Tuesday, February 17, 2009

Localism is Great - As Far As It Goes

Localism is one of those political buzzwords which everyone agrees is a 'good thing'. But what does it actually mean? My definition would be that 'localism' means that everything should be decided at the lowest possible level of government. It's the equivalent of what we used to call 'subsidiarity'.

There is, however, a flaw in the delivery of localism. It stands to reason that if as much as possible is decided on a local basis, the funding for those projects should, by and large, then be raised locally. There will always be a need for direct government grants for big infrastructure projects and social security benefits, but in theory, local people should pay for everything else.

But no political party will ever say that, because the cost would be enormous. Remember why the poll tax failed? One reason was that the bills were just too huge and people regarded them as unfair. At the moment, council tax raises less than a quarter of all local government spending. It would be a brave political party which proposed to increase it. The LibDems want a local income tax, yet as far as I know, don't propose to change the 25-75 balance (see below)*.

The Conservative proposals today on giving local people more power are, in general, to be welcomed. They are...

* Abolishing all regional planning and housing powers exercised by regional government, returning powers and discretion back to local communities
* Allowing councils to establish their own local enterprise partnerships to take over the economic development functions and funding of the Regional Development Agencies
* Giving local authorities a new discretionary power to levy business rate discounts, allowing them to help local shops and services, such as rural pubs or post offices
* Provide citizens in all large cities with the opportunity to choose whether to have an elected mayor, through mayoral referendums
* Greater use of direct democracy, including allowing residents to veto high council tax rises, and instigating local referendums on local issues
* Requiring councils to publish detailed information online on expenditure by local councils – including the pay and perks of senior staff, and issuing new guidance to stop ‘rewards for failure’ to sacked town hall staff.


I think even many LibDems and Labour supporters could see the merit in a lot of that. However, the deep irony is that although they all have the theme of returning power to the people, on the finance side, nothing changes. Indeed, it is possible to argue that the Tory plans to freeze council tax are evidence of more centralising. In effect they stop local councils from doing what they might want to do.

Perhaps it's a circle which can never be squared until there is a wholesale reform of local government finance. But I can't see that happening even in the medium term. All political parties have filed it in the 'Too Difficult' tray.

*UPDATE: Tom in the comments corrects me with a quote from Nick Clegg
My ambition is to switch from a regime where councils raise just a quarter of the money they spend, and get the rest in handouts from the centre. To a regime where they get a grant for just a quarter of the money they spend – and get the rest from local taxes, decided by local people.
While I very much agree with the sentiments, it's an easy thing to say when you lead a party which will never have to find a way of implementing such an aspiration.

40 comments:

Obnoxio The Clown said...

There will always be a need for direct government grants for big infrastructure projects and social security benefits, but in theory, local people should pay for everything else.

Here's a better idea, Iain: do away with all these incredibly inefficient and costly state-provided services and let people keep more of their salary to make their own provision.

You are just as authoritarian as Gorgon, aren't you?

Damon From Birmingham said...

Talking of Local Government, the Conservative led Birmingham City Council has promised to keep Council Tax rises to no more than 1.9% per annum (continuing the trend started since they took control of the council) until 2019 as a result of cost savings after years of Labour waste.
The Conservative Party needs to get this message out there so that the voters believe that in Central Gov't the Conservatives can deliver real savings without making cuts in services. They've done it in Birmingham, so why not on a national scale?

dmc said...

Im all for local accountability though.If the police or council big boys knew they were being watched and could be voted out,most would think twice before acting.Plus the shame of failure would be a deterrent too.At the moment they are public servants in name only,not deeds.Its our monet they are spending.
Surely central goverment is for the big issues otherwise why are thet there?

Rab C. Nesbitt said...

Yeah, it's a good idea to give local authorities even more power. The jumped up power mad freaks are bad enough as it is. For the record, I despise them, but what is the alternative?

John M Ward said...

The overall tax need would be much the same (actually, it should be much less) and my idea that virtually all existing taxes should come locally would be more than sufficient.

Indeed, it ought to then be possible to do away with the Council Tax altogether.

Tom said...

You said: The LibDems want a local income tax, yet as far as I know, don't propose to change the 25-75 balance.

You're wrong about this, Iain - see for example Nick Clegg's speech to the LGA last year, where he said:

"My ambition is to switch from a regime where councils raise just a quarter of the money they spend, and get the rest in handouts from the centre. To a regime where they get a grant for just a quarter of the money they spend – and get the rest from local taxes, decided by local people."

Iain Dale said...

Tom, Thanks for that. I have updated the original post.

jdc said...

I haven't decided what I think about this in detail, but I'm not sure it's as simple as that.

