By David Williams
13 December 2010
Local government minister Bob Neill has told Public Finance that today’s Decentralisation and Localism Bill will usher in a new ‘can-do’ era for councils.
The Bill, which proposes reforms spanning the local government sector, will bring in a much-trailed general power of competence, which ministers say will entitle authorities to do almost anything not forbidden by law.Neill told Public Finance this morning that, under current arrangements, councils can only do what statute enables them to do but the new power would make more joint working and financial innovation possible.
He said the power would remove legal barriers to ventures such as the London Authorities’ Mutual Limited, which was blocked last year by the High Court.
Councils will be prohibited from levying new taxes or starting wars, but ‘very little’ else.
Neill added: ‘You always keep some reserve powers – that’s naturally the case – to make sure people didn’t go completely off the road and behave irrationally.
‘You have to make sure that in certain cases – vulnerable people are a good example – there has to be greater ground for intervening. That’s why you keep a bit of flexibility in the system to deal with that. But we’re talking about the extreme type of case.’
He said sharing functions such as information technology, legal services or chief executives would now be expected of councils. ‘Most observers and the public will be expecting councils to be doing it. We won’t be compelling councils to go down that route,’ he said. ‘Residents will start judging their councils very harshly when it came to the ballot box if they weren’t making sure they did all that sort of thing to take out the corporate core before they started making reductions in actual front line services.’
The Bill will dismantle the current housing revenue account system, in which rent receipts are pooled and redistributed centrally. Local authorities will have the opportunity to buy themselves out of the scheme, by taking on public housing debt currently held by central government.The idea was first outlined earlier this year by John Healey, housing minister in the previous Labour government, who proposed a transfer worth £3.6bn. However, it is not yet clear how closely the coalition will stick to that sum. Neill indicated there would be some adjustment to reflect the most up-to-date figures.
The Bill sets out new rights for ‘communities’ to become more involved in planning, and to take over services or local assets. However how a ‘community’ is defined in law is expected to become a central issue as the bill is debated in Parliament.Neill said communities would around the size of a parish area, or a ‘couple of local authority wards’. But residents of a particular road would not be allowed to form a community.
Ministers are also proposing to bring in local referendums if a council plans to levy a council tax rise deemed ‘excessive’ by the secretary of state.Neill denied this was a means for central government to exert control over local authority financing, and said the secretary of state would only be setting a ‘trigger’, while the decision to pull it remained with local people.
Contrasting the new system with the current ‘rate-capping’ impositions, he said: ‘We’re removing a very top-down power, where the secretary of state can say “thou shalt not”. What we’re now saying is “thou can, if”, and letting the local authority make the case to its electorate.
