As they read through the Localism Bill, or at least a summary of it, many councillors and council officers will be thinking: ‘Just what will the proposed General Power of Competence do in practice?’
In theory, the GPoC, a central aspect of the Localism Bill, will give local authorities the right to act in any way that is not specifically prohibited by law, something that no other public body can do. Very exciting, one would think; however, what the Localism Bill gives with one hand, it potentially takes away with the other.
While the Localism Bill should mean that courts will no longer have the ability to challenge councils on the grounds of ultra vires (essentially local authorities acting beyond their statutory limits), the Bill also contains the caveat that the Secretary of State for Communities and Local Government can, as a last measure, step in and veto a council’s actions.
So, the result could be that the fear of challenge that currently inhibits innovation in local government may not change that much, despite the introduction of the GPoC. Indeed, recent comments by some think-tanks at a sitting of the Localism Bill Committee would support this view.
However, if one disregards this pessimism and instead takes the more realistic view that the ministerial veto will be a measure to be used in last circumstance (if a county council was raising a particularly vicious looking militia, for example), and one that is unlikely to be abused, then the GPoC becomes a promising prospect for local authorities.
Consider, for example, two of the measures being taken by local authorities in response to current economic conditions, and how a GPoC could support councils to more successfully implement them.
The first development is the council as ‘commissioner’ – still responsible for ensuring residents receive statutory services, but not necessarily for directly providing them. Research, conducted by Localis and commissioned by May Gurney, suggests that councils already outsource around a quarter of their services, on average – but that looks set to increase as budgets are cut. A GPoC could allow local authority ‘outsourcing’ to take on a much more intelligent and locally accountable design.
Joint venture partnerships between a local authority and private sector service providers are rare, but they have been shown to be effective when commissioned. Indeed one that we have implemented with Torbay Council has shown that private sector innovation combined with local authority strategic input can produce substantial savings and create services that are more responsive to residents’ needs.
However, such JVs are unusual. This is in no small part due to the considerable uncertainty surrounding local authorities’ rights to engage in cost-cutting enterprises if it is not immediately demonstrable how the exercise will directly promote the well-being of an area.
Yet it is obvious to councils themselves that maintaining control of services while incorporating commercial innovation will benefit the area in the long-term. Thankfully the GPoC, as currently formed in the Bill, presumes that local authorities know what is in the best interest of an area, removing the requirement for innovating councils to prove their case to the judiciary.
Another much-vaunted efficiency measure, in terms of reducing service costs without lowering standards, is the roll-out of shared services. It has been predicted the sharing of service provision by a group of local authorities can create savings of up to 40%.
The GPoC will specifically allow for councils to exercise power outside their boundaries. In theory, this could allow groupings of councils to work with external providers to deliver services across a region, potentially entering into multi-authority JVs. It could also allow for cutting-edge local authorities to take a leadership role in supporting surrounding areas to become more efficient.
Although it isn’t just the ability to engage in new cross-border service models that is exciting. Councils involved in Local Enterprise Partnerships have been set the task of working with the private sector in a defined geographical area to grow local economies and support regeneration. Giving councils the power to act without statutory limitations across borders will undoubtedly provide local authorities with more freedom to support their LEP’s aims.
These are just two very practical examples, but the truth we just won’t know the limits of what the GPoC will allow councils to do until we observe how authorities embrace the power in practice.
However, we would call for even more freedoms to allow councils to truly take advantage of their new powers. Procurement regimes may still stand in the way of councils offering services to other purchasers, for example, while rules regarding TUPE will need to become more flexible if local authorities are to enter into JVs and transfer staff into newly formed commercial entities.
There may still be GPoC doubters, but we have just witnessed a government return more powers to local authorities than has happened in many generations. Local authorities, meanwhile, with their success at implementing Gershon savings and consistency in meeting strict annual book-balancing conditions, have long been considered the most prudent arm of government in the UK.
With their expertise and direct interest in supporting their local area, local authorities that are able to embrace the full potential of these reforms will be able to offer sustainable services to residents.
Matt Stevens is group finance director at infrastructure specialists May Gurney
