By Richard Johnstone in Glasgow | 6 October 2014
A former Treasury advisor has warned that the system of local taxation in England is ‘broke’, and has called for a radical transformation of the state through devolution in response to spending reductions.
Speaking at CIPFA’s fringe event at the Liberal Democrat party conference, Julia Goldsworthy, a former special advisor to Chief Secretary to the Treasury Danny Alexander, said that without reform, local government could ‘fall over’ amid the impact of planned cuts.
‘The implications for the public sector are absolutely massive and the implications for local government – which is traditionally seen as a balancing item in a lot of approaches to spending rounds – is absolutely huge.’
She warned delegates that there would likely be a point where spending cuts would begin to represent a real threat of the failure of public services.
‘When we get to the other side of the election there’s going to have to be a Spending Review in short order that will have to address a lot of these issues and I think in many cases salami slicing will not be enough.
‘I think the only answer to those difficult decisions is a quite radical transformation of how the whole operating system of our government actually works, and decentralisation has to be part of that.’
Goldsworthy, who is now the LibDem’s candidate in Camborne, Redruth and Hayle, said that programmes introduced by the coalition government, such as the agreement of City Deals and part-localisation of business rates, could be built on as part of arrangements for greater devolution.
However expanding existing initiatives ‘isn’t going to be enough’ and there would be a need for ‘asymmetric devolution’ to different parts of the country to meet local needs, she added.
‘I think it raises questions about the timing of funding settlements and what freedoms we can actually give to local areas to raise revenue.
‘I think the discussions with Scotland around [further devolution of] income tax will provoke similar interesting debates in other parts of England,’ Goldsworthy concluded. ‘I think that our local taxation system is basically broke, and I think it is just something that’s going to fall over at some point.'
Also speaking at the event, Chris White, leader of the Liberal Democrat group on St Albans council, said that local government must resume its historical role in being responsible for more local services, including transport, school provision, land use planning and infrastructure for the local economy, including housing.
‘My [local] house price is going up £150 a day, it has been since the 1st of January. That sounds absolutely fantastic, but there are huge, huge problems with that.
‘What would be great was if the local authority could say we’ve got to calm this market down in St Albans and Hertfordshire, and we will do it through controlling our own planning system and controlling our own fiscal system.
‘One way it could be done is to have stamp duty levied at local rates – stamp duty is a local tax. There would also have to be equalisation, but there could also be competition. None of that is possible in this centralised regime.’