It's surely fine for central government to provide the funding for a lot of what local government delivers - particularly those things where government expects a specific minimum standard to be reached across the country.

Equally, if Government wants to use local funding to promote the development of deprived areas, it can target funding for regeneration into those deprived areas.

What doesn't seem to make sense is for the government to reduce the funding given to a Council serving a relatively wealthy area for a service whose cost is not strongly linked to levels of poverty.

What seems to be important is not necessarily the exact proportion raised locally (though in principle the more the better within the constraints above, and through local choice from a range of possible taxes, rather than a national fight about loading it all on one tax in every area), but rather that there is enough flexibility in both the amount councils can raise or not raise, and the amount they can spend or not spend, to create a meaningful choice at election time.

Imagine a local election where, say, a Labour Group proposed higher taxes on big properties and higher local income taxes for high earners, but more libraries, free swimming, more meals on wheels, and so forth, a Lib Dem group proposed abolishing the council tax but introducing a local income tax, a Conservative group proposed reducing all local taxes by 25% but closing a number of libraries and pre-school clubs, and a Green group proposed cutting the council tax by 20% and doubling the number of recycling points, paid for by higher parking charges and a toll to enter the major town.

I think turnout would go up, and more people would vote based on the local issues, rather than their opinion on the Dave and Gordon show. Which must be the real test of whether local government has been helped or harmed by any change.

trevorsden said...

Much local authority spending is on education. Take that out of local authority control and the percentage raised locally goes up. There may be other options as well.

Education can still be controlled locally by a separate body but funded centrally.

This would leave issues which are important politically locally to be funded locally.

The police can be funded centrally but we can still have locally elected police chiefs.

Jonathan Cook said...

* Greater use of direct democracy, including allowing residents to veto high council tax rises, and instigating local referendums on local issues

I think that this is policy would have the most benefit at the local level.

People are genuinely interested in their communities and would work hard for them. This would help people regenerate a sense of collective pride.


With respect funding at a local level.... the whole tax and welfare benefits system needs to be simplified as a first step.

If we can clean up funding at a central government level, it will be much easier to derive a fair mechanism to tax at a local level.

scott redding said...

"Requiring councils to publish detailed information online on expenditure by local councils – including the pay and perks of senior staff."

You need Tory-controlled councils to be currently implementing what they can for these kind of policy statements to be credible. Cameron gave his speech in Coventry (Tory-controlled), and Coventry hasn't published the "pay and perks" for their top 25 local civil servants.

Blue Eyes said...

Err Iain wouldn't central taxes be cut in lieu of the increased local taxation? Why not have a local income tax or local sales tax?

Forlornehope said...

Are your in favour of localism? - Yes of course.

Are you in favour of services decided by a "post-code lottery"? - No don't be absurd!

cherami said...

Ian,

Agree entirely about power upwards. The real nettle - and if there really is going to be a depression, someone is going to have to grasp it - is the ludicrous scale of 'government' nationally and locally.

People joke (wryly) about outreach workers and the like, but that is where it is going to have to start. Local authorities need to know what people can afford and want and cut their cloth accordingly instead of pursuing any old pet project and finding some way to finance it.

Tony said...

Local accountability is all very well and I'd like to see more of it, But what form should it take? The current situation is that the combination of mandated expenditure imposed by central government, together with the trend towards longer periods between council elections, means that the local people have less say now than 20 years ago.

And here, in Eastbourne, and I suspect many other boroughs, it matters not what political party holds the majority of councillor seats. The council officers plough the same furrow regardless. The local authority officers have too much influence on policy and hide behind central government directives as a reason for not addressing local issues and giving them priority.

How difficult is it to remove a council officer? Almost impossible these days. So at the very least I'd like to see the council chief executive standing for election/re-election every 4 years. This makes more sense than the halfway house that Cameron is putting forward. Local people holding the executive to account would be a big step towards restoring our active engagement in local government.

Once that has made progress then it will be time to progressively swing how councils raise money to serve local needs away from direct government grants and more evenly balance it with locally raised taxes in whatever form makes best sense in the 21st Century.

Tomfiglio said...

In an area like South Yorkshire, large numbers of people are clients of the state and will quite happily vote for other people to pay higher taxes...a pattern that's repeated on a national level, too.

acadman said...

I dont see why reform of finance should be expensive, just technically difficult. Replacing VAT with a local sales tax is one suggestion, though I am not sure whether that would be legal under EU rules. (If so, yet another reason for leaving the EU, but thats a different issue.)

