Written evidence submitted by East Devon Alliance [OSG 040]

1. Executive Summary

• East Devon Alliance understands that encouraging economic development is a crucial task in local government. However, we are concerned that the increasing influence of unaccountable business interests on council decisions damages the health of local democracy, and can threaten the wider interests of local communities. The climate of unhealthy cynicism about politics, and a failure to engage in the democratic process, is reinforced whenever there is an apparent failure of scrutiny to make councils transparent and accountable.
• Overview and Scrutiny (O&S) can too easily be rendered ineffectual by a dominant majority party in a cabinet-led-executive.
• Government advice that members of a majority party should not chair O&S committees must be made mandatory.
• Chief Executives must not be able to have inappropriate influence on O&S committees.
• Scrutiny Officers need to be independent of influence and interference from senior officers or members of cabinet.
• The scrutiny role needs to be strengthened to be able to call witnesses. It should be a legal requirement for officers and members of Council and associated bodies to cooperate.
• With increasing privatisation, commercial confidentiality must not be used to shield public expenditure from scrutiny.
• Scrutiny should “reflect the voice and concerns of the public” by giving local people more say in what issues are chosen for scrutiny.
• There is no scrutiny mechanism of the new tier of local government created by the unelected and self-selecting Local Enterprise Partnerships who now control over £2 billion a year in England. Proposals made in 2013 by the Centre for Public Scrutiny could form the basis for scrutiny of such devolved bodies.

2. Who we are

2.1.  East Devon Alliance (EDA) is an umbrella group for people across the district concerned with promoting transparency and accountability in local government. It was formed in 2013 and in the 2015 local elections helped ten Independent candidates gain seats on the District Council. It is a registered political party.

3. Conclusions we draw from evidence of where scrutiny has failed

3.1.  EDA understands that encouraging economic development is a crucial task in local government. However, we are concerned that the increasing influence of unaccountable business interests on council decisions damages the health of local democracy, and can threaten the wider interests of local communities.

3.2.  Our conclusions are based on detailed evidence that comes from our experience of the lack of transparency and scrutiny in our District Council, particularly in its relationship with selected local businesses detailed in section 4 below. We then record, in section 5, the lack of essential overview and scrutiny either within our Local Enterprise Partnership (LEP) or in the relationship between our councils and the LEP. LEPs now control over £2 billion a year of local expenditure in England[1]. We suggest a basis for scrutiny of such devolved bodies.

3.3.  Since the 2000 Act we have had the removal of independent public audit of local authorities and the withdrawal of a universal national code of conduct. There is also increasing privatisation of council functions and of commercial interests in council decisions.  Scrutiny becomes more difficult where ‘commercial confidentiality’ is increasingly used to block inquiries and there is no longer any appeal to higher authority. Our evidence shows that effective scrutiny depends on the independence of its Overview and Scrutiny Committee (OSC) Chair and the degree of detachment of its officers. Prior to 2015, in East Devon District Council (EDDC), Chairs of these committees were drawn from the majority party and the officers reported to the Chief Executive. This is, in our view, an unacceptable concentration of power, making Council Leaders and Chief Executives too powerful.

3.4.  Government guidance in 2006 stated that political party whipping was “incompatible” with overview and scrutiny. It also stated that where there is a majority group, local authorities might consider it appropriate to have all or some of these committees chaired by members outside the majority group[2]. EDDC was slow to implement this advice, and even then only partially. Here, since 2015, the Overview and Scrutiny function has been split: though the majority party is excluded from chairing the Scrutiny function, Overview is still chaired by a majority member. EDA, therefore considers that the independence of Overview and Scrutiny must be reinforced constitutionally by:

a)                            insisting that chairs of Overview and Scrutiny are chosen from the opposition and by inviting ‘lay members’ and outside experts to sit on OSC inquiries.

b)                           allowing Scrutiny to truly “reflect the voice and concerns of the public,” as the Council Constitution states, by giving local people more say in what issues are chosen for scrutiny. This could be done, for example, by allowing residents to petition the OSC to pursue matters of particular concern, with a certain minimum number of petitioners required before action is triggered.

c)                            giving more protection to OSC members from interference from council leadership and officers. It might be inappropriate for a Chief Executive Officers to attend scrutiny meetings unless invited to do so by the Chair to give specific advice.

d)                           strengthening the role of dedicated Scrutiny officers by making their role more important and independent of influence and interference from senior officers or Cabinet.

e)                            the power of Scrutiny to call witnesses. It should be a legal requirement for officers, councillors and members of organisations with which the Council works to cooperate with the committee

3.5.  EDA regrets there is little recourse for those who wish to challenge the failure of local scrutiny.

a)           The national system of scrutiny, accounting and audit, has been dismantled since 2010[3].

b)          Internal audit is often not trusted to be completely independent of the Council, and objective in its inquiries. In July 2013, the Council’s internal auditors, South West Audit Partnership (SWAP), conducted an inquiry into the audit and governance implications of councillor Graham Brown’s behaviour (he had resigned following a Daily Telegraph investigation of councillors claiming to be able to obtain planning permission in return for money - see para 4.2 below). It was widely criticised as a box-ticking exercise which failed to examine the issues involved with any rigour, and resulted in a formal complaint by EDA against a senior officer of SWAP[4].

