A very significant sentence is hidden away in the appendices to last month’s Pre-Budget Report, Cm 7747. You could easily miss it, and it seems many have since it has received scant comment from local government. Yet in that single sentence the Treasury has undermined its own often-asserted case for capping local government expenditure.
‘Since changes to council tax are broadly balanced by changes to locally financed expenditure, they have little material impact on the current [fiscal] balance or on net borrowing’ [Annex B. page 184, para. B.70]. Why then cap local government expenditure rather than leave it to local councils, accountable to local people, to determine the level of expenditure financed by local taxation, since the decision has little impact on the national economy?
Of course other arguments will be used for capping. The government will say, and has said, it has to protect local people against ‘excessive’ local expenditure and taxation. But local people can protect themselves through local elections.
The protection argument directly contradicts the government’s expressed commitment to devolving power to local people. It is as if the government is saying ‘we give you the power to decide but only if you do what we want’.
In both ways the government has undermined the case for capping.
George Jones is emeritus professor of government at the London School of Economics and John Stewart is emeritus professor of local government at the University of Birmingham
