Latest Public Sector News

09.07.14

Local authorities should be given greater financial freedom – CLG

Local authorities should be given greater powers over their finances, and be released from the “fiscal grip” of Whitehall, the Communities and Local Government Committee (CLG) has stated.

In its new report - 'Devolution in England: the case for local government' – the CLG Committee calls for the transfer of a range of tax raising powers to local authorities, including business rates, stamp duty, council tax and other smaller taxes and charges, along with a greater flexibility to borrow for investment.

The Committee stated that devolution of powers locally, initially to a limited number of areas centred on large city and county regions, would build on much that has happened in England over the past decade.

Within the report, it stated that the Committee supports the principle of fiscal devolution in England and calls on the government to work with local government to devise a fiscal devolution framework for local authorities. “No-one who submitted evidence to this inquiry opposed fiscal devolution, though some wanted to go no further than decentralisation of spending,” added the Committee.

Labour MP Clive Betts, chair of the CLG Committee, said: “The government should work with groups of local authorities, focused initially on England’s large cities, to break the log-jam stopping local areas from shaping their economic destiny.

“The public might well ask, when Scotland and Wales are being promised ever-greater fiscal devolution, why not England? Devolving these powers is the next step on the path to genuine localism.

“Despite gaining some responsibilities for spending through City Deals and limited control over business rates, England’s local authorities still have much less power than the Scottish Parliament and Welsh Assembly Government. The Committee therefore suggests the government should develop a framework for devolution.”

The Committee argues that all local authorities in England should gain decentralised powers over spending and public services, and existing combined authorities should be able to take on a greater range of planning, housing and regeneration powers. It was stated, however, that the transfer of enhanced tax and borrowing powers from central to local government may take time and require complex negotiations.

Local government minister Brandon Lewis said: “We disagree with the calls in this report for higher council tax, higher parking charges, higher business rates and new hotel taxes. There is no public appetite for a barrage of new stealth taxes on hard-working people and local firms, which would force up the cost of living and destroy jobs.

“This Government has devolved down funding and powers down to local communities, from housing finance to business rates, whilst avoiding higher taxes. Contrary to this report's blinkered view in concentrating power in the most distant and unaccountable tiers of municipal authority, we believe in devolving power down to the lowest appropriate - to councils, neighbourhoods and most importantly, direct to local taxpayers.”

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