The other day a group of 20 local government officers and councillors gathered at the LGiU offices to discuss the implications of the General Power of Competence. In its current form, the new powers in Part 1 Chapter 1 of the Localism Bill will give local authorities the same power to act as an individual has, offering councils the opportunity to develop new and innovative business models in ways that were previously disallowed.
The seminar explored the implications of the new Power and aimed to address a number of questions including:
- How does the General Power of Competence differ from the Power of Wellbeing?
- How can it promote innovation at a local level?
- How does it affect the role of leadership within a council?
- What are the implications for local partnership working?
- What forms of commercial activity will be opened up by the new powers?
Our first speaker, Nicholas Dobson, Senior Consultant at Pannone LLP gave a fascinating overview of the legal background and implications of the General Power of Competence. His presentation, embedded below, covered several key points.
- Even with the new powers, there are still a number of constraints on local authority powers, primarily their equalities duties and the Human Rights Act.
- Despite this, the General Power of Competence does appear to be a genuine attempt by Parliament to broaden the power base of local government.
- Unlike the Power of Wellbeing, the power allows councils to take actions that are not necessarily designed to contribute to the wellbeing of their local community. It also includes the power to do things “anywhere in the United Kingdom or elsewhere”.
- However, the Secretary of State will still have considerable power to intervene. S/He can remove any existing statutory restrictions which impede the exercise of the competence power; prevent authorities from doing specified things and to impose general or specific conditions on the application of the competence power. This can only be tested by councils starting to use the power.
- Nick concluded that the new power wasn’t magic, but is an important new measure that should deliver increased confidence, enable innovation and unlock creativity. He stressed the need to make it clear in decisions that the competence power is the relevant power relied on.
- Nevertheless, he suggested that the current powers are broad enough for councils to start to do this if they want to. What holds many councils back is organisational culture rather than legislation.
John Maddocks, Policy and Technical Manager for CIPFA followed Nick with an interesting presentation on the role of social enterprise and the different models available to local authorities. He commented that while social enterprise seems to be growing in popularity for policy makers, there is still a lot of confusion about how they are defined. A social enterprise:
- undertakes trading activities (50% > of income);
- has a social purpose;
- reinvests its profits (50% > reinvested);
- is independent;
- has an asset lock;
- is accountable for social goals (possible through the social enterprise mark); and
- has a participatory structure.
He described four main types of social enterprise: 1) charities that trade, 2) community interest companies, 3) mutual, and 4) co-operatives (which are a distinct type of mutual). The presentation also included several useful case studies and can be found here.
Mark Hynes, Director of Governance and Democracy at Lambeth Council gave an engaging overview of Lambeth’s ‘Cooperative Council’ model and the implications of the General Power of Competence. Lambeth was one of the councils originally involved in the Local Authorities’ Mutual Ltd (LAML) judgement, which ruled that local authorities could not use the Power of Wellbeing to establish a mutual insurance company. This setback has not prevented the council from taking on new challenges however. With the launch of the ‘Cooperative Council’ vision, Lambeth has announced that they are opening their doors to a wide range of service delivery models including mutual, shared services, federated services, joint ventures with 3rd Sector and social enterprise. They aim to:
- turn citizens from passive recipients into active shapers of services;
- deliver more effective, more responsive services by giving users more control;
- strengthen civil society so it’s better able to deal with challenges; and
- do things ‘with’ their communities rather than ‘to’ their communities.
Mark discussed why the General Power of Competence is important for councils and how it will help them to achieve their vision, noting that the new legislation does not specify how councils should deliver services, but clarifies their freedom to do things their own way. In this way it will help to heal the wounds left by the LAML case and give councils the confidence to develop approaches that suit their own localities.
Paul Probert, Senior Policy Manager at Essex County Council spoke about Essex’s current use of the Wellbeing Power and the impact of the General Power of Competence. He was generally sceptical of the suggestion that the new power would unleash a wave of entrepreneurialism in local government. He argued that people who think in an entrepreneurial way will make the biggest difference: while the new power will support this way of thinking, the tools to develop innovative approaches are already there. Nevertheless, it may help to address the hesitancy of local government in using the Wellbeing Power (in a recent survey only 15% said they had made use of it). Paul spoke about four Essex projects that have sought to deliver services in new and innovative ways:
The Post Office. Five years ago, the Post Office announced that it would be closing a number of its branches in Essex. The County Council looked into ways of delivering these services differently. There were various models, which generally involved contracting the service to an existing sub-postmaster. Different levels of service were offered, from re-provision of the existing service, to pop-up services in the local pub or other community centre and pay-point terminals providing basic postal services. The first Post Office reopened in 2008 and Essex has since been approached by 150 councils hoping to replicate the project.
Banking on Essex. Essex CC partnered with Santander to establish a local authority bank developed to offer loans to small businesses based on local authority reserves. Local businesses were reporting they were finding it difficult to access finance, and the council saw it as an opportunity to cross-sell free support services to bolster the local economy. The bank opened in March 2009 and made a number of loans, but several factors, including a change of leadership, FSA regulation and the more challenging financial climate have resulted in a decision being taken to close the business this year.
Essex Cares. Essex was the first local authority to set up a traded service focusing on social care. 850 staff moved across from the council to the new organisation, which was set up as an independent company owned by its shareholders. It offers support in the home and the community. It made a profit of £3-3.5 million last year, which was reinvested in the service and has reduced the cost of services for self-funders. It has been very successful from an organisational perspective: absenteeism is down, the turnover of staff has slowed and user satisfaction is now at 99 per cent.
Essex Libraries. Essex has a very popular library service: its 75 libraries are used by over half of the population in the county. Chelmsford Library is the second busiest in the country and they have been rated highly by independent reviewers. However, the council also has significant savings targets to achieve. When Slough opened a tender for its library services following a review, Essex used the Goods and Services Act 1970 to bid for the work. They won the tender, and as of 1st January this year are now running ‘Library Services Slough’, allowing them to make greater efficiencies and economies of scale.
The event closed with a group discussion about the findings of the day.
- The General Power of Competence won’t automatically result in more innovative services, but it will offer policy officers leverage with other directorates. It could help to shift the debate from ‘can we do this?’ to ‘how can we do this?’
- There may be winners and losers. Those councils that are already taking an innovative approach will be in a good position to take advantage of the new power. Some councils may not be interested, or may not have the capacity to invest in new models of service delivery. This is a concern for districts. The current financial context is also making it difficult for councils to take a long-term strategic approach. Finding space to innovate is a challenge.
- There is a danger that councils will use the challenge to run services in a different way as an opportunity to pass failing services over to the community. Mutuals/social enterprise should not be regarded as a panacea for dealing with unsuccessful services.
- Using the new power will be primarily down to the culture of the organisation, rather than the legislation itself. There are already tools available under the current powers and councils can use these immediately.
- For the sake of clarity, councils should refer to the new power in any decision paper that intends to make use of it.