Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Ninth Report

7 Different tiers of Local Government

Two tier authorities

169. The different tiers of local authorities bring an additional dimension to the local government revenue debate. Council tax is currently collected by unitary authorities, London borough councils and metropolitan borough councils, and in two tier areas by shire districts and borough councils. Fire and Police authorities also have a precept on local council tax bills. And since 2002, when the White Paper 'Your Region Your Choice' was published, there is now the potential of a regional dimension. Each authority spends money and so has a potential influence over the level of council tax demanded.

170. As it currently stands it is not a system that is easy to follow. There is a general lack of clarity for local residents regarding the provision of services. As Sir Jeremy Beecham noted, "In the two tier areas there is already considerable confusion, as you have already indicated, as to who is responsible for what".[216] For example, a district authority might collect waste, but a county authority will be responsible for the management of its disposal. When it comes to understanding what is being charged for on a council tax bill, the divide between county and district makes a complex system even more confusing.

171. The Committee believes that the complicated nature of sub-national service provision and service cost needs further clarification, and that the Government should review the information that accompanies council tax bills. Whatever judgement is made on implementing a revised council tax, the Committee believes that the Government should survey authorities to gauge current best practice and feed these findings back into the central-local partnership for discussion, before the next council tax bills are issued.

Parish Councils

172. Parish councils obtain their revenue from a precept on council tax bills. They use their money to invest in small community projects, which often involve the greatest accountability, due the small nature and size of their remit and electorate. When considering the possible changes to the current council tax the Somerset Association of Local Councils was most concerned about the impact of a local income tax. Their representative, Peter Lacey, argued that

"For Local Income Tax to be relevant to Parish Councils without any other form of tax there would be a need for a basic rate of tax taken to say five places of decimals. Computerised payroll working could cope, but simplicity needs to be the key and the manual operation of the PAYE codes is already under attack as too complex for small businesses."[217]

He further argued that,

"Without a locally sensitive tax the direct relationship of the precept to the Parish would be lost and therefore the local link of revenue to borrowing capacity would also disappear. Some form of local tax is essential from the perspective of our members so that local decisions have local direct relevance. A "local" local tax is also essential for the security of the revenue for any repayments arising on borrowings."[218]

173. The Somerset Association of Local Councils argued that local taxes should represent the wishes of the local community, and that their accountability was premised on that. Peter Lacey indicated that the Parish Council decision-making process was one that involved a large number of local residents.[219] The laudable desire of Parish councils for expenditure directly attributable to their activities to be known to local electors, and to be raised from local taxation, is a further strong argument for a local tax base and local taxes.

216   Q 831 [Sir Jeremy Beecham, Leader of the Labour Group, Local Government Association] Back

217   Ev 37 HC 402-II [Somerset Association of Local Councils] Back

218   Ev 37 HC 402-II [Somerset Association of Local Councils] Back

219   Q 219 [Mr Lacey, Chief Executive, Somerset Association of Local Councils] Back

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Prepared 16 July 2004