Combined Authorities Note

Nathan Holden, Freeths, Nottingham

Combined Authorities were introduced by sections 103-113of the Local Democracy, Economic Development and Construction Act 2009 (“the Act”).  They represent a legal arrangement which supports and enables formal collaboration between two or more local authorities on transport and economic growth.  Section 103 of the Act provides that a Combined Authority can only be created by an order of the Secretary of State where the following conditions are met:

1. the area consists of the whole of two or more local government areas in England;

2. no part of the area is separated from the rest of it by one or more local government areas that are not within the area;

3. there is no local government area that is surrounded by local government areas that are within the area but that is not itself within the area;

4. no part of the area forms part of:

●     the area of another combined authority,

●     the area of an EPB, or

●     an integrated transport area; and

5. each local government area that forms part of the area was included in a scheme prepared and published under Section 109 of the Act.

In order to satisfy the Secretary of State that it is appropriate to permit the creation of a Combined Authority, the applying authorities must demonstrate that the proposal will improve the effectiveness and efficiency of transport functions and the exercise of statutory functions in relation to economic development and regeneration.

Is a Combined Authority a type of local authority?

Combined Authorities have a separate legal personality,i.e. they constitute a separate body corporate (unlike a joint committee),however they remain wholly within the public sector (unlike a joint local authority owned company).

Combined Authorities are not local authorities for the purposes of the Local Government Act 1972, although a number of the provisions contained therein have been amended so as to apply to Combined Authorities. For example: the provisions relating to arrangements for the discharge off unctions by committees; sub-committees and officers (s101); vacation of office by members who fail to attend meetings (s85); and the power to bring legal proceedings (s223).

 

Do they take their powers from existing local authorities and if so, how would the transfer of powers work in practice?

What is the effect of Part 6 ofthe Local Government Act 1972 (‘discharge of functions’)?

The implications of a Combined Authority on the individual local authorities that have set the Combined Authority up will depend on the nature of the scheme for its creation, which is agreed locally.  There is no set model for Combined Authorities and their main purpose is to have local relevance by tackling locally relevant issues,whatever those issues might be.

In setting up a Combined Authority, the constituent member local authorities can agree to hold functions concurrently with the Combined Authority or to transfer them to the Combined Authority in full (the obvious risk of transferring powers wholly is a loss of control over that function).   Where functions are concurrent, the scheme would need to set out clearly how decisions are to be made, so as to avoid confusion and duplication.  To this extent, the transfer of functions should be agreed and set out in detail in the scheme.

The key purpose of a Combined Authority is to drive economic growth and prosperity, which includes activities such as: external funding; inward investment; and skills and transport.  However, the overall functions entrusted to a Combined Authority aren’t prescribed by statute and what is ultimately included is a matter for local determination(although, of course, this remains the subject of Secretary of State approval).

What would be the capacity of the Combined Authorities and what functions could be delegated to them?

Combined Authorities may be delegated functions of local authorities (if they chose) and the Secretary of State – and may have powers and transport functions transferred to it (if they chose) under the provisions of the Local Transport Act 2008.  It is up to the constituent authorities to design / agree the scale and detailed nature of the Combined Authority –within the statutory provisions set out in the Act.

In any event, the applying authorities will need to set out the ‘offer’ of what is to be included across the range of economic development and transport functions.  In order to convince the Secretary of State that a Combined Authority will deliver an improvement on the existing arrangements, the applying authorities will need to demonstrate what strategic issues can be tackled as a result (e.g. skills gaps, travel to work, etc)

An advantage of Combined Authorities is that they attract certain additional functions and powers in their own right such as the general power of competence (subject to limitations) which allows them to do anything they believe will help achieve their stated objective (something which is not possible with a Joint Committee).  The extent of this ‘general power of competence’ is set out in s113A of the Act.

The Localism Act 2011, sections 15-20, allows the transfer of any public function from other bodies, or from ministers, to“permitted bodies” – a designation which includes Combined Authorities (section20).  It would also be possible for further powers to be devolved to Combined Authorities by statutory instrument in due course.

Generally,how would they operate in practice?

