Early insights into the English Devolution and Community Empowerment Bill

The much anticipated English Devolution and Community Empowerment Bill (“the Bill”) was finally issued late yesterday afternoon which sets out the government’s plans on Strategic Authorities and many other matters which will be of significant interest to local government colleagues as they navigate LGR and devolution, and those in the wider sector.

So what does the Bill say? At this early stage we have not had opportunity to analyse the full contents of the Bill in detail, but will be doing so with a view to publishing further more detailed analyses of its content, and what this might mean for local government.

Rather unusually, the government has also issued (among other things) guidance to the Bill, which gives a helpful oversight and explainer behind some of the provisions.

The guidance states that the Bill includes measures that fall under 3 broad categories, being:

• Devolution – describing structures and outlining and expanding powers for Mayors and authorities, and explaining routes to devolution;
• Local government – ensuring the process for LGR supports the ambitions of the White Paper, outlining changes to local authority governance, reforming accountability and introducing effective neighbourhood governance structures to amplify local voices.
• Communities – giving more power to local communities to purchase assets of community value and making reforms to commercial leases.

Devolution

The Bill makes it clear that government is aiming to introduce “Strategic Authorities” for every area of England. Existing Combined Authorities, Combined County Authorities, the Greater London Authority, and in rare cases a single council which reached an agreement with government to access non-mayoral devolution, will become Strategic Authorities, meaning a change in terminology, but what does this mean?

Government proposes that there will be three “levels” of devolution:

• Foundation – authorities without an elected mayor – limited devolution
• Mayoral – authorities with an elected mayor – greater devolution
• Established Mayoral – mayoral authorities which satisfy additional governance requirements – broadest range of devolved powers and functions, and an ability to request further devolved powers from central government – the criteria is set out in the White Paper.

Strategic Authorities can progress through the levels but cannot be in more than one level at the same time. The government also state that Strategic Authorities will not replace councils which will continue the important work of representing local communities and delivering key services like adult social care.

Government also intends to roll out devolution by default, rather than each region negotiating its own deals, meaning that there will be a standardised devolution framework to tackle inconsistency between areas.

The “framework” will be a standardised set of powers, funding commitments, and partnership/collaboration arrangements with government, setting out what each “level” of devolution is entitled to.

The Bill intends to give powers in the framework automatically to each level of Strategic Authority. It will also “unblock” decision making by creating a standard simple majority (including the Mayor where there is one) voting method to take most decisions.

The Bill also recognises 3 ways of supporting continuing and deepening devolution:

• Power to expand the Devolution Framework over time using secondary legislation
• Ability for specific Strategic Authorities to pilot devolved powers
• Empowerment of Established Mayoral Strategic Authorities with a right to request devolvement of further powers, funding and partnerships

Strategic Authorities will have “areas of competence”, setting out the functions, funds, and partnership arrangements that Strategic Authorities have and could have in the future. Further information is set out in the Devolution Framework Explainers.

The areas of competence being:

• Transport and local infrastructure
  
  • Will be the Local Transport Authority
  • Oversight of and powers in relation to local transport networks (including power to manage concessions)
  • Requirement to produce Local Transport Plan – constituent councils will be required to implement – needs to align with Strategic Authority leading on growth and spatial planning
  • Ability to charge compulsory “transport levy” on constituent councils
  • Can pay grants to constituent authorities to help with delivery of transport activities
  • Strategic Authorities to play a coordination role in relation to local road networks
  • Mayoral Strategic Authorities will have additional powers and will be required to set up a Key Route Network ensuring strategic oversight of the most important local roads – power of direction over constituent councils’ use of highway and traffic powers on the Key Route Network – Mayors given legal power to set Traffic Reduction Targets on the Key Route Network
  • Regulation of on-street micromobility schemes – initially shared cycle services, but possibility to expand to include e-scooters and pavement delivery services
  • Ability to apply for Penalty Charge Notice powers (with consent of constituent authorities)
• Skills and employment support
  • Transfer of adult education functions from central government
  • Adult Skills Fund – to be used as Strategic Authorities see fit to meet the skills needs of adults in their region – involves significant local discretion with funding provided on a non-ringfenced basis
• Housing and strategic planning
  
  • New planning powers similar to Mayor of London
  • Includes power to direct refusal of planning applications of potential strategic importance and ability to call in such applications
  • Under the Planning and Infrastructure Bill Strategic Authorities will be required to publish a Spatial Development Strategy (SPD) – Mayors will be able to use the planning powers where this is in place
  • Ability to prepare Mayoral Development Orders (MDOs) which can be used as a tool for the Mayor to grant planning permission for a particular development instead of relying on an application being submitted. Currently consent is required from the local planning authority, but this will be removed – local planning authorities will however be required to be consulted and to approve a MDO – where the local planning authority do not approve, the Secretary of State can approve instead
  • Mayoral Community Infrastructure Levy (CIL) if there is a SPD in place – Mayor will require a simple majority of constituent councils to approve a Mayoral CIL charging schedule – Mayors will have a casting vote in a tie
  • Power to designate a Mayoral Development Area (MDA)
  • Power to establish a Mayoral Development Corporation (MDC) without the need for secondary legislation
• Economic development/growth and regeneration
  
