Going Nuclear? A general power of competence and what it could mean for local communities

The Government’s new General Power of Competence for local authorities will only work successfully if councils are given clear legal freedom according to the New Local Government Network.

In a new report the think tank urges the Government to abolish the ultra vires principle – in place to ensure that councils do not stray beyond their powers – and allow them to implement actions unless they are expressly forbidden by law.

With parliament shortly to consider legislating for a General Power of Competence for local authorities, NLGN’s report sets out a series of innovative activities that councils could consider adopting and makes recommendations on how the reform should be enacted.

In the context of local authorities losing a third of Central Government funding over the next four years, the research argues that councils must be freed to develop new revenue streams and income, and allowed to work more innovatively in partnership with the private sector, local community groups and other public bodies to drive out savings and re-design services.

The research analyses possible new ventures and activities for local authorities to consider, including

• offering banking, insurance and credit services to local businesses and residents;
• grouping together in innovative partnerships to drive efficiencies and generate income or to devolve powers and responsibilities to the neighbourhood level;
• trading and selling a wider range of products and expertise (such as recruitment services, energy, communication and business services) to the private sector as well as other public agencies;
• varying charging rates for planning and licensing fees to reflect local circumstances and costs;
• adjusting tax rates and reliefs to incentivise behaviour on recycling, business development or property usage.

In legislating for change, the report calls on the Government to consider a series of additional freedoms to make the reform meaningful. These include allowing councils to act as they like in the interests of their local communities as long as their action is not specifically illegal, permitting local authorities to flex and vary taxes within the existing tax regime and carrying out a thorough examination of current laws to remove inappropriate legislation.

Report author and NLGN’s Head of Research, Nigel Keohane, said:

‘This power has the potential to be a major piece of reform that heralds a new era of localism. For too long, democratically-elected councils have been restricted in what they can do and vulnerable to legal challenge for adopting innovative responses to local challenges.

‘In the difficult financial landscape ahead, local authorities need full discretion to engage in new ways with their community, to save money through efficiencies and to develop income to safeguard frontline services.

‘To work it will require a leap of faith from national politicians to give local areas the necessary latitude for innovation to thrive. It will then rest on the ambition and aspiration of local communities to determine how best to improve the lives of their residents.’

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