What would be difficult would be the transition phase. This would not only be difficult for technical reasons, but also because of the increase in responsibilities and competence needed by local councillors, who are often mediocre: a consequence of local councillors having so few powers is that councils dont always attract talented people.

However, localism in local government wouldnt also bring more accountability, it would lead to innovation and genuine competition, Furthermore, experience in local government could act a proving ground for aspirant national politicians. In other countries such as France its very common for national politicians to have a track record in local government. We are very badly served by people who are cultivated entirely in the Westminster hot house and start to try a run the country in their 40s having never run anything (one Tony Blair springs to mind).

Childprotector said...

It is interesting that the parties are quick to impose standards on local government that they will not impose on themselves at Westminster. For example, the Conservatives back local referenda, but I am sure would shy away from Swiss-style citizen-initiated recall mechanisms applying to central government; and they (sensibly, in my view) want the Audit Commission to report on the transparency of local government finance settlements to avoid "covert party political influence" but I wonder what their view would be on the National Audit Office exercising exactly the same role over other ministerial resource allocation decisions (eg gerrymandered Lottery grants)?

Sauce for the goose...

Ethelred the Unhinged said...

No community exists in grand isolation; each is a part of a greater whole.

So saying localisation means each community must raise money in grand isolation is a logical fallacy.

There will always be a mixture of central and local fundraising.

The point is deciding how that money is spent.

Localisation ultimately sees Britain as a community of communities, as opposed to the atomised society of neo-liberalism.

The point of communities is that people help each other, which means that rich areas will help poorer areas.

If this is what Dave is arguing on CiF today, and it seems to be, it is a radical and welcome departure.

I was wondering when you would address Philip Blond's idea of Red Tories.

James D said...

The important point is that grants from Whitehall do not belong to Whitehall: they are taxpayers' money, all of whom live somewhere that can be defined as local. Genuine localism would involve abolishing national taxes (especially income tax) and having communities grant Whitehall ministries democratically accountable sums of money.

Sweet and Tender Hooligan said...

Iain,

Lets clear something up, if you can.

The tory council tax ‘freeze’ is no such thing – it has set the parameters so high that most councils of all stripes will never see the light of the funding for the freeze. So lets confirm that from the start.

Also, and I am no lib dem, but to dismiss them on the basis that ‘they will never be in government’ is petty and pretty lazy reasoning. Are we to dismiss every idea based on whether they can win government? Surely we should throw the Scottish Conservatives in the bin as they ‘will never be in power at Holyrood’. In Wales, where I am from, without the Lib Dems, it is highly unlikely the Tories would gain any power in the Senedd…

Anon said...

There is a very easy way of changing the proportion raised at the local level and all parties are moving towards it.
Take Education expenditure away from local government and fund schools directly from Whitehall.

The Penguin said...

"How difficult is it to remove a council officer? Almost impossible these days."

Cheltenham are showing the way. They have not only sacked a Chief Exec, they are suing her for damages.

http://therantingkingpenguin.blogspot.com/2008/12/heres-turn-up-for-books-hope-it-sets.html

The Penguin.

Gareth said...

But no political party will ever say that, because the cost would be enormous. Remember why the poll tax failed? One reason was that some bills were just too huge and people regarded them as unfair.

I've replaced a word in that paragraph. The poll tax was as 'fair' as any other means of taxing people. Some would have paid more, some less. The Government was unable to articulate this to combat a popular campaign against it.

A more local tax regime would introduce tax competition between councils. In principle this is a good thing but I believe there is so much State interference that it will always distort the market - in education, health and Policing for example, the target culture leads to shortcuts and gaming the system at the expense of 'consumers'. Police target convenient crimes or don't bother investigating, hospitals shorten operation waiting lists by lengthening waiting lists to see a consultant, schools make exams easier.

The ingrained lack of responsibility and accountability has given us a system beyond repair at a national level and beyond improvement by devolving things to a local level.

Newmania said...

Imagine a local election where, say, a Labour Group proposed higher taxes on big properties and higher local income taxes for high earners, but more libraries, free swimming, more meals on wheels, and so forth,

Not possible it is a well know and accepted fact that tax cannot be significantly more redistributive nor can it be much increased . Ordinary people will have to pay for any more state funding . This is the conclusion of the Institute for Fiscal Studies.

a Lib Dem group proposed abolishing the council tax but introducing a local income tax

This means more tax .

a Conservative group proposed reducing all local taxes by 25% but closing a number of libraries and pre-school clubs,

Or reducing bureaucracy or allowing people to set up their own which they would do far better than the council


and a Green group proposed cutting the council tax by 20% and doubling the number of recycling points, paid for by higher parking charges and a toll to enter the major town.

