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The Cities and Local Authorities Devolution Act 2016

Overview of The Cities and Local Authorities Devolution Act 2016.

Purpose

"An Act to make provision for the election of mayors for the areas of, and for conferring additional functions on, combined authorities established under Part 6 of the Local Democracy, Economic Development and Construction Act 2009; to make other provision in relation to bodies established under that Part; to make provision about local authority governance and functions; to confer power to establish, and to make provision about, sub-national transport bodies; and for connected purposes."

Combined authorities – the elected mayor

The Act inserts new provisions in the 2009 Act. The 2009 Act allows the Secretary of State (SoS) to establish and change combined authorities (CAs) so the new provisions add to his or her order-making powers. Therefore they say what the SoS may do, not what he or she will do.

An order may provide for there to be an elected mayor for the area of a CA, styled as "mayor" and to be a member of and to chair the CA. Such and order may not be revoked, although the SoS may make an order abolishing the CA and therefore the office of mayor.

The Order may be made if the "appropriate authorities" make a proposal to that effect, or, if the SoS "considers that the making of the order is likely to improve the exercise of statutory functions in the area", with their consent.

The "appropriate authorities" are any county council whose area includes the area of the CA, the district councils whose areas are within the CA, and any existing CA. The county and district councils are called "constituent authorities".

If the order is triggered by a proposal, it may be included within a "scheme" for a new CA, or for changes to an existing CA, preceded by a "review". But a proposal may be made without a review or a scheme.

If the order is based on consent, rather than a proposal, and there is an existing CA, the first mayoral order may be made even if some of the constituent authorities do not consent, provided that the CA and at least two constituent authorities do consent. Any authority that does not consent must be removed from the CA.

The mayor will hold office for four years.

At the election, if there are two candidates, the candidate with the most votes will be elected. If there are more than two, electors will have an additional "second preference vote". If no candidate receives more than half the first preference votes cast, the second preference votes are added to the votes cast for the top two candidates, and the candidate with the most first and second preference votes will be elected.

The mayor cannot remain, or become, a councillor in a constituent authority. Candidates may stand for election both as mayor of the CA and as a councillor, if the elections take place at the same time, but if they are elected as mayor they cannot be elected as councillors. But the elected mayor of a constituent authority may be elected mayor of the CA.

The mayor must appoint a member of the CA as deputy mayor. The deputy holds office until the mayor’s term of office ends, so long as he or she remains a member of the CA, but may be removed from office by the mayor, or resign. The deputy must act in place of the mayor if the mayor is unable to act, or the office of mayor is vacant. If there is neither mayor nor deputy mayor, the CA may act in place of the mayor.

Combined authorities – the mayor and PCC functions

The order may provide that the mayor will exercise the functions of the Police and Crime Commissioner (PCC) in the area of the CA. This requires the consent of the "appropriate authorities" and (if there is one) the mayor. There will then be no PCC, or PCC elections.

The order may specify the PCC functions that are exercisable by the mayor, but the core PCC functions of securing the maintenance of efficient and effective police force, holding the chief constable to account, issuing a police and crime plan and appointing, suspending or removing a chief constable must be discharged by the mayor.

The order must provide for the mayor to appoint a "deputy mayor for policing and crime" (DMPC), and authorise the mayor to arrange for another person to exercise PCC functions. The DMPC may not be the deputy mayor appointed for other purposes. The order must, in effect, incorporate provisions of the Police Reform and Social Responsibility Act 2011 as to who may or may not be the DPCC and as to the functions which the mayor may and may not delegate.

Likewise, the order must establish a Police and Crime Panel. The Panel will scrutinise the discharge of the PCC functions by the mayor and the DMPC, and may be authorised to scrutinise any related non-PCC ("general") functions. The Panel must be able to suspend the mayor if charged with a serious offence. The order must provide for arrangements to deal with complaints about the conduct of the mayor or the DMPC, and it must and may apply other legislation that affects PCCs to them.

Combined authorities - functions

CAs exercise the transport functions which were previously the responsibility of an Integrated Transport Authority, and any local authority functions exercisable in the CA’s area by a constituent authority specified in the order establishing the CA. Under the new Act, the latter are no longer limited to economic development and regeneration, and the cost of functions other than these can be recovered from constituent authorities. The review and scheme promoting or altering a CA are no longer limited to transport plus economic development and regeneration. So a CA can do anything that a constituent authority can do, if the order so provides. It seems that the constituent authorities cannot veto this.

