Freeing our Local Councils

It is important and democratically proper that our local councils are engaged with the communities that they serve. However, local authorities are currently part funded by a complex national system of pooled funds and grants as well as council tax. This can leave councils too dependent on central government. Local authorities should be encouraged to focus on encouraging economically successful local communities rather than having to focus on seeking the most favourable deal from Whitehall.

This is why the Government is working on new legislation to free local authorities from their dependence on central government. Instead, councils are to be given more responsibility for local council tax levels, and encouraged to promote local growth.

The first key element of the Government’s plan allows each council to keep a base level of the money raised locally through business rates, before any reallocation payments. As these adjustment payments remain fixed, councils can retain any future increase in funds raised as local business develops. By allocating funding on the basis of both need and local economic growth, councils have direct financial incentives to make sensible decisions on planning, business regulation and local services.

Allowing local authorities to retain business rate increases will also permit them to fund large-scale infrastructure investment by borrowing on the basis of these future funding increases – something that would be impossible under the current centralised system.

The second important aspect of the new legislation gives local authorities more flexibility to keep council tax at an affordable level for ordinary households. Councils will have the freedom to reduce council tax relief on second homes or empty homes, freeing up budgets to keep council tax down, or improve services on the front line.

This is all in addition to the Government’s other recent reforms to council tax. Forest of Dean District Council has committed to freeze its part of Council Tax until 2015. This is supported in part by central Government, with other moves being introduced including a new right for residents to veto excessive council tax rises and the cancellation of Labour’s planned revaluation which would have pushed up bills for millions of people.

The freeing up of local councils in these two key aspects of funding can only increase their local focus and help them better serve their communities more effectively.

Contact me: Mark Harper MP, House of Commons, London, SW1A 0AA, mark.harper.mp@parliament.uk or www.markharper.org.

ENDS