapped pension and pay protection for employees of outsourced public services ahead of a wider review of the rules regulating contractors. The Cabinet Office withdrew the protection with immediate effect.

Margaret Thatcher introduced CCT

news Councils will have to consider allowing community groups take over services

Spectre of CCT looms from bill lenge and it is not compul-sory,” he added.

Mr Mousdale added that while CCT had covered a lim-ited number of services, the right to challenge could “cover everything”.

“The right to trigger the competitive bidding process may belong to the Big Soci-ety, but in competitive ten-dering the contracts are usu-ally awarded to the private sector,” he said.

CCT, a flagship policy of the Thatcher government in the 1980s, prioritised finding the right supplier at the cheapest price but was scrapped in 2000 in favour of an approach that empha-sised value for money.

Mike Bennett, assistant director general of the Soci-ety of Local Authority Chief Executive & Senior Manag-ers, said the right to chal-lenge could also mean only the most profitable council services were affected.

“It could lead to innova-tion, but it could also lead to cherry picking,” he said.

t

‘‘ This is the most dire financial settlement that we have ever witnessed for local governmentDavid sparks, Agenda 1, p12

in subsequent regulations.Michael Mousdale, a

partner at law firm Trowers & Hamlins, said the new right, by triggering procure-ment processes for council services, could usher in a new wave of compulsory competitive tendering (CCT).

“It is, if you like, CCT by the back door – but only if any-one can be bothered,” he said.

“It could be much broader in application, but what will stop a flood of CCT is that it must be triggered by a chal-

Between 2003 and 2009 the Department for Commu-nities & Local Government paid £143m in fines to the European Commission for irregularities in its handling of the ERDF programme. In July the department said it expected a further £155m in fines – largely due to prob-lems with accountancy – to be levied this year.

Communities secretary Eric Pickles has pledged to end this “mismanage-ment” and is developing plans to centralise the ERDF programme – which is cur-rently the responsibility of the soon-to-be-abolished regional development agen-cies – in Whitehall.

Steven Smith, a partner at law firm Eversheds, said the move could only be “equita-ble” if councils were able to have their representations heard in negotiations between the UK government and the EC over any poten-tial fines. “But the bill doesn’t make it clear that this’ll be the case,” he said.

Councils have railed against powers in the Localism Bill that allow ministers to pass on to town halls the costs of European Union fines levied against the UK government for mishandling European regional aid programmes.

The power would enable the secretary of state to order councils in England to con-tribute towards the cost of any fine levied against the UK government for irregular-ities in the handling of Euro-pean aid programmes, such as the European Regional Development Fund (ERDF).

The Local Government Association said the move to pass EC fines on to coun-cils had been made “without any consultation” and “imposes a new regime for the government to impose fines extra judicially, by exec-utive action”.

“It will result in significant and unjustified strain on local authorities that are already facing extremely testing circumstances,” the LGA said.

LoCaLism biLL

Anger over passing on of EU fines to town halls

Research

Exclusive

Exclusive

Campaign

Campaign

10 Local Government Chronicle 16 December 2010

‘‘

Emma maiErEditorAfter an industry in ‘delay’ stories, the two biggest local government announcements of the year came, like buses, at once. The stakes were high: would the Localism Bill and the finance settlement live up to the government’s pledges of devolution and fairness?

LGC’s exclusive analysis of the settlement shows the transition grant had a positive impact (see scatter graph, right). But it also reveals that the north and Yorkshire and Humber face larger proportional cuts. The most-deprived quintile of councils are facing higher average cuts than less-deprived quintiles.

The government’s focus on ‘spending power’ (including council tax) rather than like-for-like annual comparison points to obfuscation over transparency. The effect of the four-band model, which was used to damp the effects for those more reliant on government funding (2 December, LGCplus.com/5022590.article) will become clear only with further analysis.

Meanwhile, the Localism Bill brought few surprises. The general power of competence (for which LGC campaigned) is welcome. But it is tempered by a reserve power for the secretary of state to intervene. Clauses on senior pay mark interference in local affairs. Planning reform detail is still missing.

The finance settlement emphasises that the finance review must simplify and clarify grant distribution. The bill shows that government must resist centralist overtures and remain true to its localism cause.

