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Memorandum from the
About the Institute 1. The IRRV is the professional body concerned with all aspects of local taxation in the United Kingdom and has members within both the private and public sectors. Institute members are engaged in local tax administration, local authority benefits administration, valuation of property for taxation, the appeals process and financial management in local government. The Institute represents the professional interests of its members who work within this broad church.
Summary · A clear understanding is required of the respective roles of central and local government. Local government should be accountable to the local electorate within a framework set by central government and it should not be subject to detailed direction. Flexibility is required to allow for local variances to meet local needs. · A clear understanding is required of the local government's role in respect of other local service providers. Partnership building will enhance local government influence, particularly if central control were to be loosened to allow greater funding and operational flexibility. Local authority representation of elected councillors on Police Authorities, local National Health Service boards and on Fire & Rescue Authorities would substantially enhance the democratic process. · Local Government would benefit from greater freedom to determine which services it shall provide and what service levels to maintain, with less financial regulation from central government. It should be able to attract European Community funding money without incurring penalty. It would benefit from a simplified and fairer Revenue Support Grant (RSG) system. · Central Government should act as protector of local authorities and their powers. The IRRV would welcome any proposal that enshrined local government's independence in a constitutional form. · IRRV believes that local government should remain truly local. The current trend of creating county-based unitary structures will not sustain local government in the long term. · Central government's 'one-size fits all' approach to local government has been forcing it into a position where it is in danger of becoming 'Local Administration' instead of 'Local Government'. There needs to be a restoration of more local decision-making. Local decisions are often the best examples of good schemes and services. They account for the local community's needs and reflect the matters that are relevant to them. · Money raised locally at District level should remain local. Local government should be able to implement income generating schemes as it sees appropriate. It should be encouraged to make more use of charging policies to take the pressure away from the Council tax. · Council tax itself is in need of reform. Several practical improvements could be made, including greater integration of the council tax benefits system into a rebate scheme that better reflects ability to pay. · Capping wrecks local accountability and has become a political tool. Local authorities must be trusted to steward their funding and expenditure plans. · There are pressures created by centrally dictated spending decisions and the inadequacy of RSG to respond to the extra demand for services caused by population and service growth. Funding for centrally determined expenditure could be transferred to the Exchequer, to leave local government to fund the services over which it has more control. · The IRRV advocates a complete and independent review of governance and funding.
Responses to Inquiry Questions Further devolution Does local government need greater autonomy from central government? If so, in what ways? 2. Local authorities largely have sufficient powers from central government and this itself is not a major issue. Many powers are there but are not used. What is needed is a clear understanding of the respective roles of central and local government so that there is clarity about which services are provided by local authorities as agents and which are truly local services. 3. For local government to be truly effective it needs to account to the local electorate within a framework set by central government; it does not require detailed direction. The legislative framework for the schemes that the Government wish local government to undertake should be in place, but the flexibility to provide local variances and react to the tax payers' needs should be allowed. The current restrictive position of local government is simply not meeting the needs of individual areas. 4. It is not essential for new local taxes, or higher local taxes, to be implemented to sustain local democracy. Revisions in council tax and non-domestic rates could bolster local independence but in general higher local taxes would have a negative effect on the public perception of local authorities. The alternative would be the often proposed solution of transferring some funding, for centrally determined expenditure such as much of education, and certain other services, to the Exchequer. This would leave local government largely funding services over which it had more control of total spending and service levels. 5. Local authorities are crucial to giving local residents confidence in government overall, by providing a sense that some of the more detailed decisions that affect their lives are taken by people who live and work in the local area. This confidence is enhanced by the democratic base of local government, which ensures that people serving on local councils are not simply appointed by an amorphous 'state' mechanism. Even the electors who choose not to vote in local government elections have the satisfaction of knowing that local councillors are subject to a directly democratic system. 6. Central government should not view local authorities merely as 'service providers', or as businesses that can only become be more 'efficient' largely through economies of scale. Local authorities need to be independent, accountable and truly local to retain the confidence of the local communities. 