What are the Priorities for Local Government Finance Reform?

Author: Roger Gough, Cllr Paul Bettison, Lord Hanningfield, Cllr Gordon Keymer, Chris Tambini   |  

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What are the Priorities for Local Government Finance Reform?

In this second Localis Policy Platform, two County Councils (Essex and Leicestershire), a District Council (Tandridge) and a unitary authority (Bracknell Forest) address the need for change in the local government finance system.

As the articles point out, there is no need to reinvent the wheel here. We have had the Lyons Review, the Balance of Funding Review and other studies going all the way back to Layfield in the mid-seventies. Some of the issues raised here can be traced back further still. Struggling to respond to the economic woes of the twenties, Winston Churchill urged business de-rating while Neville Chamberlain, with his experience of local government, argued that this would produce a damaging separation between local authorities and business. That debate ended in a draw: sixty years later, the loss of the business rate in 1990 confirmed Chamberlain’s point. A common theme of our contributors is the need to get that financial link between business and local government back.

Another major theme is the sheer inflexibility of the current system. In spite of its wide range of functions, British local government remains a one-club golfer, dependent on a highly visible and unpopular tax that is only loosely linked to ability to pay, coupled with an opaque grant system.

A few years ago, Localis supported a Policy Exchange/ New Economics Foundation study of local government finance that argued for ?radical but politically feasible? changes: a reformed council tax, access to other taxes (including a locally variable element of income tax), a relocalised business rate and changes to the grant system. The case for changes of this kind is as strong as ever; without them, we will ? as Sir Simon Milton warned in a speech to Localis over a year ago ? ?drift inexorably towards another council tax crisis.? Even if an issue has been with us for a long time, action cannot be deferred indefinitely.

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What are the Priorities for Local Government Finance Reform?