Recent announcements that the Coalition Government seeks to revitalise the "Big Society" movement coincide with the continued progress of the Decentralisation and Localism Bill through the UK Parliament. This article updates our analysis of the impact of the Bill in light of its reception to date by legislators, industry and local government.

Planning and the Localism Bill

The Bill's journey through Parliament has been a long one, involving 24 committee sittings, two days on report and some 80 hours of scrutiny. The passing of the Bill through the House of Commons was only achieved following nearly 270 proposed amendments. The question is whether the Localism Bill as introduced on 13 December 2010 remains the same.

Before being remitted to the House of Lords for further consideration, Rt Hon Eric Pickles MP, the Secretary of State for Communities and Local Government, summarised the main features and aims of the current draft of the Bill as aiming to:

"establish a general power of competence for local government, to increase opportunities for members of the public to participate directly in local democracy, especially via referendums, to vest in communities new rights to challenge the way in which services are provided and to own assets of importance to their communities, to reform the planning system to remove the regional tier, to permit neighbourhood planning and to establish a new duty to co-operate at the strategic level" (Hansard 18 May 2011 : Column 455).

Despite changes to the Bill, its proposals will continue to affect how planning decisions are made and the basis on which they are made. There are minimal changes to the regime governing major infrastructure projects of national importance regulated by the Planning Act 2008. However, the treatment of local developments is set to change drastically - both directly through the removal of regional policies, and indirectly through other changes to local government.

Elected mayors and local referendums

The Bill proposes at Schedule 2 that local communities elect a mayor for tenure of four years with the Secretary of State having broad power to transfer to the mayor any function of any public body. This provision has faced political opposition stemming from the fact that some mayors will be appointed this summer, almost one year before a proposed referendum in May 2012 during which local areas will officially decide whether they wish to appoint a mayor at all.

Concerns have been raised that the appointment of shadow mayors in the interim will provide them with an unfair advantage once formal mayoral elections commence in 2013. From a legal perspective, there could also be an argument that pre-referendum appointments are an infraction of administrative procedure, although the detail of how these changes will be implemented remains to be finalised.

Introducing Local Government Ltd?

In addition to measures prefaced by the Spending Review (as set out in the Secretary of State's open letter to local authorities on 20 October 2010), including: the replacement of Regional Development Agencies with local enterprise partnerships; starting a Regional Growth Fund (worth £1.4 billion) to create jobs and growth in places currently dependent on a public sector–driven economy; and allowing local authorities to borrow against future growth in Business Rates to fund infrastructure projects, the Bill will give councils "control over the issues which matter to local people, including providing councils with the general power of competence they have long called for".

At present, local authorities must act within their statutory powers, or their decisions are vulnerable to legal challenge by way of judicial review. This new "general power of competence" at Section 1 of the Bill essentially removes the statutory restrictions placed on how a local authority can act, and instead allows for a Local Authority "to do anything that individuals may generally do".

One consequence of this is that a local authority may behave like a private entity. If it therefore seeks to exercise its power for a commercial purpose, it must do so through a company as outlined in Section 4(2) of the Bill.

The Local Government Association argues that this general power of competence will enable local authorities to "respond to local issues and priorities ambitiously, confident in their legal footing" (Localism Bill: LG Group On the Day Briefing 13 December 2010). However, the legitimacy of this legal footing could be questioned if the practical effect is that an authority acts through a company to use public funds to achieve public ends whilst governed by private articles of association and not by a statute sanctioned by a parliament of elected representatives.

The House of Commons considered similar points at Committee stage, scrutinising in particular proposed enabling powers regarding trade, the raising of revenue and variation of tax rates, with the associated risks of abuse of public funds. These concerns were raised against the background of new powers that appear to be given to the Secretary of State under Section 5(3) of the Bill, who:

"may by order make provision preventing local authorities from doing, in exercise of the general power, anything which is specified, or is of a description specified, in the order".

Although the Coalition Government ostensibly seeks to break down bureaucratic barriers by granting more power to local authorities, it seems at the same time to be introducing a power of veto to central Government. It is unclear how this system of checks and balances will operate in practice, especially in the context of funding cuts which will limit the ability of local authorities to exercise their new powers in practice.

Unamended amendments

Provisions which have survived the refinement of the Bill to date include:

  • the abolition of Regional Spatial Strategies, the impact of which the CLG Select Committee Report of 17 March 2011 queried in respect of the emerging Local Development Framework and the effective transfer of cross-jurisdictional policy-making powers from ministers to local authorities; and
  • introduction of neighbourhood plans and neighbourhood development orders, intended to enable communities to influence council policies and development in their neighbourhood.

Along with these features of the Bill, criticisms of them also persist:

  • Difficulty in monitoring the cumulative impacts of locally determined planning decisions and an inability to ensure the application of sustainability and climate change duties as they fall outwith the scope of the Planning Acts 2004 and 2008;
  • Concerns as regards to the accessibility and fairness of the neighbourhood planning process and the potential for the influencing of neighbourhood development.

 Next steps

Steering this supertanker of a Bill through the parliamentary process is not over yet. With the publication of the draft National Planning Policy Framework upcoming, and the second reading of the Bill in House of Lords due on 3 June, further diligent navigation is required if the government's course is to succeed, and there is no guarantee of an easy passage.