Fiscal devolution should be a key issue in any upcoming election

23 Aug 19

Local government currently has no certainty over funding and must ensure political parties see giving it greater control over its finances as a manifesto issue, says Localis’ Jonathan Werran.  

 

Some days, it seems the new realities of political life are enough to make one question the nature of reality in the manner of a pre-Socratic philosopher or Zen Master.

In his blog-writings, Dominic Cummings, the newly installed eminence grise overseeing Number Ten’s strategy often comments on ‘branching histories’, contingent events and individual circumstances that shape our collective destiny.  Or, for the lowbrows among us, just cast your mind back, if you will, to Gwynneth Paltrow’s rom-com flick of parallel destinies, ‘Sliding Doors’.

Four years ago, I remember public affairs briefings to the effect that the only interesting happenstance for the 2015 parliament would be the timing and circumstance of George Osborne’s eventual and inevitable coronation – and to tailor all local government lobbying efforts around this. 

Hence the uncanny feeling one gets when checking the daily digital version of The Times that one is trapped inside the wrong alternate reality like the characters in Philip K Dick’s ‘The Man in the High Castle’.

The funding reality local government finds itself in is largely defined by Osborne’s shock and awe announcement at the start of the 2015 Conservative Party Conference to fully devolve business rates funding to local government by 2020. 

After that immediate adrenaline rush excitement came the questions and arguments as to what fully retained business rates should rightly fund, for instance whether excess should go towards attendance allowance and other welfare services.  And then the legislation that didn’t get time to clear parliament before Theresa May’s snap general election and Brexit fouled up any space in the parliamentary timetable.


'A Royal Commission should be established to independently determine the relevant criteria and develop a baseline funding formula on a resource basis – providing the assurance of long-term funding in a self-sustaining financial system for local authorities.'


Whatever the original spirit and intention may have been, the idea is now seen as the hospital pass some of us always suspected it to be.

This week’s report from the Commons housing, communities and local government committee reels off a litany of reasons as to why business rates are unworkable.  A major £26bn leg of local government revenue stool, it will come a cropper from existing pressures and changes in the economy.  As a revenue it will need substantial reform and we should find alternatives to this impost.  Where else in the world is social care funded by business property charges?  

The panel of MPs also pointed out the byzantine complexity is so bad that restoration of Revenue Support Grant might be a better means of making necessary redistribution.

In our report ‘Hitting Reset – a case for local leadership’ Localis made the case that devolution and equalisation is not a binary choice, and that the task is to redress the national balance by restructuring central government funding to resource-grants – based on the human, natural and economic resources in a place – and away from revenue expenditure grants. 

A Royal Commission should be established to independently determine the relevant criteria and develop a baseline funding formula on a resource basis – providing the assurance of long-term funding in a self-sustaining financial system for local authorities.  The future of business rates as a meaningful and sustainable revenue raising exercise should be framed in this context.

In today’s febrile political environment, and factoring the NHS funding boost, local government can’t expect much more from the limited one-year Spending Review than more of the same, although perhaps with some enticing cash pledges to scrape the barnacle of social care funding off the boat. 

However, with the prospect of an imminent Brexit general election, it is incumbent on the sector to seek to make local government finances and the question of how the nation goes about funding our vital and valued local services an issue of genuine importance to prospective voters.

Central to the ability to govern effectively is the ability to tax and spend - powers sorely lacking in UK local government, which has increasingly become a mere delivery arm for the central state.

The opportunity is to create a strong and cohesive local state by bringing fiscal devolution out from under the policy shadows and into the light as a key manifesto must and doorstep issue for all parties. 

Perhaps in a parallel universe, it already is!

Did you enjoy this article?

AddToAny

Top