Magazine article Public Finance

A Devolutionary Deal

Magazine article Public Finance

A Devolutionary Deal

Article excerpt

Let me say straight away how much the government appreciates Sir Michael Lyons' programme of work, which concluded with his final report in March. However, before that, it had already contributed a great deal to the development of the measures in the white paper and the emerging 'place shaper' role of local government.

This was a major piece of work and an in-depth debate on the form, function and financing of local government.

Like us, Lyons looks longer term. Many of the suggestions and recommendations will continue to feed into policy as we travel down the devolution road. That is why it makes no sense to respond point by point. So I will pick out a few immediate highlights.

Already we are moving forward with many of the changes Lyons advocates, giving local government and local partners the space to take on that place-shaping role.

For example, there will be far, far fewer targets and indicators - and they will reflect local priorities as well as national standards.

We are setting up the new devolutionary deal between central and local government, through the statutory Local Area Agreement and local partnership network. One important change is that, no matter what the source of a funding stream, local government and its delivery partners can use it for taking priority actions and improving priority services in the area. The default will be that funding is not ring-fenced.

Will the new LAA work? This is the best opportunity local government has had for decades to step forward and act as the strategic leader of its communities. The talking is now over, the challenge is for councils to step up to the mark and take the opportunity.

However, we must not get distracted by detail and lose the big picture. And, once and for all, we must break the dependency culture that has built up in the past 50 years as a legacy of centralising measures imposed from Whitehall.

The new LAAs will work if local authorities and local communities grab the opportunities and make the most of them. Government can only create the opportunities and step back - that's devolution. I believe the pessimism we hear is more a lack of imagination on the part of the commentators than a lack of commitment on the part of government or enthusiasm on the part of local government.

Inevitably the discussion around the Lyons report has focused on finance. We entirely agree with one of his main conclusions - that council tax Is not broken. As the report points out, it has clear benefits. For example, it is highly collectable - properties don't move but people do. At 96.8%, collection rates are at their highest level ever. It is also transparent and provides a stable environment for councils.

However, it also has a personalised element, with a 25% discount for single occupiers. And it is underpinned by council tax benefit, which pays for 15% of all council tax levied. But we must all do more to make sure that those who need this benefit don't miss out.

I know there has been some criticism over our not accepting Lyons' recommendation to abolish capping. We agree that decisions about council tax are primarily a matter for local authorities. However, they need to exercise this responsibly.

Average council tax increases reached 13% in 2003/04 at a time of low inflation and increased investment in local government. …

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