7. The long-recognised strength of there being many diverse local authorities is that by each one seeking to provide similar services, but in different ways and by different methods, the local government system has enabled service improvement by innovation without the risks of large-scale failure which are associated with a centrally directed process. 8. Artificial methods of service comparison and 'league tables' have diverted local authorities from their primary task, which is to satisfy their own locally elected members, who are there as representatives of the local population. 9. Moves towards even larger authorities, or groupings of authorities, is damaging local government and is confusing for the public, who have no idea what the nature of local councils is from one area of Britain to another, and even from area to area within England. 10. The current trend of creating county-based unitary structures will not sustain the long-term health of local government. Councils should cover a geographic and demographic area that local people can relate to as being a logical area of work, leisure and social travel. Do local government's role and influence need to be strengthened in relation to other public services, such as policing and health? 11. Local Government needs to be clear what its role is in respect of other local service providers. The Local Strategic Partnership (LSP) needs to be understood and to have clear and achievable objectives. If the Comprehensive Area Assessment is to judge the success of these partnerships it must be clearly understood as to what they are there to achieve. Through partnership building on LSP, Local Area Agreements etc there is potential for local government influence to be shown. This would be particularly enhanced if central control was loosened to allow greater co-operation; partnerships would grow through the ability to fund and operate locally as the needs of the community dictate. As it stands, though there has been much talk about authorities having community leadership through their elected members, they do not have any sway over the other local services and thus fall into the role of advocacy. 12. Local authority representation of elected councillors on Police Authorities, local National Health Service (NHS) boards and on Fire & Rescue Authorities would be beneficial if these bodies are to be seen by the public as being truly responsive to local communities. It is not proposed that there should be separate election to these boards or authorities as to do so would probably be an unwelcome, unnecessary and confusing extension of voting. Instead, a population-proportional representation from the constituent local authorities in the relevant area would provide legitimate democratic balance to the professional management of these services. Financial autonomy To what extent do the current arrangements for local government funding act as a barrier to local authorities fulfilling their 'place-shaping' role? In particular: · Does local government need greater financial freedom? If so, in what ways? 13. Local government would benefit from: · Greater freedom to determine what services it shall provide and what service levels to maintain, with less financial regulation from central government. Through the stringent approach to funding that is permitted by government - controlling the amount of money that local government has and how it can be spent - there is little left for real innovation and meeting the needs of the community. Local Government has been cut to the core in funding: there is no excess left, it is in a very real position of cutting services, cutting jobs and failing to meet the needs of residents. Local government finds itself in the ridiculous position of not focusing on how it can meet need, but on what it can do without. It is an untenable position. Of course there is the need for auditing and policing what local authorities spend - but this should be done with a light touch and there should be public scrutiny through elected members. We advocate giving them more autonomy and allowing real local governance to emerge; · Being able to attract European Community funding money without being penalised; and · A simplified and fairer Revenue Support Grant system, using factors agreed with local authority representatives through the Local Government Association and other representative bodies. · Should local government be able to raise a greater proportion of its expenditure locally? 14. Raising a greater proportion of expenditure locally cannot feasibly be achieved with existing spending levels, as an increase in existing local taxes is not acceptable to the public. Previous attempts to identify alternatives to the property-based local tax have not been successful, but the present council tax, whilst crucial to the independence of local government, is in need of reform. The IRRV have previously proposed a number of practical improvements to council tax, including greater integration of the council tax benefits system into a rebate scheme that better reflects ability to pay. The key to local authorities raising a higher proportion of their spending locally is to remove some financial burdens, such as education, from local authority funding. 15. Money raised locally should remain local. Local government should be able to implement income generating schemes as it sees appropriate. Local government should be encouraged to make more use of charging policies to take the pressure away from the Council tax. 16. There is an argument that education and social services that are an extension of care and therefore should be under a wing of the NHS, should remain centrally funded to ensure consistency. Too much autonomy in these sectors will lead to unwarranted variations in what are regarded as national service standards for education and health. These services should not be reliant on local expenditure plans and income generation. · What effect does the capping of council tax rises have on local accountability? 