  • Requirement (except GLA) to produce Local Growth Plan to provide focus for other plans to set out how and where economic growth can be supported, setting out an economic overview, shared priorities with government, and an investment pipeline
  • Requirement for certain public bodies to have regard to the shared priorities of each Local Growth Plan, if relevant to what those public bodies do (public bodies to be named in regulations)
  • Requirement to work with Local Government Pension Schemes (LGPS) on local projects which deliver social or economic benefits for local communities as well as the financial returns necessary to pay pensions – purpose is to increase LGPS investment in local projects – separate bill – Pension Schemes Bill to place responsibility on the LGPS administration to work with Strategic Authorities
• Environment and net zero/climate change
  
  • Bill does not transfer statutory environmental or climate related functions, government recognises importance of local leadership – government will continue to explore future opportunities for devolution in this area
• Health, wellbeing and public service reform
  
  • Requirement for Strategic Authorities to have regard to the need to improve health and reduce health inequalities – will not apply to the GLA and any single local authority designated as a Strategic Authority
• Public safety
  
  • Commitment to increase number of Mayors with PCC and FRA functions which enables joined up local services and an integrated approach in local outcomes
  • Where mayoral geographies align with PCC and FRA geographies, Mayors will by default be responsible for these functions
  • The Bill also allows Mayors to exercise PCC functions over more than one police force area where those forces align with a mayoral geography
  • Exploration of mergers of FRAs under one Mayor
  • Where a Mayor exercises PCC functions – requirement to appoint Deputy Mayor for Police and Crime for each force area
  • In some areas, police forces will cover parts of two different Strategic Authorities, and in this case the Mayor will not be responsible for police functions
  • The Bill will allow the SoS to change police and fire boundaries at the same time as transferring PCC and FRA functions to Mayors to support alignment of police and fire boundaries

The Bill will provide Mayors with “Mayoral Powers of Competence”, the intention being to drive growth, collaboration and improvements. These are made up of:

• The General Power of Competence enabling the Mayor and the Authority to do anything an individual can do
• A power to convene local partners to address local challenges
• A duty on local partners to respond to a request from the Mayor when they use the power to convene
• A duty to collaborate ensuring that Mayors have a formal process to collaborate with neighbouring Mayors to deliver projects and strategies

“Local partners” are to be defined in regulations, however it is anticipated that this will include local authorities, NHS partners, police and fire services and organisations providing other public services.

London

Our London based colleagues have not escaped some form of legislative change. 

The GLA will be treated as an Established Mayoral Strategic Authority (therefore the third level and top tier of devolution) – government state that because the GLA was set up differently to other Mayoral Strategic Authorities, and has a different devolution settlement, the powers and duties in the Devolution Framework will be applied to the GLA on a case-by-case basis (so much for uniformity and standardisation then).

The GLA will also have power to request additional devolution and pilot arrangements for itself and its functional bodies either alongside other Strategic Authorities or to the GLA or functional body only.

The GLA has a number of “functional bodies” as follows:

• Transport for London (TfL)
• The London Fire Commissioner (LFC)
• The Mayor’s Office for Policing and Crime (MOPAC)
• The London Legacy Development Corporation (LLDC)
• The Old Oak and Park Royal Development Corporation (OPDC)

Before devolving or piloting powers to the GLA or a functional body, government will consult with London Borough Councils, the City of London and the London Assembly. The Bill will also enable TfL to dispose of operational land without the consent of the SoS, but this is subject to a requirement to consult with Network Rail.

Reforms to how Strategic Authorities operate

Strategic Authorities will be able to pay constituent council members for work done on behalf of the Strategic Authority, and the level of pay will be determined by the Strategic Authority’s independent remuneration panel.

In a radical move, the Bill allows for an Elected Mayor to appoint up to 7 “commissioners” each of which is only able to work in one of the “areas of competence”, and who are not members of the Authority. Mayors will determine their portfolios and will be able to delegate some functions to them. This of course raises questions about unelected officials undertaking public functions and will be an interesting area moving forward.

Where a Mayor exercises PCC and or the FRA function they will still be able to appoint a Deputy for policing and crime and for them to take on the same role for fire, or appoint a separate Public Safety Commissioner to take on fire responsibilities. Where a Mayor does not hold the PCC function, they can still appoint a Public Safety Commissioner but they will have no role in the PCC function.

The Bill will also prohibit a Mayor from being a Member of Parliament at the same time.

The ability of a Mayor to raise a precept will also be unrestricted in the sense that such a precept can now be raised to support all of the Strategic Authority’s functions, whereas presently the precept can only be used to support limited functions.