An order may also enable the CA to exercise any function that any "public authority" could exercise in the CA’s area, or even a function corresponding to one that a public authority could exercise somewhere else. "Public authority" includes (but seemingly is not limited to) a Minister or a Government department, but excludes a county or district council. The public authority function may be exercisable by the CA alone, concurrently or jointly with the public authority, or both jointly with the public authority and by the public authority alone. The order may transfer the public authority’s property, rights and liabilities and may abolish the public authority. But a national regulatory function which regulates the CA may not be exercisable by it, in its area at least. The transfer may be conditional, and the CA may be obliged to take account of relevant policies or standards.

An order conferring public authority functions on a CA requires the consent of the appropriate authorities, but again dissenting constituent authorities can be disregarded and removed from an existing CA in the first such order, provided the CA and at least two constituent authorities agree. Nor is consent needed for an order which revokes a provision in an existing order or disempowers the CA’s exercise of health service functions.

And when the order is laid before Parliament, the SoS must also produce a report explaining why it is expedient, including the outcome of any consultation, the context and supporting evidence.

Section 16 of the new Act contains a separate self-standing power to make Regulations to transfer public authority functions to local authorities. Section 18 limits this power, and the power to transfer public authority functions to a CA, in relation to the devolution of health service functions. Both are described below.

Under existing legislation, CAs may be given "incidental" general powers similar to those under section 111 of the Local Government Act 1972, but broadened to overcome the interpretation of that section which prevents the incidental activity being too remote from the base power which it supports, and to include a "trading power" to do things for a commercial purpose through a company. Under the new Act, an order may confer on CAs the "general power of competence" under section 1 of the Localism Act 2011, in substitution for the incidental and trading powers. This requires the consent of the appropriate authorities, but if the power is given in an order which provides for an elected mayor then the provisions allowing non-consenting authorities to be disregarded and removed from the CA apply.

Combined authorities – allocation and delegation of functions

In short, therefore, a CA will have transport functions and can have a range of local authority and public authority functions, and the CA mayor may have PCC functions.

Section 101 of the Local Government Act 1972 provides for the delegation of functions and the establishment of committees and sub-committees. That section, and other related governance provisions, apply to CAs much as they apply to local authorities generally

An order may confer on the mayor, personally, any CA function. To distinguish them from PCC functions, they are called "general functions". They may only be exercised by the mayor, but he or she may delegate them to the deputy mayor or an officer of the CA, subject to any restrictions in the order. The order may also allow the mayor to delegate general functions to the DMPC, or to a committee. The members of the committee need not be members of the CA, but the order can prescribe membership, the appointment of members, the chair, voting powers, the information that is or is not to be disclosed to the committee by the CA, and the application of political balance rules. The order may limit the mayor’s authority, for example so that certain functions require the consent of the appropriate authorities. It can allow members or officers of the CA to assist the mayor in the exercise of his or her functions, confer ancillary powers on the mayor (except for borrowing powers), and authorise the mayor to appoint a single political adviser.

The order requires the consent of the appropriate authorities, but again if the power is given in an order which provides for an elected mayor then the provisions allowing non-consenting authorities to be disregarded and removed from the CA apply.

The order may permit the mayor to discharge his or her general functions jointly with any local authority, and for a joint committee to be established. The governance arrangements of the joint committee can be prescribed in the order.

It seems, though, that the CA cannot delegate functions to the mayor unless the Order so provides.

Combined authorities – financial matters

CA’s transport functions are funded through levies on constituent authorities. Levies fall within the authority’s budget, and their council tax calculations. CA’s can also access government funding for transport schemes and some have other sources of transport-related income.

The order establishing a CA sets out how the non-transport cost of the CA is to be met by the constituent authorities, again in effect enabling the CA to levy those authorities, although these are not currently categorised as levies under section 74 of the Local Government Finance Act 1988 or the Regulations which set out how levies are to be calculated and recovered.

PCCs cover policing costs by precepting local authorities in their areas. Precepts fall outside the authorities’ budget calculations, but are recovered as part of the council tax.

The new Act provides that the costs of CA’s mayoral functions will be met though a precept on constituent authorities. This will be a personal, non-delegable function. The Order will cover the maintenance of funds for those costs and a budgeting process. If the mayor has PCC functions, the council tax requirement must contain a calculation distinguishing the cost of the PCC functions from the cost of the mayor’s general functions. The budget-making process is likely to include the preparation of a draft budget, review by other CA members, scrutiny by an Overview and Scrutiny Committee and approval – or some kind of power of veto - by the CA.