LGCplus.com

Agenda Local government finance settlement1Each week LGC’s Agenda sections each focus on a key topic, providing news, comment, analysis and best practice Email the news desk on [email protected]

wide discrepancy of settle-ments across England. The north-east, the north-west and Yorkshire and Humber-side will face grant reductions in 2011-12 of 13.5%, 12.3% and 12.1% respectively. Meanwhile, authorities in the south-east face an 8.4% cut and those in London 8.5%.

District councils will have their grants reduced by an average of 12.6% next year, and metropolitans 12.7%. Nine of the top 10 worst-hit councils are districts, with Aylesbury Vale DC and Bab-ergh DC topping the list at 17.28% and 17.26%.

Corin [email protected]

Local authorities in the north, and district and met-ropolitan councils nation-wide, have been hit far harder than their counter-parts by the local govern-ment finance settlement, LGC analysis reveals.

Comparing total formula and specific grants for 2010-11 with those for 2011-12 shows a 10.2% reduction.

But the analysis shows a

alam

y

‘‘ The most deprived quintile of councils are facing higher average cuts than those less deprived

Grant cuts reveal north-south divide

worst AffEctEd counciLs

top 10 1-10

Grant reduction %

Aylesbury Vale 17.3

Babergh 17.3

shepway 17.1

Adur 16.7

Harlow 15.9

Ashford 15.9

north East Lincolnshire 15.8

west somerset 15.7

wyre forest 15.6

fenland 15.6

GrAnt rEduction for EAcH rEGion (%)

rEGion 2011-2012 2012-2013

north-east England 13.5 6.4

north-west England 12.3 7.2

Yorkshire and Humber 12.1 6.5

west Midlands 11.1 5.8

East Midlands 10.1 6.2

south-west England 8.8 5.9

East of England 8.7 5.9

Greater London 8.5 6.1

south-east England 8.4 6.3

0 10 20 30 40 500

5

10

15

20

Note: grant reductions based on comparison of formula, specific and transition grants

DEPRIVATION INDEX: GRANT REDUCTION 2011-12

Least deprived

Gran

t red

uctio

n 20

11-2

012

(%)

Deprivation index

0 10 20 30 40 50Most deprived

20

15

10

5

0

16 December 2010 Local Government Chronicle 11

Local government finance settlement

LGCplus.com

10.2%the reduction in formula and specific grants from 2010-11 to 2011-12. Factoring in transitional grants, Aylesbury Vale faces a 17.28% cut, while Surrey faces a 4.8% reduction

£2.4bnthe amount DCLG says it has rolled into formula grant for social services spending

37councils will receive a share of the £85m transition grant in 2011-12, with 12 getting a further share of the £14m in 2012-13

9of the ten worst-hit councils in 2011-12 are districts, alongside one unitary

Grant cuts reveal north-south divideGrAnt rEduction for EAcH counciL tYPE (%)counciL 2011-12 2012-13 Metropolitan 12.7 6.8district 12.6 10.6unitary 10.6 6.0London 8.5 6.1county 7.9 5.1

worst AffEctEd counciLs

top 10 1-10

Grant reduction %

Aylesbury Vale 17.3

Babergh 17.3

shepway 17.1

Adur 16.7

Harlow 15.9

Ashford 15.9

north East Lincolnshire 15.8

west somerset 15.7

wyre forest 15.6

fenland 15.6

LEAst AffEctEd counciLs

Bottom 10 343-352

Grant reduction %

Poole 6.8

Harrow 6.8

west sussex 6.7

norfolk 6.4

thurrock 6.3

Buckinghamshire 5.9

richmond upon thames 5.2

dorset 5.0

wokingham 4.9

surrey 4.8

ity is facing a grant reduction of 13.8% in 2011-12, said: “It beggars belief that a council which, in the government’s own measure, is growing faster than anywhere else in the country, has been hit with the biggest cuts.”

DEPRIVATION QUARTILES: GRANT REDUCTION 2012-13 WERE THE MOST DEPRIVED HIT HARDEST?

Colin Davie (Con), portfo-lio holder for finance at East Lindsey DC, also criticised the government for releasing figures that were “impossible to interpret” following com-munities secretary Eric Pick-les’ claim that no council would have its spending power – a figure including NHS funding, council tax receipts and other income – reduced by more than 8.9% over two years.

Mr Davie said: “We knew the 8.9% cuts were more, and looking at the detail of the grant shows almost a 20% reduction next year.”

