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Introduction 1 In the context of taking forward the Government's commitment to introduce a new duty for local authorities "to promote the economic, social and environmental well-being of their areas", the Department of the Environment, Transport and the Regions commissioned a study to establish: * up-to-date evidence on the use being made of Section 137 powers; * the types of activities on which Section 137 expenditure is being incurred; * the reasons why, in practice, Section 137 powers are not seen as an effective means of promoting community leadership. 2 There were two elements to the methodology adopted for the study: "* case studies of 46 principal local authorities in England, including five pilot case studies using a draft interview checklist; "* a postal questionnaire survey of all principal local authorities in England, to which there was a response rate of 74.5% (292 out of a total of 392 authorities). Use of Section 137 3 The results of the research suggest that in 1996/97: * 92% of authorities made use of their Section 137 powers; * the average use was 31% of the available expenditure limit, with 57% of authorities spending above this average and 43% spending below it; * 6% of authorities spent within 10% of their expenditure limit. 4 However, it is likely that there is a bias in the responses to the questionnaire towards users, and larger users, of Section 137 and hence that use of the powers is overstated by these results. 5 Unitary and non-metropolitan district councils and authorities controlled by the Liberal Democrat Party were larger users of Section 137 in 1996/97. In contrast, county and metropolitan borough councils and authorities controlled by the Conservative Party were lower users of their Section 137 powers. 6 Seventy-three per cent of the expenditure declared under Section 137 in 1996/97 was accounted for by grants to voluntary and community organisations (including the Citizens Advice Bureau) and the administration of these grants. 7 Authorities generally adopt an unstructured approach to the identification of expenditure under their Section 137 powers. We estimate that the "real" (defined as excluding activities for which other powers exist) use of the expenditure limit in 1996/97 by the authorities responding to the questionnaire survey was 25%, only 81% of the declared figure of 31%. 8 The overwhelming majority of authorities (84%) currently have no plans to change the level or type of expenditure made under Section 137. Those authorities which spent above the average use of the expenditure limit in 1996/97 are most likely to increase their expenditure under Section 137. Awareness of Section 137 9 Amongst officers, there is perceived to be a three-level hierarchy of awareness of Section 137: "* high in finance, legal and, to a lesser extent, chief executives; "* above average in economic development, although this awareness is somewhat "historical', relating to the period prior to the Local Government and Housing Act 1989; "* significantly lower in all other service areas. 10 However, even some of the finance, legal and other senior officers do not possess a full understanding of Section 137. It was evident in a number of cases that it was a long while since any consideration had been given to the powers. 11 It is likely that only a small number of the more experienced elected Members are fully aware of the powers under Section 137. Very few voluntary and community groups are perceived to have any awareness of Section 137. Role of Section 137 12 Authorities responding to the questionnaire survey attached the greatest importance to the promotion of the well-being of their areas and/or residents and the provision of a fallback or power of last resort as the primary roles of Section 137. Authorities generally do not regard Section 137 as a vehicle for undertaking new or innovative activities. 13 Whilst few of the case study authorities emphasised the role of Section 137 as being the promotion of the well-being of their areas and/or residents, this probably reflects their assessment of the effectiveness of the powers in fulfilling this role. There is a general view that Section 137 is of limited importance, with many authorities indicating that the powers are "irrelevant" to the key issues and concerns which they face. Therefore, it is not perceived as an adequate power for promoting the well-being of their areas and/or their inhabitants. 14 Section 137 is perceived as a 'negative' and 'grudging' power, rather than a 'positive' power to undertake a specific activity or to achieve a specific objective. However, there is a strong view amongst authorities that the powers under Section 137 are useful because they provide essential flexibility and, subject to the definition of the proposed new duty, should be retained. 15 Although most of the authorities regard the powers available under Section 137 as being wide-ranging, they consider that the creation of new specific powers has narrowed the scope of activities which it is possible to undertake under Section 137 and hence the use made of the powers. Barriers to the use of Section 137 16 The key factor underlying the limited use currently being made by authorities of their Section 137 powers is the availability of a wide range of primary powers. Whilst this does not represent a 'barrier' to the use of Section 137, its importance indicates that the spending priorities of authorities are to be found in areas where they possess primary powers, rather than in activities which are likely to be funded under Section 137. These primary powers are now wide enough to accommodate most activities which authorities want to undertake. 17 Only two barriers to the use of Section 137 were identified as being of any significance: the capping of total expenditure; and the limits on Section 137 expenditure. 18 Only three out of 296 authorities indicated that they had been subject to a legal challenge regarding expenditure under Section 137. 19 Whilst authorities do not consider that Section 137 is currently an effective mechanism for promoting the well-being of their areas and/or their inhabitants, the following evidence suggests that this assessment is not related to any restrictions on the use of the powers: � only 7% of authorities stated that they had been prevented from undertaking an activity under Section 137 by the expenditure limit, whilst only 9% suggested that they would spend more under Section 137 if the expenditure limit was removed; "* only 10% of authorities indicated that they had considered funding an activity under Section 137 and then not done so as a result of taking internal or external legal advice; "* only 6% of authorities stated that they wanted to undertake an activity under Section 137 but are being prevented from doing so because they consider that it lies outside their legal powers. Changes to Section 137 20 Only 23% of the authorities responding stated that they would advocate any changes to Section 137. The two changes most often suggested by these authorities were the replacement of the powers by a general power of competence and the removal of, or a significant increase in, the expenditure limits. 21 The absence of any significant degree of interest in the reform of Section 137 reflects the limited importance which authorities attach to the powers and, as a result, the limited consideration which has been given to them over many years. This, in turn, reflects the new specific powers that authorities have been given, especially in relation to economic development. 22 Considerably more emphasis is placed by authorities on other changes or clarifications to the legal position relating to their activities. Some of these have, or could have, an impact on activities funded through Section 137. For example, the position, and especially the liabilities, of Members and officers when serving on the boards of companies and trusts is likely to be an increasingly important issue as authorities become more involved in community governance.