c)           The remit of the Local Government Ombudsman is too limited and provides no recourse for many complaints of council maladministration[5]. 

d)          There has been a weakening of media coverage of local affairs, particularly with the shrinkage of the local press.

e)           At the same time: the Council’s communications office is increasingly required to give a ‘spin’ to controversial council policies, rather than to simply inform the public. Some council publications and newsletters have also been accused of lack of objectivity.

f)            EDA is concerned at the apparent ‘politicisation’ of EDDC senior officers. CEOs should scrupulously avoid taking sides in contentious political issues and should refrain from criticising members and community groups who are opposed to the political programme of the Leader.

3.6.  The apparent failure of scrutiny to make councils transparent and accountable helps to create a climate of unhealthy cynicism about politics, and a failure to engage in the democratic process[6] . 

4. East Devon District Council Scrutiny Committee’s Inquiry into the Council’s relations with the East Devon Business Forum: an example of scrutiny failure.

4.1.  Public trust in councils, especially in their role as planning authorities, is seriously eroded by any suspicion of inappropriate private pressure. It is therefore vital that councils act promptly to defuse such concerns by open, transparent and objective scrutiny. Unfortunately this was not the case with EDDC as explained below, with consequent damage to its reputation.

4.2.  In March 2013 a ‘sting’ in the Daily Telegraph raised serious concerns nationally over ethical standards in local planning. A group of ‘Councillors for Hire’ were exposed offering to obtain planning permission in return for money[7]. They included a prominent East Devon District Councillor, Graham Brown, who, as well as his council roles concerned with planning, for instance as Chair of the Local Plan Panel, chaired the East Devon Business Forum (EDBF) described by critics as a ‘lobby group of landowners and developers’[8] and by the CEO at a Task and Finish Forum (TAFF) meeting as “a joint body with the Council”.

4.3.  Six months before, the Overview and Scrutiny Committee (OSC) of East Devon District Council (EDDC) had opened an inquiry into relations between the Council and the EDBF. Its failure to progress and complete this inquiry illustrates some significant weaknesses in the post-2000 system of scrutiny. The OSC’s launched the inquiry with the setting up of a TAFF on 27 September 2012 responding to deep public mistrust in East Devon of apparent conflicts of interest in planning decisions.

4.4.  By 2012 planning was a highly-charged political issue.  The Council Leader and Cabinet, supported by a dominant Conservative majority (43 of 59 councillors)) and the Chief Executive and senior officers, prioritised economic development in planning. They were opposed by a small number of opposition councillors, mainly Independents, and local community groups who saw East Devon’s unique environment seriously threatened by the relaxation of planning controls.

4.5.  Protests against Council planning policies were particularly strong in Sidmouth which was adversely affected by EDDC’s project to relocate its offices from the town, and by a Local Plan proposal to build a business park in the AONB close by[9].

4.6.  Some Conservative members of OSC representing Sidmouth supported the creation of the TAFF which, controversially, was tasked with an in-depth examination of the relationship between the council and the EDBF which had successfully lobbied the Council to change planning rules in favour of increased development of business parks, and which, critics said, was having an unfair and disproportionate influence on the emerging Local Plan.  In over two years the TAFF totally failed to examine the issue, hear witnesses or write a report. It met intermittently and was hamstrung by arguments over scoping and procedure.

4.7.  Some members of the OSC believed that this failure was largely caused by the interference of the Chief Executive Officer (CEO) in the conduct of the inquiry. They allege that:

a)           he intervened to alter the minutes and agenda of the committee to reduce the scope of the inquiry without reference to the chair[10].

b)          he erroneously advised the TAFF that legally they could not discuss planning and that they were required to leave the examination of planning issues to other bodies such as the Local Government Ombudsman and Local Plan Inspector. He thereby removed the main plank of the inquiry[11].

c)           he instructed an important witness not to appear before the committee leading the Conservative chair of the TAFF to complain of a ‘total lack of cooperation’[12].

d)          he appeared to cooperate with pressure from EDBF for an Independent councillor to be removed from the TAFF because of her ‘pre-conceived ideas’[13].

e)           the CEO’s then Deputy, who acted as Monitoring Officer, tried to persuade the same Independent member to moderate her criticism of council policy[14].

4.8.  During the period the TAFF was sitting, the CEO made public statements trivialising the issues being discussed by it and denigrating the motives of those raising concerns, and wrote in similar terms to a Member of Parliament.  He repeatedly refused requests to examine potential conflicts of interest among councillors and in the activities of a senior council officer involved with planning[15].

4.9.  The Leader, Cabinet, and Conservative Party Whip conducted a similar campaign against the need for an inquiry and criticising those who supported it.

a)           The Leader made inaccurate statements to the media about the functioning of the EDBF[16] .

b)          He publicly branded campaign groups and councillors who supported the inquiry as ‘self-publicists’ motivated by political considerations[17].

c)           The Conservative Party Whip attacked the motives of Independent councillors and made a complaint to the police about an Independent member of the TAFF[18].

d)          A Conservative councillor accused an Independent colleague of a ‘witch-hunt’[19].