The aim of Combined Authorities appears to be a complementary one – they complement local authority functions by improving the effectiveness of decision-making at a strategic level, which will be made at a single point, in relation to agreed functions and activities.  A Combined Authority will also be better placed locally to take on more functions and responsibilities from Government which relate to regeneration, economic development and transport.

What would happen: to existing contracts when a new Combined Authority takes over from the function to which that contract(s) relates; would there be some form of statutory novation; or would the existing local authority have the option to transfer the contract(s)to the Combined Authority?

As Combined Authorities are a separate legal entity they have capacity to enter into new and additional contracts in their own right.

In terms of existing contracts, there does not appear to be any mechanism for automatic statutory novation.  Therefore, the Combined Authority, and the relevant member authorities, are responsible for transferring, assigning or novating the benefit of those contracts which they consider to be necessary for the Combined Authority to exercise its functions.  Certainly this has been the case with the existing Combined Authorities that have delegated powers to relevant officers (e.g. Chief Executive and Chief Financial Officer) to determine which contracts are required to be transferred.

This is likely to mean that there will be a period when the Combined Authority exists but the local authority continues to exercise certain functions until the relevant transfers / novations have taken place.

Who would be liable in respect of a breach of a function that has been transferred to the authority?  Would liability pass to the Combined Authority or would it remain with the local authority?  What is the mechanism for challenges tobe brought?

A Combined Authority is a separate legal person, such that actions in respect of a breach of function can be brought against it.  There are cases of legal challenges (judicial review) being brought against a Combined Authority.  In one instance, Sheffield City Region Combined Authority was challenged, over a decision to reduce concessionary travel on buses and trains for disabled and elderly people. In fact the challenge was brought against the Combined Authority notwithstanding that the original decision had been made by its predecessor, the South Yorkshire Integrated Transport Authority (whose functions it had recently taken over).

As Combined Authorities fall within the full remit of the public sector, it also appears that they will be subject to the same checks and balances (e.g. Local Government Ombudsman) and scrutiny (central Government seems keen to ensure that Combined Authorities are subject to the same internal and external scrutiny as local authorities).

How would purchasing frameworks be affected?  For example, if one area which is subject to a framework agreement merges with another area that is not, how would this operate going forward; would the framework be void or could contracts continue to operate in the area that is subject to the framework?

It would appear that existing purchasing framework agreements are largely unaffected in principle, at least.  In terms of the individual local authorities which form the Combined Authority, there is nothing to indicate that, by virtue of its membership of a Combined Authority,a local authority will be prohibited from retaining any existing framework agreements, insofar as they do not relate to the services that have been transferred to the Combined Authority.

The Combined Authority, on the other hand, is a new and separate legal entity and therefore in order to benefit from a framework agreement it must be a “contracting party” to that agreement.  The Combined Authority cannot itself benefit from an existing framework agreement simply by virtue of the fact that one or more of the local authorities which comprise the Combined Authority are a contracting party.  To do so would be contrary to Regulation 33(5) of the Public Contracts Regulations 2015 on the basis that the Combined Authority is not clearly identified as a contracting authority in the original call for competition or invitation to confirm interest.

However, a Combined Authority does fall within the definition of a “contracting authority” for the purposes of the Public Contracts Regulations 2015, as it has the required characteristics of a body“governed by public law”.  A Combined Authority could therefore enter into a new framework agreement in its own right, provided that it is properly identified as a contracting authority in accordance with Regulation 33(5).

Overall it would appear that a Combined Authority is required to have in place its own framework agreements relating to those services which it provides, if it wishes to benefit from them.  Similarly,and as is the case with contracts, there does not appear to be any automatic or statutory novation or transfer of the benefit of a framework agreement and any such transfer must be carried out at the discretion of the member authority.

Proposed amendments

The Government recently consulted on a number of proposed amendments to the existing rules on Combined Authorities. These would have the following effect:

  • Council’s that are not adjacent could form Combined Authorities (provided that they could satisfy the requirements on improvements to efficiency, etc).
  • Combined Authorities would be allowed in a ‘doughnut’ shape, to prevent one authority from obstructing the formation of a combined authority.


However, there are no proposals to allow parts of a district to join a Combined Authority (despite requests by some larger local authorities)