REGIONAL CUTS DISTRIbUTION

Although overall northern regions face larger reductions in central government funding, the ten worst-hit councils are concentrated in the south. the south is also home to the 10 least affected.

least affected most affected

there are some big differences in funding per resident between rich and poor councils – Eric Pickles’ statement said deprived Hackney gets £1,043 a head while well-off wokingham gets £125.

But looking at the range of funding reductions experienced by different councils tells a different tale. LGC’s exclusive analysis shows a small but steady correlation between councils high on the government’s index of multiple deprivation and those facing the highest cuts. the scatter graph reveals that a few of

the least-deprived authorities score highly on the grant reduction scale – an equivalent number score low. the fact that there is less variability between councils high on the deprivation index shows the effect of the targeted transitional grant.

the bar chart presents a clearer picture. on average, councils in the top quintile on the deprivation index are facing a 12.9% cut – higher than any other quintile and two points more than the middle band. the most deprived areas can, therefore, be said to be affected the most. Least deprived

Deprivation quintiles

1 2 3 4 5Most deprived

13

12

11

10

9

County councils fared best at 7.9%. Five of the top 10 least affected councils were counties, with two London boroughs and three unitaries completing the list.

The unequal distribution of cuts has prompted out-rage from some in the sector. Speaking to the local press, Middlesbrough mayor Ray Mallon said the government had dealt his authority “sav-age” cuts. He added: “It has declared financial war on the north- east. This will widen the north-south divide.”

Corby BC leader Pat Fawcett (Lab), whose author-

Av. g

rant

redu

ctio

n 20

12-1

3 (%

)

We value your views Email [email protected]

Full figures online A spreadsheet with these statistics and more at LGcplus.com/settlementstats

plus.com


Agenda Localism Bill1

Neil Blake (Con) (pictured), cabinet member for resources, Aylesbury Vale DCWe are very disappointed by the severity of reductions in grant for Aylesbury Vale. The spending review had indicated reductions of 28% over the next four years, yet we can now expect to lose well over 30% over the next two years alone. This is much greater than we had planned for and it will only lead to more painful decisions.

As an area with a growing economy and a diverse and expanding population of mixed needs, it seems perverse that we appear to be losing far more grant than others with

The Local Government Asso-ciation has criticised the gov-ernment’s failure to find extra help for councils to fund redundancy programmes.

Communities secretary Eric Pickles last week raised hopes of a rethink when he said he was “actively review-ing” the £200m allocation of capital funding that councils would be permitted to use to meet workforce reorganisa-tion costs. However, there was no new assistance announced in the local gov-ernment finance settlement, with mere promises of “more details in February”.

The LGA says councils require £200bn and shouldn’t have to apply to Whitehall for permission. LGA vice-chair Richard Kemp (Lib Dem) said: “Council taxpayers will not consider that locking up these resources in the bureaucracy of central gov-ernment’s accounting rules is a sensible use of their money.”

News Metropolitan councils question distribution method

Four-band model ‘unfair’

t

‘‘ With a growing economy and population, it’s perverse we are losing more grant than those with fewer needs Neil Blake

James [email protected]

Metropolitan authorities gave short shrift to ministers’ claims that the four-band model used to distribute council grants had protected areas that are more depend-ent on central funding.

The new model, combined with the £85m transitional grant and adjustments to the relative-needs distribution formula, had produced a fair and progressive settlement, communities secretary Eric Pickles insisted on Monday.

But the Special Interest Group of Metropolitan Authorities (Sigoma) said the move merely paid “lip serv-ice” to mitigating deep cuts to grant dependent areas and that “fairness had clearly not been delivered”.

Councils were allocated to different bands according to the proportion of their

considerably fewer needs. This further calls into the

question the fairness of the Formula Grant system. Our budget strategy over the past few years has been almost entirely focused on delivering efficiencies whilst protecting services. It’s difficult to envisage how further cuts of this magnitude can be achieved, and some impact in terms of reduced services seems inevitable.

Baroness eaton, chairman, Local Government Association This is the toughest local government finance settlement in living memory. We have been clear that the level of spending

budget requirement, funded through formula grant this financial year, the Depart-ment for Communities & Local Government said.

Upper-tier authorities were banded into groups of about 38. But districts, in groups of about 50, saw steeper percentage cuts.