There will also be a change to voting arrangements on financial matters, which presently are different in each Strategic Authority. The changes will apply a standard voting method of a simple majority, which must include the Mayor, for votes on Strategic Authority budgets. That said, these changes will not apply to the GLA or any single local authority designated as a Foundation Strategic Authority given their different constitution.

Voting system

Something which has been called for from the sector for a long time is a change away from the first past the post system, and which is reflected in the Bill in relation to the election of Mayors. The Bill seeks to change the voting system to a supplementary vote system in place of first past the post, meaning that where a candidate receives more than 50% of the first preference they are elected, however if not, the top two candidates with the most first preference votes go through to a final round, and the other candidates are eliminated. If the votes for any of the eliminated candidates selected a second preference for either of the remaining candidates, these are counted.

Future devolution

Government state that all Combined Authorities and the GLA will be Strategic Authorities by default.

There are 3 main routes to becoming a Strategic Authority:

• Councils may come together to put forward a proposal to establish a Strategic Authority
• The SoS may propose the establishment of new Strategic Authorities with the consent of local places
• The SoS may invite a single local authority to become a non-mayoral foundation Strategic Authority

However, the Bill also introduces a power for the SoS to introduce Strategic Authorities or expand existing institutions without the consent of local areas. There will also be a route for the SoS to require an existing non-mayoral Combined Authority to transition to having an elected Mayor.

Local Government

Structures

The Bill reinstates the ability for the SoS to direct councils to submit proposals to reorganise two-tier areas into a single unitary tier. Presently invitations have been issued for reorganisation to unitary councils, so the government states that they will only use this power of direction should it prove necessary.

The Bill enables the SoS to invite or direct existing unitary authorities to submit proposals for merging, as well as a power for the SoS to abolish an existing Combined Authority as part of LGR.

The Bill also seeks to abolish the discretion afforded to local authorities in terms of governance structures, requiring authorities to adopt a Leader and cabinet executive system. This means that there will be a restriction on the creation of any new Mayor and cabinet models, and the abolition of the committee system. There will however be provision for a local authority operating the elected Mayor and cabinet system to continue doing so.

Accountability

The Bill also proposes an overhaul to external audit arrangements in light of the significant backlog around audited accounts of local authorities. The Bill seeks to create a Local Audit Office to oversee local audit and to simplify and streamline the current system. This will not mean that third party auditors are no longer engaged, but seeks to coordinate the audit system, setting standards, contracting auditors and overseeing and reporting on audit arrangements.

Communities

Community Right to Buy

The Bill seeks to supercharge the current right to nominate a building or land as an asset of community value, into a Community Right to Buy, which gives community groups the right of first refusal to purchase the asset, and extends the moratorium on sale to 12 months (from the previous 6) during which the community group can seek to gather funds to undertake the purchase. The definition of what might constitute an asset of community value is also intended to be extended to include a wider range of assets. There will also be a new type of asset of community value, being the Sporting Asset of Community Value, and an automatic designation of all eligible sports grounds as such.

Neighbourhood governance

This is an interesting one given the proliferation of areas seeking to establish town or parish councils by way of community governance reviews in the wake of reorganisation as a means to address the delocalisation of local government, which is something that the government appear averse to.

The Bill seeks to require all local authorities to establish effective neighbourhood governance to move decision making closer to residents (which some might say appears contrary to the exercise of LGR). The details around this are to be set out in regulations, which will be interesting to read when they are published. The Guidance states that local authorities can still set up parish and town councils but emphasises that the government’s intention is that the neighbourhood governance arrangements they intend to bring in enable a way of working with local people rather than relying on town and parish councils. Watch this space.

Upwards only rent reviews

Finally, the Bill seeks to abolish upwards only rent review provisions in commercial leases in England and Wales, which in the government’s view create market inefficiencies and higher rents during economic downturns. This will also apply to renewal leases. Following the ban, any new upwards only rent review clause in a new or renewal commercial lease will be unenforceable.

Further thoughts

There are also some notable omissions from the Bill which were mentioned in the White Paper. Whilst this is likely to be because these matters will be dealt with by way of other legislation, it would have been preferable to have them all under one umbrella. So, what are these matters?

One matter of significant importance to the sector is the revision of the standards regime presently set out under the Localism Act 2011, in particular the reintroduction of powers to suspend members upon a finding of breach of the applicable code of conduct, and the establishment of an appeals body which has power to disqualify.

Other areas of significant interest are the matter of remote meetings, and the matter of proxy voting. These are issues which have attracted substantial interest and input from the sector, and we would hope that government has suitable proposals waiting in the wings.

As above, this is very much a preliminary overview of the provisions of the Bill, and we will be aiming to produce more detailed analysis in the coming days and weeks.

Given that this is also the first iteration of the Bill, much can change as the Bill progresses through Parliament.

In the meantime, please visit our dedicated devolution and local government reorganisation resource page.

Should you require support around LGR and devolution please contact one of our highly experienced team.