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The Localism Act - top ten

1 December 2011

The Localism Act top ten

The Localism Act is huge, both physically and in terms of importance for public authorities. Setting the planning aspects aside, weve put together a brief overview of our top 10 hits affecting local authorities.

1. General power of competence

Heralded by the Government as the panacea to previous limitations on local authorities acting in ways which benefit their area, it allows local authorities to do anything that they are not specifically prohibited from doing. So how far can local authorities really go? The big question is how liberally it will be interpreted by courts if challenged.

2. Commercial activity

Local authorities are being encouraged to be innovative and improve their financial resources. Where local authorities have the power to act under the general power of competence, this may be done as a commercial activity which can include making a profit. The limitations to the power are similar to the s95 trading powers which continue to be in force and there are limitations similar to the s93 charging power in relation to recovering the costs of a service. For commercial activity under the act, it is still necessary to set up a separate vehicle which means that local authorities may continue to look at other options.

3. Standards

Standards for Englands regulatory function will shortly cease and there will be no national model code of conduct. However after much debate local authorities must still "promote and maintain high standards of conduct" and adopt a code. What that will look like and how standards will be managed is for the local authority to decide so long as the code includes the requirements set out in the act.

4. Governance arrangements

Local authorities now have the option to convert back to a committee-style arrangement or to an elected mayor and cabinet system. This second option was previously available but the manner in which this can now be decided is considerably different. The Government hope to encourage more local authorities to follow this style of leadership. Who will be the next Rudy Giuliani?

5. Delegation of additional powers

County and district authorities, combined authorities and economic prosperity boards can be delegated additional powers from other public authorities or Ministers of the Crown if deemed appropriate and if it will increase local accountability and it can be "appropriately exercised" in this way. This could end up creating quite large differences between the remits of the larger cities and other authorities who may be less able to take on additional powers.

6. EU fines

In a much watered down version of the original wording, local authorities may be required to contribute to fines imposed by the EU if their actions have played a part in the sanction. The Secretary of State needs to issue a policy on the procedure for deciding to enforce this. The local authority can appeal the decision but it has the potential to be very expensive, especially in areas such as State aid.

7. Pay

Local authorities and fire and rescue authorities are now required to publish a pay policy statement which sets out how decisions are made about the salaries of the highest paid officers and how that relates to the lowest paid jobs. The act is quite prescriptive in what the statement must contain and it must be approved by a resolution of the full authority.

8. Community right to challenge

This gives local organisations the opportunity to take a more active role in the provision of services in their area. There are obvious costs such as running more procurement exercises which local authorities will have to take into account when looking at any requests.

9. Community right to bid

Sometimes incorrectly called the right to buy, this requires local authorities to keep lists of assets of community value as described in the act. Assets can be nominated by the community and the local authority must consider adding them to the list. When these assets come up for sale, community organisations must be given the chance to put in a bid and raise finance. There are a number of limitations to this right and it has been suggested that community organisations will not have enough time to put together suitable bids.

10. Housing

Local authorities are to be given considerably more freedom to make decisions on social housing, including allocation of housing and length of tenancy. By abolishing the Housing Revenue Account, local authorities have the potential to release more funds to be spent on social housing. Local authorities being able to manage their housing budgets based on longer term financial models and raise additional funding could be one of the biggest impacts of the act.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

Peter Ware

Peter Ware

Partner and Head of Government Sector

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