Cuts for upper-tier coun-cils ranged from 11.3% for band one authorities to 14.3% for band four in 2011-12. A slightly more generous settlement for 2012-13 will see cuts range between 7.4%

reduction that councils are going to have to make goes way beyond anything that conventional efficiency drives, such as shared services, can achieve. We will now pull out all the stops to minimise the impact of these cuts and build on our record of delivering new and better ways of doing things.

Paul Bell (Con), deputy leader, wellingborough BCThis is an extremely harsh settlement. We will need to look very closely at what services we provide and how we provide them, and we need to do this urgently over the next few days.

and 10.4%. Lower-tier coun-cils saw cuts range from 13.8% to 16.8% in 2011-12.

Sigoma policy officer Frances Foster said: “The banding … is merely a varia-tion on the damping regime that protects those receiving more grant than the formula determines. Many deprived authorities tpay for topping up the reduced losses in more affluent areas.”

Eric Pickles told the House of Commons: “The first thing we did was to change relative needs level from 73% to 83%.Then we introduced banded floors and then a special damping for authorities more dependent on grant than others. This formula is more progressive, protecting vulnerable communities.”

Councils have already warned that the government could face legal challenges.More available at: LGCplus.com/5023177.article

news

No funds for extra redundancy help

CoMMeNts: Cuts worse thAN feAreD

Pickles: model is ‘progressive’


Although English councils had to endure a significant delay before finding out what their individual settlements were, they can at least con-sole themselves that they are not in Northern Ireland. There, a draft budget has yet to be set and councils have resigned themselves to remaining in the dark until next month.

However, the Department for Communities & Local Government was slower doing its maths than the Welsh Assembly Govern-ment (WAG) and the Scottish Executive. They announced their figures last month and last week respectively.

Take a look at the figures for each nation and you can see the stark differences pro-duced by the devolved sys-tem. Figure 1, showing the percentage annual change in departmental expenditure limits (DEL), is a striking illustration of how the Welsh and Scottish governments have chosen to protect local government funding, while England has imposed a pun-ishing first-year cut of -41%.

In Wales, councils have

A raft of council funding streams have disappeared following the publication of the local government finance settlement.

As LGC went to press. finance chiefs were still working out the fate of the 57 so-called “missing in action” grants – worth some £2.26bn – which have been unac-counted for since the spend-ing review.

Initial research suggested at least 23 grants, including the £168.3m school develop-ment grant and the £70.7m extended schools start-up grant, have been ditched.

Documentation published with the settlement revealed some larger missing grants have been rolled into the new core ones.

The £466.7m connexions grant; the £184m short breaks (for disabled chil-dren) grant and a chunk of the £142m children and young people’s grant have been rolled into the £2.214bn early interventions grant.

Other sizable grants to have resurfaced included the £340m flexibility of free enti-tlement for 3- to 4-year-olds, which has been rolled into the re-jigged dedicated schools grant.

London Councils finance and policy manager Steve Doogue said: “Ministers have provided information but, with more than 120 revenue grants to keep track of, indi-vidual boroughs are still working out what has been cut and what has been rolled into another grant to get their spending baselines.”

As set out in the spending review, some £3.4bn of specific grants in 2010-11 have been rolled into for-mula grant.More available at: LGCplus.com/5023181.article

AnALysIs: deVOLuTIOnruth KeeLING reporter

been helped by the WAG’s decision not to protect health funding as Scotland and England have. Figure 2 shows the result of this decision: a cut in health funding, of which the WAG’s Conservative group has been highly critical.

Also in the Welsh councils’ favour is the protection of education and social care funding, both of which come within local authority budg-ets, so that those funding streams are cut by 5% and 11% respectively, compared with 14% for the economy and transport, and 18% for housing and environment.

All in all, it means that the WAG’s local government department will benefit from small increases in DEL fund-ing in 2012-13 and 2013-14.Even the toughest individual settlement for a Welsh coun-cil next year is -1.7%, com-pared with Eric Pickles’ figure of -8.9% in England.

The situation in Scotland is different again. There, like England, NHS funding has been protected, but minis-ters have also decided to offer some protection to

local authorities so that councils face an overall cut of only 2.8%. Announcing the deal, finance secretary John Swinney made a point of emphasising that it was better compared with Both England and other parts of the Scottish budget.

However, there is a sting in the tail because the overall 2.8% cut for councils – rang-ing individually from the -4.5% floor to -1.58% – is available only if councils make a number of commit-ments, including maintain-ing police and teacher num-bers, and a council freeze next year (something that Wales decided against).

