Lib Dems focus on Regional Government

LIBERAL DEMOCRAT POLICY

Reforming Governance in the UK, Chapter 4, pp 26-34
Approved by Lib Dem Conference 2000

Decentralised Government

4.1 Introduction

4.1.1 The Liberal Democrats have long advocated devolution for Scotland and Wales (and when possible Northern Ireland) and a system of directly elected regional government for the English Regions. These commitments have been a core element in our vision of accountable, responsive and efficient government, delivering services at the lowest effective level.

4.1.2 In recent years important advances have been made. A fully fledged Scottish Parliament with legislative and tax-varying powers has been achieved as the fruit of long-term cross-party co-operation within the Scottish Constitutional Convention.

4.1.3 By contrast, devolution for Wales and London has also made some progress, but Labour’s one party approach has led to timid and incomplete reform. We would like to see the powers of the Welsh Assembly enhanced to include tax varying powers and primary legislative powers in a range of key areas including: economic development, industry and training, Welsh language and culture, health, transport, education and law and order. We would also wish to see the Greater London Authority have greater powers, for example to raise revenue and to hold the Mayor to account.

4.1.4 The great failure of the current Government, however, has been to provide democratic decentralisation within England. The majority of this chapter concentrates on this issue.

4.2 The Existing Regional Tier

4.2.1 There is already a significant amount of administration of public services that is done at the regional level. There is a range of quangos and other public bodies operating at a regional level which have a significant impact on the lives of the people in their areas. The problem is that because none of them are directly accountable to the local electorate there is very little awareness of the existence of this layer, let alone much public involvement with decision-making. The relevant Secretary of State appoints most of these quangos. They have little statutory responsibility to take account of local views in what they do. Their boundaries frequently overlap. Recent research done by the Centre for Urban Regional Development Studies has identified 19 separate bodies working within the North East Region, a pattern that is likely to be mapped closely in most regions in England.

4.2.2 Liberal Democrats support directly elected regional assemblies. We wish to pull all these quangos together under the umbrella of regional assemblies. We would simplify the current mess of regional administration, to make it far more transparent, approachable and accountable to ordinary people.

4.3 The Desire for Change

4.3.1 The political imperative for devolution has been ignored in the London-based discussions of regional issues. While demand for Regional Assemblies varies across England there are regions – most particularly in the North East, but also in the North West and Yorkshire and Humberside – where the public are demanding devolution and the status quo is not an option.

4.3.2 The potential for regional government to alter the current stagnant nature of government has hitherto been ignored. Regional government has the ability to deliver ‘joined-up’ government – to use a current buzzword – in other words a holistic, strategic approach to problems. With its attachment to departmental baronies, Whitehall delivers fragmented government. The debate is too much centred on ‘adding another layer of bureaucracy and politicians’. The bureaucracy is already there. The point is to democratise it. A key objective of regional government would be to democratise those organisations and bring them under the scrutiny of elected government, local and regional media and the general public.

4.3.3 Addressing the direct democratic deficit is only part of solving the general lack of involvement by the public in decision-making. Creating a genuinely new body that works with the people of the region and brings them into the decision-making process will give people a degree of ownership over what happens on their own doorstep. This will help create a sense of responsibility and self-reliance as well as generate pride in one’s area.

4.3.4 The establishment of Regional Government will also help to disperse economic power though the regions, as more public sector workers are located at the regional level and regions enhance their capacity to run effective economic development strategies. Stronger regional political centres will help regions retain talented individuals in fields such as the Civil Service and journalism, who currently tend to be drawn to London in order to progress their careers.

4.4 What will Regional Assemblies Do?

4.4.1 Currently there are a number of services that are provided or administered at a regional level, but they are provided by a complex web of quangos and other organisations. These cover a number of strategic functions including economic development, transport, planning, the environment, further education & training as well as cultural issues including the arts, sport and tourism. Many of these bodies cover geographical areas with different boundaries. Liberal Democrats would bring the majority of these organisations under the democratic control of elected Regional Assemblies. So we would redraw their boundaries, as far as possible. We recognise that this would take time, but this would allow ‘joined up thinking’ between all these various bodies, as well as giving greater clarity for the local population. Most importantly, it would allow them to be democratically controlled by the elected assemblies.

