Post Lyons
13 April, 2007

Dick Sorabji, Deputy Director, NLGN
Public Servant

So the media caravan has moved on and so too will Sir Michael Lyons when he arrives at the BBC. How have the prospects for devolution changed since the Lyons inquiry reported? The timing of the report maximised the chances for both disappointment and misreading. On the one hand national politicians are becalmed waiting for a new Prime Minister. Until that happens caution will dominate all parties in Parliament. Yet on the other hand local leaders have been waiting on a promise since 2004. Lyons may only be the messenger, but his message was meant to be powerful and government had suggested it was eager to listen.

The apparent rejection of council tax reform shows both forces at work. Government moved to squash debate over council tax bills. Opposition parties joined in, claiming either that revaluation was unnecessary, or that council tax was beyond reform. At national level no party would risk angering the public, or the press, just because it was the right thing to do.

Local leaders wanted support if not action and have sensed Parliament’s response as the end of the story. Yet reform was only rejected for this Parliament; the same promise that was once given on university tuition fees.

On business rates it was Lyons himself who provided the disappointment. His best argument against re-localising business rates was his most brutal. Implicitly Lyons suggests that in an argument over fairness between business and local government, business would win.

The stalled progress on these two big ticket reforms shines a spotlight on the key challenges faced by the local government family. Firstly, waiting to be given autonomy as a result of Whitehall’s evidence based policy making is like waiting for Godot: we will wait forever. Secondly, devolution will come when we convince the public, whether in their homes or their workplaces, that local government is worth it.

Lyons’ detailed discussion provides a series of specific tools that will help. He discusses a range of medium term reforms, some trailed by NLGN, that can deliver large increases in autonomy. The supplementary business rate could raise £1.6 billion. The right to retain the revenues from growth in the number of business paying rates could have raised £3.4 billion in the last five years. Assigning a slice of income tax to councils would provide another income stream that no longer depended on judgements in Whitehall, but on whether councils could create jobs for their communities. Meanwhile the proposed reforms to council tax benefit can reduce the constant drain on good will towards local government

Smaller proposals also offer chances to change the terms of debate. He proposed reductions in ring-fenced grants, the removal of business rate relief on empty or derelict properties, reform of LABGI and independent assessment of the true costs of duties imposed on councils by Whitehall.

The Chancellor accepted all of these medium term and smaller proposals as worthy of development. If implemented swiftly and wholeheartedly they could provide the tools with which local government could build the argument for major reform. The problem is that these ideas were the small print of the report. They lack the political momentum needed to stop Whitehall changing its mind.

Whitehall will formally respond to Lyons in the Comprehensive Spending Review this autumn. Building the political momentum to ensure these reforms are accepted as a package will be an important first step to devolution. The lesson from the national response on council tax is that it is the public, not Whitehall, who must be convinced.

Local government does this best when it plays to its strength: delivery. Across the country there are councils developing plans to solve problems that people care about on health, crime, work and transport. The more that councils can show that they are ready to address these issues, the more citizens will understand our argument: give us the tools and we will finish the job.