Unions have criticised the use of ring-fencing and the reduction of local autonomy.Scotland’s 32 councils now have until 21 December to indicate whether they will accept the ‘funding package’ or volunteer for an addi-tional 4% cut in funding.

Whatever those councils choose next week, the stage is already set for public serv-ices in the UK’s four nations to diverge even further than they have already.

Figure 1: Local government funding* Figure 2: Health funding*

-45%

-40%EnglandScotlandWales

EnglandScotlandWales

-35%

-30%

-25%

annu

al in

crea

se

-20%

-15%

-10%

-5%

0%

5%

-1%

3%

2.5%

2%

1.5%

1%

0.5%

0%

-0.5%

2011-12

2012-13

2010-11

2014-15

2013-14

2011-12

2012-13

2010-11

2014-15

2013-14

*Departmental expenditure limits of Scottish Executive, HM Government and Welsh Assembly Government

pa, a

l gra

nt

news

Search for missing grants continues

‘‘ to the surprise of many, Eric pickles and greg Clark have emerged as the Batman and robin of localism tino hernandez, head of public affairs, rtPI, p15


Agenda Localism Bill

General power of competence has a prime slot in the Localism Bill. Councils will be able to do anything an individual can do (as long as it is legal), instead of being limited to what Parliament has authorised.

The bill says the power can be exercised in the UK or elsewhere; for a commercial purpose or with or without charge; for the benefit of the authority, its area or persons resident or present or otherwise.

There are seven clauses seeking to address areas of concern but the

comment: power at last Judith Barnes, partner, eversheds

bill does impose some boundaries. Commercial trading will only be permitted in activities where the authority is not under a statutory duty to provide services. And, surprise, surprise, clause 5(3) allows the secretary of state to make an order denying councils the right to a specified activity.

Charging powers will be available to do anything other than for a commercial purpose, provided the authority is not under a duty to provide the service and

the person has agreed to its provision, in line with the Local Government Act 2003. Taking one financial year with another, the income from charges must not exceed provision costs.

Interestingly, the power will apply only to local authorities in England and the wellbeing power will be amended to apply only to Wales.

Many commentators expected an explicit limitation on raising money (other than through

allister [email protected]

The Localism Bill was finally – and briefly – introduced into the House of Commons on Monday night for its first reading and will be discussed more fully by MPs during a second reading.

As well as proposals on senior pay, mayors, council tax referenda and social housing reform, the bill sets out long-awaited details on a general power of compe-tence that is set to give local authorities more freedom.

Powers and financel A general power of compe-tence for local government – with reserve powers for the secretary of state to remove and add limits to it (see com-ment, below)l Powers for the secretary of state to put shadow mayors in place and to initiate mayoral referenda – with additional powers for the secretary of state to transfer any function of any public body to the elected mayors (see p15)

l Power for the secretary of state to order councils to con-tribute to the UK’s obligation to pay an EU fine (see p23)l A requirement for councils to hold a referendum if they set a level of council tax above the threshold set by the secretary of state and approved by the House of Commonsl Reforms to the Housing Rev-enue Account subsidy sys-tem, including the power to set the buy-out for self-financing. The bill includes powers for the secretary of state to re-open the buy-out figure at a later date and set a borrowing limit (see opposite)l So-called ‘bin-tax’ schemes scrapped

Big Societyl A community ‘right to buy’, requiring councils to draw up and publish a list of assets of community value to ena-ble community groups to express an interest in bid-ding for assets (see p16)l A ‘right to challenge’ that gives community groups, employees and parish coun-

news A general power of competence is the key feature of a wide-ranging piece of legislation

Localism Bill changes the landscape

cils the right to bid to the council to take over the run-ning of a service (see p2-3)l Communities given the power to initiate a non-bind-ing referendum on any local issue if they submit a petition signed by 5% of the electors, with councils required to take account of referendum outcomes in decision making l A duty to respond to peti-tions and a duty to promote democracy are both repealed

Governance and standardsl Councils allowed, if they wish, to return to the com-mittee system of governancel Standards Board abolished, with a new duty on councils

to promote and maintain high standards of conduct

Planning and housingl The abolition of regional spatial strategiesl The transfer of national infrastructure decisions to the secretary of statel Powers for parish councils and newly created neigh-bourhood forums to develop neighbourhood plans and neighbourhood develop-ment ordersl A proportion of revenue from the community infra-structure levy to be passed to neighbourhoods and com-munity groupsl Developers to be required to consult communities before submitting planning applications for large developmentsl A new duty to cooperate on councils and other key pub-lic partners, such as the Highways Agencyl Flexibility for councils’ pol-icies on social housing alloca-tion, tenancies and placing homeless people in private sector accommodation

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charging and trading). It appears that will be reserved for an order under Clause 5 as Mr Pickles, in announcing the new provisions, said the bill will not allow councils to “impose taxes like modern-day Sheriffs of Nottingham”.

