A New Account?
Choices in Local Government FinanceGerry Stoker & Tony Travers, Joseph Rowntree Foundation, 2001, £6
The debate about the future of local government finance is predictable and unimaginative. Central government has a firm and implacable view that it must control public spending. To this end the government has controlled funding to effectively reduce local government to local administration. In the face of this, local government demands greater freedoms in its policy actions and claims the need for greater local finance. Finding a compromise between these two views is the work of the two academics behind A New Account?
Written at the time of the Local Government Finance Green Paper it will be interesting to compare it to the White Paper due to be published by the Secretary of State, who has claimed a desire to return local administration to local government. This study starts by reviewing the current debate starting from the Layfield Committee, still quoted as the main “work on local government finance despite being 25 years old. The authors discuss the contention that local autonomy correlates strongly with the proportion of revenue raised locally. There is a perception in local government that local authorities achieve a higher profile through generating more local revenue. The authors concede this does not necessarily mean greater freedom.
I believe the matter will be raised again within the context of the White Paper with a possible look at some of the alternative forms of local taxation. Stoker and Travers list four factors that make a desirable system of local finance: accountability, fair distribution, flexibility and stability. They note we live in a time where the main aim of local authorities is community governance over providing a “discrete set of services. Certainly community governance has been the reason for councils' survival but in the community's eyes they are still measured by their ability to deliver services. A perception supported by the publishing of league tables.
Putting forward arguments about national standards and lack of trust in local authorities, the authors omit that this loss of confidence has been engineered by a central government bent on greater control. The book indicates what a centralist or a localist stance would actually mean for local government. Both are unacceptable and unrealistic extremes. The authors conclude that some compromise is needed. As I have been part of these debates for more than 25 years I found the conclusion unexciting and predictable. A system where central revenues are provided to meet central standards in major services and the local services are provided by local taxation, is obvious and logical. It is not what I expect to find in the new Local Government White Paper. Whether readers are involved or not in local government, this paper is an interesting discussion of why we are where we are now. However, I am sure readers of this magazine would rather have had more radical solutions proposed. There is no serious examination of new systems of land taxation or even experimentation with them.
Richard Harbord, is Managing Director of the London Borough of Hammersmith and Fulham
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