17. Capping wrecks local accountability and arguably leads to greater apathy amongst residents. There is not a single argument that could be manufactured in support of this arbitrary intervention in local affairs. Its operation is unfair-crude percentage increases mean nothing compared from authority to another. 18. If applied to a directly elected local authority capping negates the democratic process, but applied to non-elected bodies such as police authorities, it is appropriate until such bodies are made democratic. Local democracy would be better served by annual elections so that funding was a constant issue at the ballot box. Three or four year terms for local councillors, on a rolling cycle, have previously worked well in local government. 19. Capping has become a political tool. The government caps as it does not wish to be seen to condone excessive local income generation. Yet where centralised funding has been cut and where government auditors expect savings to be made, the only option is to increase the local contribution. This was seen this year where several police authorities found themselves in a position of having to exceed the cap in order to provide the demanded service. Clearly excessive increases are not acceptable; however Central Government needs to accept that Local Government is not a small child that cannot be trusted to steward its funding and expenditure plans. The capping issue for those communities that have listened to the arguments was won locally - 'if our grants had not been cut, we would not have had to do it. If the Government did not demand more yet pay less, we would not be in this position'. Existing powers To what extent are local government services a product of national or local decision-making? 20. They are of course the product of both. The response in the first section is relevant here because truly local services should be determined locally. There is too much central intervention one way or another in truly local services. 21. Many local services are still the result of local initiatives that have spread from one authority to another, but central government's 'one-size fits all' approach to local government has been forcing it into a position where it is in danger of becoming 'Local Administration' instead of 'Local Government'. There needs to be a restoration of more local decision-making. 22. Where local decisions can be made, these are often the best examples of good schemes and services. They account for the local community's needs and reflect the matters that are relevant to them. Where schemes are introduced with national services, there is sometimes confusion, lack of clarity and imposition of services that are not needed nor wanted to many of the community. This results in wasted funding and lack of satisfaction. Concessionary fares have been a great example of this. Some customers want this but not all, many are dissatisfied that it does not meet their needs; as it is only funded in part, resources have had to be allocated to ensure that those that are using it are able to continue - yet those who would have preferred different help are left out (not all local authorities are able to entertain additional parts to the scheme and have in place only the bare minimum that can be offered). Does local government make adequate use of its existing powers, such as its well-being, charging and trading powers? What scope is there for greater use of those powers? 23. No, it does not. Partly this is because of fear of challenge and partly because of lack of resources. Much more could be done but the financing is inflexible so far as pump-priming is concerned, so the implementation of these initiatives tends to be very slow. 24. The use of those powers is limited by the financial pressures on the council tax arising from centrally dictated spending decisions and a frequent inadequacy of RSG to respond to extra demand for services caused by population and service growth. Improving the relationship between central and local government What difference has the central-local concordat made to central-local relations? 25. It is very early days for the concordat and the jury is out on how much effect that will have. It will make very little unless there is cultural change as well. Should an independent commission be established to oversee the financial settlement for local government? 26. This was a point from the Lyons Inquiry. We do not really see this as being very useful. It just adds a layer of complication and would allow local authorities to appear before to make their case. The current system is poor but not that unfair if operated with proper data i.e. populations etc. We do not support such a body. 27. We would however advocate a complete and independent review of governance and funding. An independent commission may well be the way forward with this. The constitutional position Given the 28. It is our understanding that what sets us apart from Europe is that does not figure in the Constitution and therefore it is abolished and created at a whim of Central Government. This means that Central Government should act as protector of local authorities and the powers of local authorities. If there was a proper examination of the respective powers of local and central government that would help but we do not see that there can be any statutory protection over the balance of power when local authorities only have the powers given to them by Central Government. It is important that resources go with new powers - but again it is our belief that that was now agreed in the concordat. What role should Parliament have in the protection
of local government's position within the 29. Parliament could be used to provide a safeguard against future changes to local government being implemented by simple majorities or by parliamentary bills being enacted through the usual legislative process. The IRRV would welcome any proposal that enshrined local government's independence in a constitutional form. Changes would still be required from time to time but a constitutional 'hurdle' would, in the IRRV's opinion, provide a major increase in public confidence.
September 2008 |