All in all the new power is to be welcomed; the hope is that this will free up councils to do what they want, and give them back the confidence they have lost over the past few years. Let’s hope that is the result.


In the heavy trailing of the Localism Bill, pride of place was given to the limitations that were going to be placed on executive pay, making local authorities suitably nervous about what form those limitations would take.

However, councils can now breathe a sigh of relief because the proposals in the bill, in the words of Mary Orton, honorary secretary of the Association of Local Authority Chief Executives, are “toothless”.

In brief, the bill requires councils to publish a remu-neration policy for chief executives, those who report directly to them and the next tier of officers. The policy must cover salary, pension, benefits-in-kind, allowances, bonuses and pay-off arrange-ments, and councils must follow the policy when set-ting salaries.

Ahead of the bill, commu-nities secretary Eric Pickles railed against the salaries of a number of appointments – at one point comparing the market for chief officers to

Ministers have been accused of going against the spirit of the Localism Bill by inserting a clause that allows the Treas-ury to revisit the terms under which the Housing Revenue Account is reformed.

The bill confirms the gov-ernment will press ahead with the replacement of the HRA subsidy system with a self-financing system. A detailed policy paper will be published in January.

The secretary of state is to set the figure at which coun-cils buy themselves out of

‘‘ If the Localism and Decentralisation Bill were a Christmas present, it would be a giant jar of liquorice allsorts andy sawford, chief executive, lGIU, p17

comment tino Hernandez

To the surprise of many, since the coalition forces took Downing Street in May, Eric Pickles and Greg Clark have emerged as the Batman and Robin of localism. From the day the unlikely dynamic duo moved into their new HQ, they have shone a bright beam from the top of DCLG towers with a ‘power to the people’ slogan writ large across the Westminster village sky.

Despite promises of clarity and after months of speculation, more questions than answers are raised by the Localism Bill in crucial areas of planning reform. Ministers must now act quickly and sit down with stakeholders to come up with solutions to make the proposals in the bill work for communities.

Crucial sections on neighbourhood planning – meant to be the beating heart of this bill – can be read like a journey through a maze. The bill must be revised to take account of the need for certainty and a seamless transition from the present system.

Three of our suggestions are key. First, a need to ensure the co-ordination of planning at a national level. Second, the duty to co-operate on local authorities’ needs to involve a much firmer

News

Criticism of HRA reform

requirement to work together on the delivery of major projects involving more than one local authority area. Third, neighbourhood plans require greater clarity about their scope and the process whereby they become established as part of the development plan.

It is also particularly perplexing that the grant funding for planning aid is being ended by the Department for Communities & Local Government after March 2011, when communities are going to need its services more than ever.

On the positive side, we welcome the retention of the expertise of the Infrastructure Planning Commission and the democratisation of its decision making. We like the introduction of a duty to consult on proponents of major development and the strengthening of the enforcement of planning decisions.

The gospel according to Eric and Greg doesn’t lack conviction but it still lacks clarity. Let’s hope ministers will listen to positive suggestions. tino Hernandez, head of public affairs, royal town planning Institute

that for footballers – and repeatedly hinted that the Localism Bill would bring an end to any profligacy.

However, although the bill states that councils must “have regard to any guidance issued or approved by the secretary of state”, that guid-ance will not be legally bind-ing, according to Winck-worth Sherwood consultant Simon Randall.

Transparency, rather than top-down limitations, is what the bill looks to con-tribute to the debate.

What effect such transpar-ency will have remains to be seen. There may be unfore-seen consequences, accord-ing to recruitment expert Jonathan Flowers, who points out the bill does not refer to figures, only “policy”.

He said it was “not uncom-mon for organisations to express their pay policy in terms of the market”. He added there was a risk pay would be set a little above the average “to attract the best” and push up average salaries in the market as a result.

the HRA – which essentially means the level of debt they are required to take on to put in place the self-financing system.

