The Rate Escape

Freeing Local Government to Drive Economic Growth

Author: Tom Shakespeare, Tom Simpson and Alex Thomson   |   28/03/2011

Challenging times demand radical responses; in the current fiscal climate, new and innovative approaches are required to deliver the economic growth that the country so desperately needs. We believe that local government must be given greater local financial autonomy if it is to support this agenda more effectively. But the current system of local government finance in England is opaque, highly centralised and riven with perverse incentives.

Our long-term vision is for all councils to be entirely self-funded from a basket of locally derived income streams with minimal adjustments to take account of inequality of need. However, the parlous state of the national economy means there is a pressing need for more immediate measures that will provide councils with a real incentive to boost economic growth at the local level. In this report we aim to show how an implementable but radical reform to allow local authorities to retain business rates at the local level will create significant new incentives that will help drive the economy forward, as well as providing a platform for a full-scale localist shift in the near future.

The vast majority of councils are straining to throw off centrally imposed constraints and once again be given the freedom to innovate and drive local economic growth. This timely report – with a foreword by Sir Michael Lyons, the author of the last major review of local government finance, proposes a model that will allow them to do just that.

Please click here to read the press release