4.4.2 A range of functions currently the responsibility of Whitehall departments could also be carried out by the regions. Regions would:

Follow the model of the North East Constitutional Convention in democratising and asserting an influence over regionally based quangos. Regional authorities would be given control over regionally administered functions such as planning housing growth figures for the region. Those quangos that have coterminous boundaries with the Region would be brought under the control of the regional authority. Other quangos without coterminous boundaries would be given a duty to consult all relevant regional authorities on their activities, to at least bring them under the influence of democratically elected bodies. Over time, boundaries would be brought into line and most quangos democratised. The precise nature of each process would vary from region to region, according to local circumstances and the wishes of local people.

Take over a range of current central government responsibilities, such as strategic management of education at a regional level, for example to coordinate and link secondary education, further and higher education and work-based training schemes

Have powers to enact secondary legislation. Rather than the relevant Secretary of State setting the regulations for the implementation of certain laws, the Regional Assembly would determine them.
4.4.3 Ultimately, some Regions might take on primary legislative powers. However, an important set of powers would be retained at Federal level (see section 4.9).

4.5 Implementation and Boundaries

4.5.1 There has been much debate about where the ‘natural boundaries’ of regions fall, particularly in relation to the South East and some of the regions in the Midlands which are particularly difficult to identify. Regions must reflect cohesive natural communities, yet be large enough to be able to compete in the European environment. There is certainly no requirement for uniformity of size.

4.5.2 The nine English regions that were defined for the regional government offices, the RDAs and the regional chambers have proved a good starting point for building a consensus in favour of an elected regional assemblies and the Liberal Democrats are broadly in favour of this approach. In most regions the politicians and interest sectors involved in the new regional organisations are learning how to work together and find common interests. Constitutional Conventions such as already exist in the North East and other areas help in this process, and we would encourage their establishment in all regions.

4.5.3 The process of moving towards democratic regional government would start with the passage of an Enabling Act, setting out a menu of powers which might be adopted by a region. There would be a set ‘core’ of powers which any region wishing to devolve would need to take up. This menu would be drawn up by central government in consultation with existing regional bodies. A referendum on adopting devolved powers could then be triggered by a request from a majority of local authorities or a petition of 5% of the population of a region. Boundaries in this phase would be based on existing regions or subdivisions thereof comprising groups of existing local authorities (to allow smaller areas within existing regions some flexibility where it may be desired, for example in Cornwall). Initial referenda would be on the basis of the minimum core powers for each regional assembly.

4.5.4 Individual regions could subsequently choose to adopt, by referendum, powers from the menu beyond the ‘core’.

4.5.5 Future changes to regional boundaries could be made subject to local referenda called by the Secretary of State for the Nations and Regions. The Secretary of State would be responsible for receiving all representations on requests for boundary changes, and would be required to seek the greatest possible consensus between all affected local authorities and regions before moving to a referendum.

4.6 Funding

4.6.1 In time financial devolution must follow political devolution. This means that devolved bodies should be able to levy and vary specific taxes. Consideration should also be given to allocating a share in the UK taxes raised within their boundaries directly to the devolved authorities.

4.6.2 The transfer of additional hinds from the Treasury to devolved authorities – the fiscal transfers – should be on the basis of needs. It should be on a sufficient time scale and on the clear understanding that no area should be penalised. The objective must be to raise standards everywhere as the economy grows.

4.6.3 It is anticipated that Regional Government would be funded via a direct bloc grant that would be augmented by local tax raising powers. Over time, our intention would be to transfer the tax-raising function progressively towards the regions, from the centre. Options for the tax raising powers could include one or more of the following:

A regional element of a local income tax.

A local business rate with regional element.

A locally determined level of Site Value Rating with regional element.
4.6.4 All central government expenditure should be expressed in regional terms, so that it is clear which regions receive most direct investment from central government in all policy areas.

4.6.5 One of the most contentious issues relating to government finance is the allocation of revenue to different parts of the UK. Some is allocated to the Welsh Assembly, Northern Ireland Assembly and the Scottish Parliament, on the basis of the Barnett Formula, which was originally intended to be temporary. This does not relate to all the money received by those bodies, but does affect any changes in government expenditure. In the first instance, changes in expenditure are determined in Parliament on an English basis. Under the terms of the Barnett Formula, a proportion of any increase allocated to England is then allocated to the rest of the UK on the following basis: Scotland 10.34% (9.77% for law and order); Northern Ireland 3.41% (3.22% for law and order); and Wales 5.93%. If there is a reduction in expenditure, then a reduction is made along similar lines.