Thereby destroying business , impinging on civil Liberties and operating a system that if transferred to the Nation would be protectionist not to say racist .

Yes I can hear the arguments already and I am quite quite confident that the more you can see tax the less people will like it .If this is Clegg`s idea then great . In reality he wants an incomprehensible melange which he can call high taxes in the North and low taxes in the South .


What would happen to the basket case inner-city constituencies that rely on soaking everywhere else to pay for their nutty left wing Coucil`s to play Lady Bountiful then ?

an ex-apprentice said...

Local government is a grotesque collection of bloated, incompetent, wasteful empires, built by jumped-up Town Clerks, who measure their own worth by the majesty of their no-expense-spared headquarters, the size, rather than efficiency, of their spending and the sheer numbers of those who do their bidding.

Scrap the lot, and start from scratch.

Local chief executives, elected on a specific manifesto, free to appoint their own Board of Directors from within or otherwise. Absolute power to hire and fire, and everything else.

Locally raised revenue, spent only locally and to hell with this "fairness" of national distribution, we've seen what gerrymandering that produces. If an area isn't raising sufficient revenue even for basic needs, so much greater the incentive to do something about it.

Sack the jobsworths, the non-jobbers and the wasters of space and our taxes. Deliver only the services the people want and vote for. And free, somehow, local government from the insidious grasp of the EU, because without that, everything else is a waste of time.

LibCync said...

"All political parties have filed it in the 'Too Difficult' tray."

Iain finds out the LibDems haven't.

"it's an easy thing to say when you lead a party which will never have to find a way of implementing such an aspiration"

That's rather mealy-mouthed Iain!

Giving you the benefit of the doubt and assuming you won't now change your opinions now you've found out that they agree with a fairly fundemental bit of LibDem thought (heaven forbid!), do you now repudiate the countless Tory attacks over the years on any attempt to shift the tax-take from central to local government?

strapworld said...

Giving power back to Local Authorities is a good idea. BUT I notice that Cameron has not said anything against Unitary Authorities which have removed some district/ town`councils from the map.

IF the Tories really believed in Local democracy he would bring back Town and District Councils and consider the closing of County/Unitary Councils and disperse their duties back to local councils!

He could also bring back local Magistrates Courts so to bring Local justice for local people. The resentment, especially in rural area's, for having to travel miles to the magistrates court instead of your local town, to see magistrates with no local knowledge dispense ''justice'' is certainly against the present 'tory thinking'

Let local issues be dealt with locally!

Roger Thornhill said...

3 points - how devolution should happen, RDAs and the issue of local taxes.

As Obo says, the real problem with such proposals is that they are mostly deckchair dances. The true shift should not be from one group of Central bureaucrats to another set of local amateur bureaucrats, but to devolve to the individual. Overall, who is best able to judge for each person? The individual, of course - it is impossible for the LA to know what is best for me. Being a hetro white male in my 40's, they would rather I did not exist excep then they could not rob me via taxes.

However, one point stands out - reducing the RDAs. Without the development funding or a say over planning, what would the RDAs do then? Surely the point is to abolish RDAs, but oh, Dave can't do that, can he, for that would be abolishing a tier of EU government and Dave is not going to stand up to the EU...or is he?

The problem with the LibDem solution (being their solution is normally enough for anyone to know, but...) is that it will end up being a local income tax. That would entrench "tyranny of the masses" in some authorities as earners are squeezed hard to pay for all those who do not just as in the past Loony Left councils squeezed rate payers and businesses while riding in on votes of those who never paid a bean. Local income tax could work if only those paying it had a vote, but I do not see the LDs swallowing that one.

Ann said...

Caroline Spelman told the BBC:
"Back in 1979 the whole landscape of local government was very different... That is not the situation we face today. The landscape has changed. Conservatives actually control three times as many councils as our opponents put together - and I think this is the time to actually trust in local democracy and return power to the local level."

So, now they control most of the councils, they want to devolve power. So this is all about political expediency, and nothing to do with principle.

Iain Dale said...

I do rather agree that this was a crass thing to say.

David Lindsay said...

Who are Cameron's "local communities"?

The Tories' vehicles toured Ealing Southall proclaiming in various South Asian languages that Muslim, Hindu and Sikh festivals were to be made public holidays by the Tories.

Then that party's "Quality of Life Commission" (don't laugh, it's real) published a report advocating that "local communities" be given the power to designate three public holidays in their respective localities.

In other words, the Tories are going to go around Asian areas at the next Election making this same promise all over again, adjusted according to how Muslim, Hindu or Sikh the particular constituency, ward or addressee happens to be.