The Local Government Finance Act 1988 is amended so that Regulations may be made permitting the recovery by CAs of non-transport, non-mayoral function expenses as statutory levies. This requires the consent of the constituent authorities and any existing CA.

The Local Government Act 2003 permits "local authorities" to borrow for the purposes of their functions. At the moment, a CA is only a local authority under the Act for the purposes of its transport functions. The new Act will enable Regulations to be made to remove that limitation, with the consent of the constituent authorities and any existing CA. These Regulations require Parliamentary approval under the affirmative procedure.

Combined authorities – overview and scrutiny and audit committees

All CAs will have to establish one or more overview and scrutiny committees, able to review and scrutinise decisions and actions taken in the exercise of CA functions, and mayoral general functions if relevant. They must not have any other functions. The members of the CA (or the mayor or deputy mayor) may not be members of the committee. The usual access to information and governance provisions of the Local Government Act 1972 apply to them.

They must be able to make reports or recommendations to the authority on these and on "matters that affect the authority’s area or the inhabitants of the area." They must have call-in powers. They must publish their "proposals and arrangements" and obtain the CA’s approval to them. They may establish sub-committees. They must be able to compel members and officers to give evidence.

The order may make further provision about membership, voting, the chair, the appointment of a scrutiny officer and about reports, procedures and the disclosure of information including provision for "confidential" and "exempt" information. The majority of the members must be members of constituent councils. The chair must either be an "independent person" (defined in the order) or an "appropriate person" (in a mayoral CA, someone who is not a member of the same political party as the mayor, or in a non-mayoral CA, someone who is not a member of the same political party as the majority of the members of the CA).

All CAs will have to appoint an audit committee, to review and scrutinise the authority’s financial affairs, risk management, internal control and corporate governance arrangements, and the economy, efficiency and effectiveness with which resources have been used, and to make reports and recommendations to the CA. The order will provide for the membership of the committee, and the appointment of members. At least one member of the audit committee must be an independent person (as defined by the order).

Combined authorities and EPBs – flexibility and consents

At the moment, CAs and Economic Prosperity Boards (EPBs – like CAs but with no transport functions) may not include areas which are geographically detached. These restrictions are removed. EPBs and CAs now only have to include two or more local authority areas, and not overlap other EPBs or CAs. If part of the area is separated from the rest by an area that is not within the EPB or CA, or if the EPB or CA surrounds an area that is not within it, the SoS just has to "have regard to the likely effect of the creation of the proposed EPB on economic development or regeneration" in adjoining non-EPB areas, or "have regard to the likely effect of the creation of the proposed combined authority on the exercise of functions equivalent to those of the proposed combined authority’s functions" in adjoining non-CA areas.

Likewise, the process for creating and altering EPBs and CAs is simplified.

At the moment, any changes to the governance arrangements in an EPB Order have to be preceded by a review by the EPB and the publication of a scheme. Under the new Act, reviews and schemes are only required to change the boundaries of the EPB or to abolish or dissolve it. Other changes can be triggered by an application to the SoS by the EPB or any authority in its area, which must say how the changes would improve the exercise of statutory functions relating to economic development and regeneration or economic conditions in the area.

Similarly, the requirement for a statutory review and the publication of a scheme before a CA can be established or changed is relaxed. In every case, the SoS must "consider that [the CA] is likely to improve the exercise of statutory functions in the area…", and "have regard to the need … to reflect the identities and interests of local communities, and to secure effective and convenient local government" and the constituent authorities must consent. But there are now two routes towards the creation of a new CA. One involves the current process of review and scheme-making, including public consultation. The alternative just requires the SoS to carry out public consultation. There are equivalent provisions for making changes to the CA or the governance arrangements contained within the order.

At the moment, an authority may only be added to or removed from a CA if the authority in question consents. Under the new Act it is more complicated. Consent is required from the authority to be added or removed, the CA, and the mayor if it has one. If the authority in question is a district council within the area of a county council, the consent of either (or both) of the district council or the county council is required to add the district council to the CA, but the consent of both is required to remove it. The SoS’s duty to remove a dissident authority from a CA because it does not agree to a mayor, or to the transfer of functions, overrides these consent requirements, however.

This means that a district council can be added to a CA without the consent of its county council. And if a district council is added to a CA, its county council cannot veto an order conferring functions on the CA or Regulations giving the CA levying or borrowing powers. Likewise, a county council can be added (in relation to all or just part of its area) to a CA without the consent of district councils in its area, and the district councils cannot veto such an order or such Regulations. It also seems to mean that a district council can be added to a CA at the behest of the county council even if the district council does not agree, although this may not have been intended.

