The how and why of government interventions in councils

Posted on 21/02/2018 by Ed Hammond.

Ed Hammond, CfGS Director of Research, reflects on the powers central government has to intervene in local authorities and risks that the approach can bring.

Here we are again – another Government intervention. Although firm action has yet to be taken to deal with the dire situation that Northamptonshire have found themselves in, the likelihood that Government will step in even further seems strong.

This isn’t a blogpost about Northamptonshire though – it’s a blogpost about intervention. What is it? How and why does it happen?

I cannot resist the urge to provide a potted history lesson, not least because it is instructive when we are talking about the latest chapter in the long tussle over powers between central and local government. Readers of this blog should feel thankful that this history lesson does not stretch back to the foundation of local audit systems in 1844.

National oversight of local authority functions is surprisingly new. The current powers by Ministers to intervene derive from the 1999 Local Government Act. Those who have worked in the sector for longer than they care to remember will recall the principle of “best value”. This is what continues to underpin the Secretary of State’s powers to intervene in a local authority’s business. If you are interested in knowing more the relevant part of the Act is section 15.

It used to be that the Audit Commission (AC) would play a key part in that process. The Act gives the Secretary of State the power to intervene when he (or she!) is concerned that an authority is no longer delivering “best value” in respect of the services that they provide. This judgment may have been comparatively easy to make when the AC used the Comprehensive Performance Assessment and councils’ Best Value Performance Plans – all of which gave Whitehall huge amounts of information. Now? It is difficult to work out how the Secretary of State can satisfy themselves that a council is not delivering best value. A theme has developed whereby Government – where it has concerns – will appoint an independent individual to conduct a review or inspection of the authority (with varying terms of reference).

The way that this process carries on is not necessarily shrouded in secrecy (the Secretary of State is required to report to Parliament on this activity) but it is hardly transparent – and it is clearly highly subjective. Ministers don’t like intervening – it is expensive, and troublesome, and requires a long term commitment. But it is undeniable that the number of interventions has increased in recent years, and this needs looking into.

It’s not only the formal interventions which are concerning – the informal ones are too. One recent example is the case of the Birmingham Independent Improvement Panel. The confusion and controversy around the BIIP’s withdrawal from its oversight role, followed up its re-engagement in the council’s work following an industrial dispute at the authority over waste management, is an example of instances where “open ended” intervention can cause frustration and uncertainty.

There is, I think, the need for more clarity and consistency in how Government uses these significant powers. It does a disservice to local people when local democracy is effectively suspended at the whim of the Secretary of State. Often intervention happens for good reason – but without this clarity it is impossible to judge whether this is always the case.

In particular, we think that there should be more attention paid to the role that can be played by local systems in bringing about improvement. There is a vital “early intervention” role that could be played by overview and scrutiny, for example – but councils in trouble may not wish to open those problems up for this kind of overview. This is a short-sighted, but it is an understandable human response to a difficult situation. Part of the challenge that we face as a sector is about giving people in this difficult situation the options they need to lift themselves out on their own – using local tools to arrest failure and take strong action to turn things around.

This coming year we are planning to look at this issue in some detail – at central Government intervention and the role of local governance. It’s a contentious issue, and a delicate one. It goes to the heart of the central/local relationship – and local democracy. And it’s been subject to surprisingly little research. We hope that we can provide both answers and practical solutions.