But the secretary of state will be able to revise this buy-out figure at a later date and set limits on how much councils can borrow against their future housing revenue.

The Local Government Association called for the government to drop these powers, which it said showed ministers were not “embrac-ing genuine devolution”.

A POLICy ON PAyanalysIsruth Keeling, reporter

eric pickles compared the market for chiefs to that for footballers CoLo

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Agenda Localism Bill

According to Eric Pickles, his Localism Bill and its planning reforms are intended to bring about “more people planning and less politician planning”. The bill seeks to create a brave new world, introducing a concept of dynamic communities actively shaping their local areas and permitting development proposals without the need for planning applications.

Neighbourhoods are to be empowered, taking forward development the way they want it, with a minimum of red tape, having undertaken referenda to ensure local support. Neighbourhoods are also to receive a share of the community infrastructure levy to spend on

local needs that they have defined.Communities still need

development and, importantly, they need the right type of development, which delivers key housing, employment and services.

However, the government’s drive to empower neighbourhoods relies on active, well-intentioned members of the community. They will need to be sufficiently skilled to develop neighbourhood plans and determine applications in the context of the existing local development framework.

There must be serious doubts whether communities will possess the skills to prepare a neighbourhood plan capable of delivering the necessary development. In all likelihood, the new system will give rise to local planning decisions being dominated by a few sharp-elbowed, middle-class residents

‘‘ There must be serious doubts whether communities will possess the skills to prepare a neighbourhood plan capable of delivering the necessary development

comment Peter Weatherhead, director, DtZ development consulting

with time on their hands, whose views are not necessarily representative of the rest of the community.

Whether holding referenda will ensure community buy-in remains to be seen, and potentially raises issues of democratic accountability.

Some neighbourhoods – and it is far from clear how they will be defined – will undoubtedly not want to encourage development, despite the lure of the New Homes Bonus.

Questions remain as to how neighbourhood plans will take a positive line in securing much-needed development in these circumstances.

There are also unanswered questions as to how neighbourhood plans will fit within the statutory local development framework system. What happens when a neighbourhood does not go along with the core strategy’s proposals for the wider area?

Front-loading the development process by introducing a legal requirement to consult at length with local communities is bound to prolong the delivery process. For developers, getting the support of neighbourhoods will be vital in getting developments off the ground.

Similarly, these neighbourhoods will need to consult to ensure that the aspirations set out in these neighbourhood plans are actually feasible.

The result will be a far longer process and even more red tape for developers.

Allister [email protected]

Councils across England could stymie a Treasury- led fire sale of regional devel-opment agency (RDA) assets by using provisions in the Localism Bill, according to legal experts.

Under plans set out in the bill, communities across England are to be given the right to buy assets consid-ered to be of community value. Councils will be required to maintain a list of public or private assets of community value, which will either be nominated by com-munity members or by the council itself.

When assets on the list come up for ‘disposal’ – either the sale of the freehold or a long-term lease – a mor-atorium will ensue, called a ‘community-countdown’, during which communities will have time to prepare bids to take hold of the asset

Allister [email protected]

Council leaders will become ‘shadow mayors’ prior to ref-erenda in 12 English cities, with ministers dangling the carrot of extensive new pow-ers for town halls that take on the mayoral model.

Under the plans set out in the Localism Bill, the govern-ment will make an order by which council leaders of the 12 largest cities outside London would become ‘shadow mayors’

neWs Provision that allows communities to bid for threatened assets might have unforeseen results

‘Right to buy’ could be used for RDA assets

neWs Mayoral model to be set up in 12 cities, with leaders appointed and confirmed by referenda in 2012

Bill pushes ahead with creation of mayors

in question. The length of the moratorium will be set by the secretary of state.

Ministers have said the community right to buy is aimed at allowing communi-ties to take over threatened assets such as leisure cen-tres, swimming pools, pubs or village shops.

However, the bill sets no limit on the type of asset that could be nominated as of community value. It only states that it could be a build-

and be given the powers available to existing directly elected mayors.

However, the bill also cre-ates the power for the secre-tary of state to transfer “any function of any public body” to mayors, a move the Local Government Association described as “potentially having huge significance” in the drive to join up public services at the local level.

