Councils report argues local government needs fiscal autonomy
Author: Jo Tura, Room 151 |
A report has called on the government to make local taxation more available to councils.
Clearing the Hurdles, sponsored by South East Councils and written by think tank Localis, said that measures such as a local fiscal autonomy through greater council control over council tax, locally appropriate revenue streams such as hotel bedroom taxes and road taxation, and a review of business rates retention should be put into place to give councils greater power over their own economies.
The report also underlined calls for a collective bond agency for councils and widening access and support for Tax Increment Finance. It said that government should continue to work with the Political and Constitutional Reform Committee and the LGA to ?redress the balance of power between central and local government?.
Ashford’s Section 151 officer Ben Lockwood backed the call for a different relationship. ?Government funding has declined and we need to be in a more mature place with government, where they treat us like adults,? he said. ?The fact is, if they are not funding us to the levels they used to then they shouldn’t control us to the levels they used to.?
Council tax capping is a problem for local authorities that the government could tackle, Lockwood said: ?The first thing for us to lobby central government about is the restrictions they’re imposing on council tax. The will in Ashford is to keep council tax low, but we should be allowed to raise it if members wish to do so. The problem is that the government doesn’t want us to tax our way out of the problems that we’ve got because their agenda is to reduce the proportion of GDP that goes to taxation. It’s their fundamental strategy.?
Local taxation through measures like road tax is a tricky area for smaller councils, said Alan Peach, head of finance for Arun District Council. ?I couldn’t see charging for road use happening here on a local level because the infrastructure would just be so difficult to put in,? he told Room 151. ?Yes, the London congestion charge, that makes sense, but for areas like ours something like that would be complex and expensive to run.?
Lockwood agreed that road tax was a difficult issue. ?You could look to local congestion charges within a defined area but we don’t have a big enough metropolitan area here to do a congestion charge with,? he explained.
Steven Howell, Localis policy officer and author of the report, said that it was clear devolution of financial control had to be tightly tailored. ?New York has had a very successful bedroom tax, but not everywhere is New York, which is why many other places in the States don’t have it,? he explained. ?What we’re looking for is giving councils freedom and letting them choose.?
Hotel tax was a no-go for Peach: ?We really wouldn’t do it here, we’re a small seaside town and struggling for tourists as it is,? he said. ?Charging them extra to stay in hotels would be the last thing we would do.?
Authorities are still very much split on the issue of more local control of funding through municipal bond issues. Peach’s council is too small to issue on its own bond, he said, although it had looked at a joint issue for HRA funding. ?When the government lowered the PWLB rate for HRA we abandoned the project,? he said. ?It is something that is very difficult to do for a smaller council.?
On business rates Howell said that Localis would encourage government to make changes when it next considers the system. ?It is the prevailing view in local government that greater local retention should be considered,? he said. ?We put out a report a couple of years ago arguing for a buy-back system where local authorities work out what they get and what they give back, then pay the government the amount and take the gamble on whether they could increase their rates by 2% or 3% a year and keep it all, with the flip side being that they take the hit if they don’t make as much as they thought they would. Not all councils would want to take that on, but the current system is hamstrung by the fact that all councils are supporting the lowest common denominator.?
In the report South East Councils notes that the single funding pot in place from 2015 is a first step toward wider devolution. ?This is a welcome start,? it said. ?But we need control over more funding more quickly to deliver growth.?