What is the Localism Act?
The Localism Act is a wide ranging piece of legislation that represents a huge shift in power from central Whitehall to local governments, communities and individuals. The new measures include new freedoms and flexibilities for local government, new rights and powers for communities and individuals, reform to make the planning system more democratic and more effective, and reforms to ensure that decisions about housing are taken locally.
In simple terms, the Localism Act 2011 is an Act of Parliament that alters the powers of local government in England, with the aim of moving the focus of decision-making powers from central government control to individuals and communities.
The Localism Act introduced the following changes:
General Power of Competence
Local authorities’ powers and responsibilities are defined by legislation. Sometimes councils were wary of doing something new because they are worried about the possibility of being challenged in the courts, even if they believe that it’s a good idea. The Localism Act, however, turns this assumption upside down.
Instead of being able to act only where the law says they can, local authorities are now free to do anything, provided that they don’t break the laws. The Act gives the Secretary of State the power to remove unnecessary restrictions and limitations where there is a good case to do so. Similar powers have also been given to other entities such as the Fire and Rescue and Transport Authorities.
Abolition of the Standards Board and Clarification of ‘Predetermination’
The Standards Board for England which regulates the behaviour of councillors and receives complaints is abolished. Instead, local authorities will draw up on their own codes and it will become a criminal offence for councillors to deliberately withhold or misrepresent a financial interest. The old rule that councillors should come to council decisions, especially on planning matters, with an ‘open mind’ have been swept away by section 25.
The Localism Act makes it clear that it is proper for councillors to play an active part in local discussions and they should not be liable challenge as a result.
Empowering Cities and Other Local Areas
The Localism Act enables Ministers to transfer public function to local authorities in order to improve local accountability or promote economic growth. New powers were included in the Act at the request of the Core Cities Group who commissions a report by PWC ‘Unlocking City Growth, Interim Finding on New Funding Mechanisms 2008’.
The report concluded that the Core Cities (Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham, and Sheffield) are still underperforming relative to London and most cities in the South, due to underinvestment in city wide infrastructure.
PWC proposed a Community Infrastructure Levy (CIL), a Business Rate Supplement (BRS) allowing a 2p supplement on the business rate and the radical idea of an Accelerated Development Zone (ADZ), based on the American Tax Increment Financing Scheme that allows local authorities to retain the local tax revenues for development by securitisation of those revenues.
These new ideas, together with the Regional Infrastructure Funds (RIF) undertaking ‘banking roles’ that provide upfront finance or finance raising guarantees, effectively unlock private sector finance for massive infrastructure projects, taking the funding off the Treasury ‘balance sheet’ in a similar method to PFI funding that fell into disfavour during the last decade.
Community rights within the Localism Act help to ensure that community organisations have a fair chance to bid to takeover land and buildings that are important to them. It is hoped that local community and voluntary bodies will be able to take over the village shop, local pub, community centre or library, to be nominated for inclusion on a list of assets to be maintained by the local authority.
There is also a great power to pause a sale for up to six months, in order to raise capital and bid to purchase the asset before it goes on the open market. Neighbourhood planning – ‘clearer, more democratic and effective’. In order to allow local communities influence over decisions, Parish and town councils or neighbourhood forums lead the creation of neighbourhood plans, supported by the local planning authority, which is independently examined and put to a referendum or local people for approval.
The Localism Act cures ‘fundamental flaws’ in the previous social housing system. It was felt like the rules were too rigidly set by central government so that councils found it hard to adapt and meet local needs.
The Act gives Local Authorities greater freedom to set their own policies about who should qualify to go on the waiting list and allows more flexible arrangements for people who move to other social rented homes.
Councils can now retain the rents they recover and use them locally to maintain their social housing.
More information on the Localism Act and its changes can be found over on the Government website.