This post was first published at The Multicultural Politic.

As the Coalition is fond of saying, the UK is one of the most centralised countries in Europe. Lucky then, you’d think, that the Coalition inherited an unusual law with the potential to help make localism a reality. But the story of the Sustainable Communities Act so far is a reminder of how reluctant successive governments have been to devolve genuine power to local areas.

In theory the Sustainable Communities Act (SCA) enables communities, through councils, to demand new local powers to promote social, economic or environmental wellbeing – a deliberately broad definition. Proposals are shortlisted by the Local Government Association and the Government must either grant councils the powers requested or justify, to Parliament, why they won’t.

As a Private Member’s Bill, the SCA had to struggle for Parliamentary time despite considerable cross-party support – a huge flaw in a system which, as shown again by the recent ‘talking out’ of the Daylight Saving Bill, still needs radical reform. Unusually, and impressively, the SCA got through in 2007. 100 council areas opted in, submitting proposals covering everything from speed limits and renewable energy to planning regulations and business rates.

Since then, however, delay and frustration have dominated. Three years after the Act was passed, there had still been no Government response to the first round of proposals. The Sustainable Communities Amendment Bill was passed in 2010, aiming to tighten up the process. Campaigners are still not satisfied: important details were left to later regulations, which are now coming under scrutiny.

More broadly, the SCA’s relationship with the current Government’s localist narrative deserves examination. On the surface the Coalition has embraced the SCA, responding promptly to the first round of proposals it inherited and giving the green light to several. At the same time, it announced that communities would no longer have to wait for the next ’round’ to submit proposals, but could do so at any time through a new ‘barrier busting‘ website.

Welcome as the ‘barrier busting’ initiative is, and though it does not claim to replace the SCA, it illustrates the limitations of the Government’s approach to localism. The idea of a broad conversation on the powers local government needs to promote citizens’ wellbeing has given way to a narrow focus on deregulation. The political framing is as significant as the practical impact, with standard Conservative scapegoats such as health and safety and ‘red tape’ cited as examples of barriers ‘holding communities back’. One of the few Barrier Busting cases substantially taken up by Government is that of a community group apparently prevented by a council from running a volunteer School Crossing Patrol service, on the grounds that they aren’t insured.

Undoubtedly some councils have a risk-averse culture that needs addressing. But by focusing on points like this – or on ridiculous crusades such as Eric Pickles’s rantings about bin collections, the Government is skirting round the huge elephant in the room – local authorities’ lack of financial freedom. Such freedom is sorely needed, both to allow councils to meet local needs by raising revenue to spend on local services, and to give councils the levers to incentivise projects and behaviours, such as travelling sustainably or developing affordable housing, that can help an area improve.

Those who pushed the SCA through fully recognised the importance of financial control in determining where power lies. One of the Act’s most radical provisions is to ‘open the books’ so that communities can see a breakdown of all public money being spent in their area and propose that particular spending by any Governmental agency or QUANGO be devolved to the local authority. However, MPs have expressed concerns that the provisions have been watered down by subsequent regulation. The Coalition, creditably, is running ‘community budget‘ pilot schemes to pool funding from different agencies within local areas. But the idea that communities should be able to know exactly what is being spent, by whom, and put forward proposals to bring that money under democratic control and try to spend it better, seems to have disappeared.

Even more radically, and even more at odds with the current system, the Act also allows councils to propose new powers to raise funding. Some of these have been agreed by the Government; for example, councils will now be able to keep business rate money raised from new renewable energy schemes. That right may seem self-evident to those unaware of the current role of councils as a mere collection agency for business rates, collecting the centrally set tax and passing the proceeds to central government for redistribution. With much fanfare, the Government has set out plans to allow local authorities to retain business rates – giving them a direct financial incentive to promote local business growth – through the Local Government Finance Bill currently going through. Again, however, this is shaping up to be a disappointment, continuing the irony of the Localism Act, which saw central Government take on 142 new powers. A typical view from a group of (London) councils, much quoted in the House of Commons, is that the proposed new system is ‘fiendishly complex’, with incentives for growth undermined by placing too much ‘under direct Ministerial control’ and particular concerns, shared by poorer areas, over the Secretary of State’s power to vary the ‘central share’ of money taken by Government, without clarity over how this will be returned to the local level. It’s a far cry from the vision of the Sustainable Communities Act – and, to be fair, a far cry from a more distinctively Liberal vision for ‘real localism’.

The Coalition declares that it does not believe in regulating how councils should behave: it is for local people to hold them to account. Inconsistently though this principle has been applied, it broadly makes sense. But this must not be used to obscure the desperate need for more stringent regulation of government to ensure it decentralises power. Local Works members have written to the Minister for Decentralisation, Greg Clark, to address some of the issues with the regulations attached to the SCA, and are urging people to write to their MP in support. Given the consistent cross-party enthusiasm for the idea, progress may well be made. But as this intriguing episode in the recent history of English democracy reminds us, progress in getting governments to give up real power tends to be slow. When it comes to localism, warm words are ten a penny: it takes a brave government to put its money where its mouth is.

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