4.6.6 There are five problems with this approach. The Barnett Formula:

Takes no account of the needs of the relevant areas of the UK, because it is solely based on population figures – giving rise to inappropriate comparisons made between the funding received by different pads of the UK, e.g. Scotland and London.

Takes no account of changes in needs over time.

Takes no account of differences within Wales, Scotland and Northern Ireland.

Only relates to changes in expenditure, and is not able to tackle inequalities inherent in the current bases of expenditure.

Is not able to take account of regional disparities within England.
4.6.7 Liberal Democrats have consistently argued that all devolved administrations within the UK need to have greater powers over taxation, so that they can meet their own needs through raising resources in their own territories. There is also a case for regions keeping some of the UK – wide taxation raised in their areas rather than it all going direct to the Treasury; this would allow regions as well as the Treasury to enjoy some of the benefits of revenue buoyancy. However, to meet disparities throughout the UK, and to recognise that not all areas may be able to raise adequate funds, Liberal Democrats believe that a Finance Commission for the Nations and Regions (FCNR) should be established. Liberal Democrats believe that the FCNR should:

Have a constitutional status, enshrining the principle of equity of finance across the UK’s nations and regions. The FCNR would be under a constitutional duty to agree rules governing revenue-support and borrowing.

Be chaired by the Secretary of State for the Nations and Regions.

Be composed of representatives of the national parliaments and assemblies of the UK, along with representatives of regional assemblies in England (or regional chambers where assemblies do not exist). The conclusions of the FCNR would require consensus of its members, and would be ratified by the executives of the bodies represented on it. No revenue would be released without such consensus.

4.6.8 The FCNR should carry out the following six tasks in the first year of its operation:
Establish a new Revenue Distribution Formula (RDF) to replace the Barnett Formula. This would be a needs-based formula (reviewed periodically in conjunction with the Comprehensive Spending Review), taking account of key health, poverty and education indicators, and the available tax bases. It would recognise the problems of providing services in areas with widely dispersed populations. The formula would also take account of all spending in the nations and regions by the UK government and the European Union, regardless of whether this constituted revenue made available to sub-UK levels of government. The RDF would be used to allocate finance to devolved administrations. The FCNR would also recommend to Parliament where it would be appropriate to use the RDF to distribute expenditure which involves neither devolved administrations nor local government.

Use the Revenue Distribution Formula to re-base the current distribution of expenditure to reflect needs.

Establish the terms for distributing revenue within England to reflect not only differences between regions, but also differences within regions (e.g. poor districts within generally rich regions). Where regional governments existed. these would match regional government boundaries. Otherwise. Regional Development Agency boundaries would be used.
Establish whether differences within Scotland, Northern Ireland and Wales should be considered when allocating revenue for distribution in those countries, recognising that the distribution of revenue is a matter for devolved administrations.
Establish a timescale for implementing any changes in the balance of spending, so that there would not be any reduction in the quality of services provided in any areas that have previously benefited from the formula or from successful local policies. The aim of the timescale would be for the whole country to achieve the high standards reached elsewhere, funded by the growth of the economy, rather than an increase in the tax burden or cuts in services. The changes in the balance of spending would be completed by the end of the process of establishing the framework of elected regional government.
Investigate the possibility of regions receiving directly a proportion of the United Kingdom taxes raised within their area.
4.6.9 In future years, in conjunction with the Comprehensive Spending Review, the FCNR would use the RDF to allocate new expenditure to the nations and regions of the UK.

4.6.10 This new system would be fairer than the current system to all concerned. Northern Ireland, Wales and Scotland would receive revenue according to their current needs, and disparities within the English regions would be recognised.

4.6.11 The current method of determining need for funding local government is opaque and difficult for the lay person to understand. Despite the complexity of the formula, there are hundreds of examples of anomalies with authorities being given widely varying amounts for providing the same service. This system commands very little confidence amongst government, local government finance experts or the general public alike and it is vulnerable to criticisms of tampering with the formulae to suit political interests.

4.6.12 Once regional devolution in England was established, regions would be given the task of distributing grants to local authorities within their area, from the monies allocated by the FCNR. In the longer term, we would reform local government finance so that local councils were able to raise a much higher proportion of their funding through local taxation (see Policy Paper 30, Re-Inventing Local Government).

4.7 Relationship with Local Authorities

4.7.1 Local government should welcome the advent of elected regional assemblies. Regional assemblies will be drawing power down from national government and nationally-appointed quangos, not drawing it up from the local level. Regional assemblies will do much to reduce the local government time consumed dealing with the multiplicity of regional governmental bodies. Some regional chambers have already enabled a much greater level of regional dialogue, and so co-operation, between their constituent local authorities.

