22 June 2001
According to the New Local Government Network, a centre-Left think-tank, councils should be given more flexibility to raise extra taxes to fund service improvements.
The report, published on June 18, says that such local discretion would reconnect councils with the electorate. It suggests introducing 'referendums for matched funding'. Councils, through a vote on extra council tax
for example, would demonstrate public support for extra cash and the Treasury would match the rest. The report says: 'Local authorities with a low resources base would ask residents to dip in their pockets for an extra £1 and the Treasury would match that.'
It also advocates the use of bonds to finance projects such as leisure centres. Arm's-length companies would be used to borrow the bonds and extra taxes could be used to pay back the interest.
The report is being published in the hope that it will influence the forthcoming white paper on local government finance. Sources claim that the paper is already being redrafted to look at more financial freedoms after fears that it would fail to offer anything radical.
PFjun2001