The mayor of a CA can veto its dissolution and abolition even if the majority of the authorities in the CA wish this to happen.

Local authority governance and functions

The SoS is given a new power to make regulations prescribing the "governance arrangements" (generally the executive arrangements or committee system operated by local authorities, their constitution and membership, and their structural, boundary or electoral arrangements (including merger, moving to single tier and abolition). The consent of the authorities in question is required, although for a limited period, ending in 2019, structural or boundary changes can be made to a non-unitary district council if it consents but its county council does not or – perhaps surprisingly – if the county council consents but the district does not.

The SoS is also given a power to make Regulations to transfer "public authority functions" to one or more local authorities. This is couched in much the same terms as the power to confer public authority functions on CAs. The authority must consent (unless the Regulations just amend or revoke earlier regulations, or remove a health function from the authority). This replaces similar powers in the Localism Act 2011, which now only apply to EPBs.

In both cases the Regulations have to be approved under the affirmative procedure and the draft must be accompanied by an explanatory report.

Health Service functions

There is a special carve-out for the NHS. In principle, the power to confer public authority functions on CAs by order, and on local authorities by Regulations, will encompass NHS functions. This is deliberate, in the interests of health and social care integration as well as devolution. But there are limits, added to the Bill as it passed through Parliament. The secondary legislation may not devolve "the Secretary of State’s core functions" or national NHS regulatory functions. Both are defined in some detail. And the legislation must make provision about the standards and duties to be placed on the receiving authority, having regard to national standards and accountability obligations placed on the transferring authority.

The National Health Service Act 2006 is amended to enable the Health Secretary’s public health functions to be delegated to CAs, NHS Commissioning Board functions (including their commissioning functions if specified criteria are met) to be exercised jointly by or with local authorities or CAs and CCGs, and CCGs to exercise their functions jointly with CAs. Further amendments provide for pooled funds for these arrangements, for CAs to enter into s75 agreements for the delegation of functions, and for patient information to be shared with social care bodies, including (but not limited to) local authorities.

The new Act requires the SoS to present an annual report to Parliament about devolution in England. The report must recite the devolution agreements reached, those that are in progress, any ministerial powers devolved to a CA mayor, financial resources and other public functions devolved and "the extent to which consideration has been given by a Minister of the Crown to the principle that powers should be devolved to combined authorities or the most appropriate local level except where those powers can more effectively be exercised by central government".

Effect of mayoral referendums

An entirely unconnected amendment to the Local Government Act 2000 changes the consequences of a referendum for an elected local authority mayor. At the moment, if the SoS makes an Order requiring an authority to hold a referendum on moving to an elected mayor, then the authority cannot change its form of governance or executive arrangements or hold its own referendum until the SoS’s referendum has resulted in a "no" vote. This freezing provision is removed.

Sub-national transport bodies

Late amendments to the Bill unveiled a new three-letter alliteration (TLA?) – the sub-national transport body, or STB. Transport for London (TfL) has operated as part of the GLA family since 2000. Transport for the North (TfN) came into existence in 2014, as a non-statutory partnership involving central government, Northern city regions and LEPs, Highways England, Network Rail and HS2 Ltd. The new Act places TfN – and in due course perhaps other similar bodies – on a statutory basis.

STBs are created by Regulations made by the SoS for Transport, as corporate bodies. They must cover the areas of at least two CAs, Integrated Transport Authorities (ITAs), county or district councils. The SoS must consider that the STB would facilitate the development and implementation of transport strategies for the area, and thus further the objective of economic growth. The constituent authorities must first consult any other local or transport authorities in the area.

The Regulations will prescribe the STB’s constitutional arrangements (membership, voting, any executive arrangements and the functions of any STB executive body) and may allow it to delegate functions to constituent authorities, but it must set its own budget. The members will be appointed by the constituent authorities, from their elected members (although they could co-opt others). Regulations will also set out the STB’s functions, which will include preparing, consulting on and publishing a transport strategy for the area.

Regulations may also provide for transport functions exercisable by local and transport authorities in the area, or by other public authorities, to be exercised by the STB. It may be able to give directions to the constituent authorities as to the exercise of their transport functions. It will have general broad incidental and trading powers, like an EPB and a CA that does not have the Localism Act general power of competence. The SoS can change its boundaries, and the constituent authorities, by making further Regulations. It can, however, change its name itself at a special meeting if at least two-thirds of the voting members agree.

National Park Authorities – general powers

English National Park Authorities are also given general incidental and trading powers.