20 January 2006
Once again there is a conflict between the government's policy intentions and the law. This time it affects one of the main planks of its local reforms: Local Area Agreements. But there is solution
Local Area Agreements are at the forefront of the government's refreshed reform programme. They have been called the 'new frontier' for local authorities, offering the panacea of collaborative working. And local government minister Phil Woolas has described them as 'the most significant change in public service and local funding that we have had since the Second World War'. But are they legal?
LAAs involve a variety of public sector stakeholders working together and pooling resources to identify solutions for a region on a 'holistic' basis compared with the old departmental 'silo' mentality. This is a laudable aim and the benefits are clear. Almost all the government's main policy goals would be achieved if LAAs were successful, including efficiency gains under Sir Peter Gershon's review, Best Value, the localist agenda and better scores under the Comprehensive Performance Assessment (CPA). Looked at this way, you can see why ministers are so keen on them.
Recently, though, Suffolk County Council was advised that its LAA was unlawful. Not for the first time, a tension has arisen between the government's policy goals and the legal framework in which authorities have to operate. This fault line threatens the development of LAAs to the next stage and needs urgent resolution. It appears that the difficulties are not about the agreements in principle, but how they operate in practice.
In law, the partnership responsible for the LAA is an unincorporated association, ie, an informal grouping with no separate legal identity. It is therefore unable to enter into contracts, sue or be sued in its own name. In Suffolk, the stakeholders include the county council, the district councils and others, all of which have different functions. The LAA commands a budget of over £60m but those funds are exclusively determined by legislative means, ie, Acts of Parliament empower the performance of various functions and provide specific funding for this purpose. It has been a characteristic of government for many years to attach detailed strings to funding.
This is the essential problem for Suffolk. If legislation dictates how these functions must be performed and funded, it is not possible to give the decision to another, unelected, body to determine. In the words of one sceptical chief legal officer, an LAA may be characterised as 'decisions made by a group of random people without a legal basis for doing so'. Legal advisers therefore indicated that the arrangement was outside the local authority's powers.
This is not the first time that such a dilemma has arisen. From the start of the government's 'Modernisation Agenda', the legal framework ministers inherited in 1997 has struggled to cope. Problems have been encountered with the Private Finance Initiative, joint working, wellbeing powers and trading, which all needed legislation to fix.
For LAAs, there are a number of ways forward. The partnership can amend the way it works to stay on the right side of the law. An example might be that a meeting determines that a particular function should be funded but this decision is then referred back to the appropriate local authority or public body to put into effect strictly in accordance with its statutory powers.
Michael Frater, chief executive of Telford & Wrekin, has emphasised this, stressing that 'shared cultures, not pooled budgets, are what matter… Where there is a will, there is a legal way'. While that might work for some, it will clearly not be acceptable to others.
Another way is for the government to use Section 31 powers in the Local Government Act 2003. This allows it to pay a grant to a local authority towards expenditure incurred by it. Sub-section (4) provides that a grant may be 'paid on such conditions as the person paying it may determine'. This allows the government to determine that certain funds are conditional on their approval by some form of LAA arrangement.
Regrettably, we do not believe that this will prevent further confusion, particularly where specific statutory powers conflict with the conditions that have been imposed.
In our view, the real solution to this dilemma is further legislation. There was always likely to be a difficulty when a policy as important as LAAs was introduced in an administrative, rather than a statutory, fashion. These difficulties have been flagged up before, particularly in relation to
e-government and also the CPA, neither of which had a specific statutory basis when they were introduced.
If LAAs are as important as everyone says, then surely they ought to be put on a proper statutory footing? That would remove once and for all these legal difficulties and confirm beyond doubt the way they can work and the effect of their actions on other elements of the legal framework.
Stephen Cirell is head of local government and Professor John Bennett is a consultant solicitor with Eversheds. They are authors of Best Value law & practice and Charging & trading in local government, both published by Sweet & Maxwell
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