4.10.             The Chair of the Scrutiny Committee (a Conservative) was removed by the Cabinet during the enquiry on grounds that were widely criticised as dubious[20]. 

4.11.             The ‘Councillors for Hire’ revelations, which might seem to have justified the TAFF enquiry, served to weaken it. The CEO advised that the TAFF should be suspended until a police inquiry into the councillor’s actions was completed. When it concluded in November 2014, with a finding of insufficient evidence to warrant criminal charges, the CEO then hinted that the TAFF should be wound up as the EDBF had disbanded in the fall-out of the scandal. He also suggested that no further enquiry into Cllr Brown’s conduct was necessary as no criminal charges had been brought[21].

5. Evidence showing LEPs are unaccountable and lack any scrutiny

5.1.  LEPs can give business leaders significant influence over decisions on how public money is used. It is essential that their decision-making is transparent to the public and free from perceived or actual conflicts of interest.

5.2.  The government appointed the Heart of the South West (HotSW) as a LEP in June 2011 covering17 local authorities in Devon and Somerset and the two unitary authorities of Plymouth and Torbay. It held its first meeting in July 2012. The current (2017) self-selecting board numbers 20. Of these 20 board members: six are elected local councillors; four have backgrounds in construction, development or property; three are senior members of educational establishments; three are connected to defence and software industries; the remainder have backgrounds in utility, employment and skills consulting, outsourcing and grant distribution. Only four of the 20 are women. Not at all representative of Devon’s farming and seasonal tourist economy with its range of small businesses.

5.3.  It was not until September 2015 that HotSW published their fully-fledged statement of intent to launch a bid for devolution. Until then no minutes had been available in the public domain. Yet by March 2014 HotSW had agreed with government a detailed economic growth plan, on behalf of us, the people who live here, without any consultation. In July 2014, the Heart of the South West LEP was awarded £130.3 million from the Local Growth Fund over the period 2015-2021; in January 2015 a further £65.2 million of funding was awarded between 2016 and 2021 (excluding any European funding which LEPs also administer). HotSW estimates that by 2021 up to 22,000 jobs could be created, 11,000 homes built and up to £260 million of public and private investment generated as a result of this funding[22].

5.4.  This is the fourth highest job and home growth target for the period in England, representing economic growth in excess of 3% pa. The current ONS unemployment rate in the South West is 4.1% i.e. what economists would term full employment. To achieve this growth goal implies significant net inward migration with major community consequences in a post-Brexit climate of opinion. Yet there has been no public consultation nor even open chamber debates in either Council. Local need is for better, rather than more, jobs.

5.5.  The National Audit Office (NAO) in a 2016 report[23] found that when the Growth Deals were agreed, the Department of Communities and Local Government did not have enough assurance that they had the resources, capacity and capability to do this, and LEPs do not yet have an established track record of delivery.  To oversee and deliver Growth Deal projects effectively, LEPs need staff with expertise in complex areas such as forecasting, economic modelling, and monitoring and evaluation. Only 5% of LEPs considered the resources available to them to be sufficient to meet the expectations placed on them by government. Additionally, 69% of LEPs reported that they lacked sufficient staff and 28% did not think that they had sufficiently skilled staff. The NAO also found they were unable to obtain information on senior staff remuneration from publicly available accounts for 87% percentage of LEPs

5.6.  Media reports[24] revealed that HotSW South West Chief Executive, Chris Garcia, was voted a 26% rise in remuneration on 17 January 2017. The relevant board meeting agenda published on the LEP's website included no mention of the pay proposal. It came to light only after county council leaders in Devon and Somerset said publicly that they would not support the move. Somerset County Council leader John Osman told the BBC: "The pay of £90,000 is already too much so I believe it should be at least 10 per cent less than that...."I'm sorry to say that in the public sector we are not about giving 25 per cent pay rises – even if you are very good at your job, we cannot afford 25 per cent...."The budget of the LEP itself, operationally, is £1.6million. It has four full-time members of staff and a few others who work part-time....."If you're comparing it to how I come up with my council salaries and how the NHS has to come up with their salaries, you will find that this position is overpaid for such a small budget and such small numbers of staff." So where is the accountability? Where the scrutiny?

5.7.  The same NAO review (above) shows that 42% of LEPs do not publish a register of interest, though HotSW does, and 16% do not even publish a conflict of interest policy. HotSW does not, however, record in the publicly available minutes who voted on what, who declared an interest and why and who abstained. It is unclear to us how the public are supposed to take assurance that LEP decisions are being made with probity.

5.8.  The Centre for Public Scrutiny published a paper in December 2013 titled A Local Public Accounts Committee for Every Place[25]. The paper aims to contribute to the debate over devolution of power to local authorities and place-based joint working between local service providers. It proposes the creation of Local Public Accounts Committees (LPACs), responsible for scrutinising public expenditure in a given area to allay concerns over effective monitoring of public spending in the event of devolution of funds to local areas. EDA believes that ideas such as this could form the basis for scrutiny of devolved bodies.

March 2017