Research Project

New Localism, New Finance

As the rhetoric of ‘new localism’ becomes more commonplace and a raft of freedoms and flexibilities are being introduced for many local authorities, a begging question becomes: ‘How should local government funding in the UK be shaped for the 21st Century?’ The real prospect of elected regional assemblies also raises issues of funding and accountability.

With a major government review of the centre/local Balance of Funding already in place, this timely new pamphlet by Professor Iain McLean and Dr Alistair McMillan considers how in a more devolved world we can fund for equity without introducing complex formula or creating perverse incentives.

Drawing on extensive research from Australia and Canada, New Localism, New Finance suggests that the establishment of a UK Grants Commission to distribute and allocate both regional and local funding would boost both efficiency and equity. The authors also propose a number of other changes on how we raise and spend taxes, including allowing for some national income tax to be collected at local level.