The Independent Commission on Local Government Finance in Wales, which was chaired by local government finance expert Professor Tony Travers and supported by CIPFA, said the status quo could no longer be maintained.
Updated funding arrangements were needed to suit Wales’ increasingly devolved public services and also meet the challenges of public sector austerity, the Ambition for Change: Aiming Higher report concluded.
Among its proposals is a call for business rates to be transferred from national to local control in order to increase local councils’ financial autonomy, flexibility and accountability. This would follow proposals for reform in both England and Scotland.
The existing local government funding formula in Wales should also be frozen and a new formula developed that could be applied to any eventual local government reorganisation in the principality.
In addition, the current range of more than 50 specific grants to councils should be incorporated into the central Revenue Support Grant, with an independent grants commission established to make funding decisions independent of government.
The report is intended to help inform decisions following Welsh Assembly elections in May, and Travers said the recommendations offer a distinctively progressive Welsh approach to funding public services.
“While not completely broken, the current system for funding local government in Wales is broadly the same one inherited from England and Wales arrangements that predate the highly successful and continuing devolution journey that Wales has embarked upon,” he highlighted.
“There is now a clear need to support Wales’ increasingly devolved public services with an updated and improved financial system that is fit for purpose.
“As a panel of commissioners we feel the recommended package of reforms outlined in Ambition for Change: Aiming Higher will strengthen local accountability, encourage greater financial flexibility and innovation, significantly reduce local government’s dependency on the Welsh Government and allow councils to take a much more direct role in local and regional economic growth.”
Chris Tidswell, head of CIPFA Wales, said there is now an opportunity for government to ensure local authorities have the flexibility and options to deliver local services to local people in a self-determined finance regime.
“CIPFA believes that it is time for change and it would be a great pity if these recommendations are not given serious consideration by government,” he added.
