Local government has had to dance to Whitehall’s tune for far too long. It’s time for a more mature relationship enforced by a statutory code that protects councils’ rights and provides greater financial autonomy
Today the Political and Constitutional Reform Select Committee publishes its report on the prospects for codifying the relationship between central and local government. It may sound like a dry subject, of little interest to the ordinary voter, but the nature of the relationship directly affects councils’ ability to provide services for their local communities.
Currently central government holds the purse-strings and makes the funding arrangements. Local government is forced to dance to whatever tune Whitehall plays, whenever Whitehall decides to play it. Local government in England currently does not even have a statutory right to exist.
We need to change that. In much of Europe, local government is constitutionally protected, with access to guaranteed funding streams such as a portion of income tax or sales taxes, so that councils can make long-terms plans about infrastructure projects, rather than waiting to see how much funding will be allocated to them each year.
Government has made steps in the right direction. Giving local authorities the right to use the general power of competence, the huge reduction in central government ring-fencing and the moves to allow councils to retain a greater proportion of the business rates will all give councils greater autonomy. But there’s so much more we can do.
Our report puts forward a draft code for relations between central and local government. The Committee’s consultation found a considerable appetite for such a code. I would like to see it enforced by statute and entrenched by an amendment to the Parliament Act, so that the rights of local government cannot be clawed back by future Governments. The code, as it stands, would also give local government a far greater measure of financial autonomy, which I believe is sorely needed.
I am not advocating an increase in funding to local government. Instead of relying on complicated funding streams to meet expenditure commitments, local councils in England should be given a guaranteed share of the income tax take for England, commensurate with their current level of funding.
In time, local government in England should also be given the opportunity to raise other taxes, such as a tourist tax, with the consent of the local electorate. Such taxes are the norm in much of Europe, and are set at a low level so as not to have a negative effect on tourism.
A statutory code, and a new financial settlement would see an end to the public sniping that often occurs between Whitehall and local councils whenever budgets are agreed, or council taxes raised.
It may sound radical, but it is not. Scotland is leading the way, showing us how models of devolved taxation could be implemented. The Scotland Act 1998 introduced the Scottish Variable Rate, which gave the Scottish Parliament the power to raise or lower the basic rate of income tax by up to 3 pence in the pound. The Scotland Act 2012 goes further still. It introduces a Scottish rate of income tax, which will be worked out by reducing the rate of income tax levied by the UK Government by 10 pence in the pound and adding a new rate set by the Scottish Parliament.
The Commission on Devolution in Wales suggested that the National Assembly for Wales should have similar powers to set a rate of income tax for Welsh taxpayers. It’s a fair bet that similar proposals for Northern Ireland won’t be far behind.
It is time for a new, more mature relationship between central and local government. I believe we have found a way forward. I urge everyone to read the report, and engage with us and the Government in bringing about a new relationship between central and local government that benefits all.
Graham Allen is chair of the Political and Constitutional Reform Select Committee and is the Labour MP for Nottingham North. The prospects for codifying the relationship between central and local government is published today