The Department for Com-munities & Local Govern-ment said the 12 cities – Bir-mingham, Bradford, Bristol,

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If the Localism and Decentralisation Bill were a Christmas present, it would be a giant jar of liquorice allsorts. Overall it looks attractive and there are many things we like, but some of the ingredients require more chewing over, and others leave an odd taste.

Take the measures to promote stronger local democracy. The general power of competence is important and very welcome, yet it is highly qualified in the legislation, and its limits and opportunities will become clearer when it is debated in Parliament and then tested in the courts.

One very clear limitation is around finance – communities secretary Eric Pickles does not want councils to find a way around the straitjacket on council tax.

The government says councils can raise more money locally, but this will be subject to a referendum. Who can argue against a ‘democratic’ test around local taxation, or indeed other issues that may be subject to referenda under provisions in the bill?

Yet this approach looks like double standards from Whitehall, where the chancellor exercises huge powers to vary, at a stroke, the tax we pay from one year to the next without being subject to a referendum. Why is the electoral mandate considered a democratic basis for national politicians to govern but not for local politicians?

The approach to models of political leadership also displays a degree of contradiction. I support the measures in the bill to allow councils to opt to return to the committee system if they wish. I do not expect that many will opt for this, but that is their choice and it was wrong for the last government to force councils to adopt a particular form of governance model.

comment Andy sawford, chief executive, LGIU

It is now equally wrong for the current government to be trying to foist mayors on to our larger cities by triggering referenda and making the current council leaders into ‘shadow mayors’ with extra powers.

Local people can already opt for a mayoral model if they wish, and it is wrong to grant the proposed additional powers only to mayors, rather than all council leaders.

Other parts of the bill under the broad ‘democracy’ heading look less controversial.

Few will mourn the passing of Standards for England, or the scrapping of the pre-determination rules on planning that sometimes prevented councillors from speaking up on behalf of residents.

The community right to challenge and the community right to buy are surely to be welcomed in principle.

Other elements, such as the ‘pay accountability’ proposals to require councils to publish senior salaries, are hardly a surprise .

Finally, the biggest question of all for local government right now is how all these proposals sit alongside the finance settlement. Many provisions in the bill have financial implications, and a proper financial impact assessment must be made.

neWs Provision that allows communities to bid for threatened assets might have unforeseen results

‘Right to buy’ could be used for RDA assets

neWs Mayoral model to be set up in 12 cities, with leaders appointed and confirmed by referenda in 2012

Bill pushes ahead with creation of mayors

fears in the regions of a Treasury-led fire sale of RDA land and property.

But Steven Smith, partner at law firm Eversheds, said that under the provisions of the bill, the type of land that could be included on the list of assets of community value could be “very wide-rang-ing”, meaning councils could elect to include RDA assets, thereby potentially delaying the sale of those assets.

“At the moment poten-tially land held by any public body, including the significant assets currently owned by the outgoing RDAs, could be put on to such a list,” he said.

A Department for Com-munities & Local Govern-ment spokesman said whether RDA assets could be defined as community assets would be “subject to regulation, which will be drafted following public consultation in the early part of 2011”.

the mayors would gain any substantial new powers, say-ing that this would be “fur-ther explained during the course of the Parliament”.

As revealed in LGC (22 November, LGCplus.com/5022221.article), it was cross-Whitehall disagree-ment over plans to hand mayors powers that led to an initial delay to the Localism Bill. Work and pensions sec-retary Iain Duncan Smith had refused to allow mayors to take on welfare pro-grammes and budgets.

ing or any other structure as well as land, including “mines and minerals”.

This raises the prospect of councils including the assets of the soon-to-be-abolished regional development agen-cies on their list of assets of community value.

The government has said the disposal of about £500m in RDA assets will be under-taken through a process that takes account of the need for deficit reduction, prompting

Coventry, Leeds, Leicester, Liverpool, Manchester, New-castle, Nottingham, Sheffield and Wakefield would hold referenda on local election polling day in May 2012.

For areas that vote in favour, mayoral elections would be held on local elec-tion day in May 2013 using the supplementary vote sys-tem used at the moment for directly elected mayors, including that of London.

DCLG said the postholders would serve four-year terms but was unclear over whether

community assets could include brownfield sites ‘‘

Why is an electoral mandate considered a democratic basis for national politicians to govern but not for local politicians?

more onLIneFor more, including the Localism Bill as it happened, visitLGcPlus.com/Localism

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