4.7.2 Local government would find a democratically elected regional assembly easier to work with than the current mish-mash of agencies and offices. Devolution and the creation of regional assemblies is about drawing power out from the centre, and providing a strategic approach to powers currently at a regional level. So there should be no adverse effect on either the powers or influence of local government.

4.7.3 Liberal Democrats would draw up devolution legislation tightly, to ensure that regions could not encroach on the existing powers of local authorities. If they wish to, however, local councils should be able to work together to provide efficiency savings, within the framework of the regional government. A good example of how joint working could develop in the regions is the Integra waste management project in Hampshire. The project involves the county and district councils. Because of co-operation, they are projected to achieve recycling levels far higher than would be realistic working alone.

4.7.4 Once elected regional government is in place, we would anticipate that the principal local authority tiers of local government would be rationalised. However, in accordance with the principle of devolution, we believe that decisions about local government structures should be determined at local rather than national level.

4.8 Co-ordination between Regions

4.8.1 The Local Government Association has already taken a lead in furthering co-ordination between the regions and we see this useful role continuing. In the longer term it may be necessary to construct a separate body to represent the interests of regional government, but that would be a matter for the regional authorities themselves to decide upon.

4.9 Continuing Federal Responsibilities

4.9.1 The Westminster Parliament and the UK Government will continue to be responsible for defence, foreign affairs, national security, immigration, social security, macro-economic management, freedom of commerce, some transport infrastructure and setting minimum standards and targets for public service provision. In England and Wales they would also be responsible for the courts, legal services, the law and criminal justice system. In some fields. legislative powers would need to he exercised concurrently at European, national and sub-national levels, for example with respect to the environment.

4.10 West Lothian Question

4.10.1 The West Lothian question (the issue of whether Scottish MPs can vote on English matters at Westminster while English MPs cannot vote on Scottish matters) has beer much debated. If Regional Assemblies are established throughout England. the Westminster Parliament w ill increasingly focus on Federal UK issues and the West Lothian problem will be vastly reduced. Liberal Democrats are clear that Regional Government is the only sensible way to resolve concerns about powers that are devolved only to some regions. Although we are keen to encourage the maximum possible levels of devolution in all parts of the country, of course no region would be forced to take on powers that it did not want beyond the core. However, it seems likely that once the process of regional devolution is firmly underway there will be something of a ‘domino effect’. Slower regions will see the benefits of devolution for their more advanced neighbours, and demand the same for themselves – just as the North East is following Scotland’s lead today.

4.10.2 Once regional government is in place in most parts of England, we will correspondingly reduce the overall size of the Westminster Parliament. For further details on reform of the House of Commons, see the chapter 3 on ‘Accountable and Representative Government’.

4.11 Input into EU

4.11.1 A regional government should be able to negotiate directly with EU on policy matters as well as grant applications, be fully represented on the Committee of the Regions and, if appropriate, have representative offices in Brussels. Decisions on new towns and cross council area developments, including for example housing policy, should be settled at regional level rather than via the DETR.

4.12 The Council of the Isles

4.12.1 The British-Irish Council or ‘Council of the Isles’, established under the Good Friday Agreement, provides for regular meetings between representatives of all the national governments of the British Isles. That includes: the United Kingdom (the Westminster Parliament and the representative bodies in Cardiff, Belfast and Edinburgh); the Republic of Ireland; the Isle of Man; and the Channel Islands. Liberal Democrats believe that the Council provides new opportunities for recognising the flexible nature of relationships within the British Isles, and welcomes the establishment of the Council. Liberal Democrats believe that in its first years, the Council should focus on the following areas of work:

Education, e.g. mutual recognition of qualifications and entry standards.

Environment, e.g. pollution in the Irish Sea.

Tourism.

Agriculture and fishing.

Transport.

4.12.2 In particular, we believe that there is room for regular meetings of a ‘Council of the Irish Sea’ within the framework of the Council of the Isles. In many areas, such as transport and pollution, there will be strong shared interests between representatives of Cardiff, Dublin, Belfast, the Isle of Man and a North West England regional assembly. Liberal Democrats believe that it makes more sense to discuss them at this level in the first instance, than it does for matters to be resolved on a simple Dublin-London basis.

4.12.3 To support the work of the Council of the Isles, Liberal Democrats believe that a permanent secretariat should be established, based in a central location such as Cardiff.