After this, what else are these unspecified "local communities" going to decide? Who are they, exactly? I think we all know that they are the great and the good of the local mosque, mandir or gurdwara.

Getting to decide this, and then a whole lot more, is to be their price for getting out the vote, sometimes consisting of nothing more than reminding their mates to fill in postal ballot papers the right way on behalf of their entire households.

These situations will easily perpetuate themselves, since people will move - not just from around the country, but from around the world - to live in Cameron's little Caliphates, Hindutvas and Khalistans.

Among other things, of course. When Avigdor Lieberman has denaturalised the Haredim by forcing them to swear allegiance to the secular State of Israel, then they can just set up as a "local community" in, say, Golders Green, or Stamford Hill, or Salford, or Gateshead.

Watch out, the Labour MPs for Gateshead. And watch out, the Labour MP for Salford, Hazel Blears, Secretary of State for Communities.

RobertEve said...

So we'll be getting local bureaucrats instead of national bureaucrats. Somehow that does not really thrill me.

Sobers said...

All taxation needs a limit. Nationally and locally. Govt should be forced to live within a fixed tax rate framework (perhaps for each parliament). Then if any party wants to raise overall taxation levels they would have to say so in their manifesto. And which taxes they wished to raise. Within a parliament they could adjust various individual taxes, but the only growth in total revenue could come from growth in economic activity.

The Grim Reaper said...

Sir Iain said "...the cost would be enormous. Remember why the poll tax failed? One reason was that the bills were just too huge and people regarded them as unfair."

I've never been entirely convinced by this line of thought. Whenever the issue of tax used to come up, my dad always used to say "I would have actually been better off under the poll tax system" and I'm not from an especially rich family. I'm always slightly baffled as to why it failed, despite having looked into it a few times. It seems much fairer than the current system.

jdc said...

Newmania - you and the IFS may have one view. Voters may or may not have another. At least this way we have the argument, people vote on it, the result is different in different places, and we see the results.

Strapworld - Unitary authorities aren't doing away with town councils, in fact most of the new ones are giving more power and status to town councils. They're doing away with district councils, but these have only existed since 1974, so it's hardly sweeping away a thousand years of tradition!

Malcolm Redfellow said...

Hold on, hold on. While I'm sure that large bits of what follows is implicit in the verbiage above, however ...

It was the Thatcher Government that destroyed a long standing system of local taxation by centralising commercial rating, and by the "nationalising" of funding via (first) Poll Tax, then by Council Tax. The result was that local authorities, which had been 40%+ dependent on monies raised from their own communities, went to 80% dependent on government subvention.

That increased by more than twice the local ratchet effect. It also gave local authorities the let-out: guilt was hosed onto Whitehall: "We'd love you to have a new social centre/school/public bog/flower bed, but the government won't let us." Central Government (both Tory and Labour) has been seeking ways out of this ever since.

Beyond that, do we really want excessive local control?

Do we want BNP/Trot representatives on Police Committees?
Do we want the kind of schooling districts (intelligent design, anyone?) that bedevil educational advance in the States?
Would anyone, left, right or centre, be happy with Islamicist/SWP/George Galloway clones running Stepney Green?

Because, quite frankly, with >30% voter participation and the kind of arm -twisting that involves, that is precisely what you will get. There's no democratic, no Tory advantage there in any middle term.

The Lib Dims haven't thought this one through, beyond the presumption that local communities can impose a reverse precept upon the national Exchequer.

Thatsnews said...

I'd like the pre-1974 system brought back. It worked. But it was changed to make it easier for Whitehall to administer. Not to deliver a better service.

Mike Law said...

Anyone who is in favour of more elected mayors should take a closer look at what has gone on here in Newham. Aside from the fact that the elected Labour Mayor (Sir Robin Wales) is an egomaniac who loves self-promotion, he has structured the council in such a way as by-pass any scrutiny of his decisions.

His ill conceived plan to "police" Newham by using the parks constabulary as police officers on the streets is fairly well documented (for those regular readers of Private Eye), but there are many, many other examples of Wales' poor decisions. I could point out that he recently purchased a gleaming new glass fronted building near the City Airport as the council's new offices. The council has stated that the purchase price of the building was £78 Million, yet I found out via a Freedom of Information enquiry that the true cost £111.5 Million.

He's also announced a freeze on Council Tax; convenient inasmuch as there are to be local elections next May.

Talking of local elections, there is a by-election taking place in the Newham ward of Royal Dock. The Conservatives have a brilliant candidate in Neil Pearce. Any support would be greatly appreciated.

Richard Gadsden said...

Solution to taxation is easy - don't have a national solution but give local authorities a general power to tax and let them decide for themselves how to raise the money