Gary Porter leader of the LGA has said “We need to completely rethink how we fund local government in this country”. But is a rethink, albeit incrementally, already underway? Can we see where this government is going?
In politics there is a tendency to wish for a “big bang” a sweeping reform that is tidy, uniform, national and dramatic – and preferably paid for by someone else.
Britain had a big post war reform of local government in 1974. The pragmatic metropolitan counties sat on top of the urban areas most in need of urgent reform and achieved much, as did the regions in Scotland, to build and complete infrastructure across key urban areas.
Then as the Britain changed – rising property prices in the south, de-industrialisation in the north and midlands – that settlement cracked, produced failings, inadequacies and injustices culminating in a rates rebellion by householders and especially businesses.
Mrs Thatcher tried her “big bang” with the Poll Tax but it literally blew up. John Major settled for nationalising local government funding, giving government more control than they ever had over Rolls Royce or British Leyland. Made easier since the de facto nationalisation of school education, the biggest budget in local government was already underway.
Tony Blair had his ideas for new forms of devolution – elected mayors and elected regional assemblies, scuppered by an alliance of Gordon Brown’s treasury, who wanted subservient regional development authorities, and furious local labour councillors who voted almost every proposal down, often with some very clever referendum gamesmanship. London was the exception forced through by Blair.
George Osborne accepted that something more had to be done but looked at the ruins of Mrs Thatcher and the bruises of Tony Blair and decided for incremental, untidy, messy but voluntary and targeted devolution.
And so the metro mayors were conceived and the carrot of funding and devolution put in place, wrapped in the promise of a Northern Powerhouse. A slow burn of elections starts this May and we will witness the incremental transfer of control over business rates to local government in the coming years.
The new Theresa May government is still following that incremental road. But will they run out of road, as Gary Porter fears, before the benefits of a new settlement are in place?
National Government, including politicians of every party, believe they have run out of the political will and capacity to raise funds through the national taxes of PAYE and VAT or corporate tax so the new revenues and new choices need to be made somewhere else and that means locally.
The new mantra is Growth. Local government structures are only worth their salt if they promote or facilitate growth. Any money devolved in the Industrial strategy will be tested for “growth”.
The question is whether the new political structures locally will have the courage to make the choices being devolved to them?
The Scottish Labour and SNP governments have had the option of varying income tax by 3p since devolution in 1999 but have never used it. Conservative Surrey is holding a referendum to ask for a 15% increase. Who are the reformers today?
The mayoral elections will attract the most headlines but the Surrey vote will matter the most. It is more likely to tell us what the future will bring. It will test courage and choices so everyone in local government should wish them well.
By Neil Stewart
Editorial Director, City View
