The next PM should follow Lyons’ vision
29 March, 2007

Dick Sorabji, Deputy Director, NLGN
Local Government Chronicle

“Philosophers only interpret the world. The point is to change it.” That has been Lyons’ dilemma; to produce a report that is analytically rigorous and also politically effective. Lyons argues that funding reform alone will not equip councils to take on their larger role. He wants to unleash cultural change in all tiers of government. This leads to a dilemma. His analysis leads to a strategy based on many small reforms instead of one dramatic shift. But cultural change is much harder to trigger without large and symbolic reforms.

Localising the business rates has the symbolic power for cultural change, but Lyons’ technical and political analysis was that it would deliver too little lasting reform at too high a price.
The negative reaction from both national government and opposition to his strong proposals for reforming council tax, suggest that Lyons political judgement is realistic.

Instead Lyons argues for ‘developmental’ reform where at each stage the initiatives reduce in number, but grow in scale. The Budget was positive about many short term measures including reform of LABGI, reduced ring-fencing, charging for waste and the right to raise a supplementary business rate that could be worth £1600m.

Each of these reforms offers local government the chance to build the argument for devolution by showing what can be done with autonomy. But rejection of Lyons medium term proposal for council tax revaluation and reform will dent to motivation to try.

Two other medium term plans reflect NLGN proposals. Lyons suggests assigning a slice of income tax, up to £13.1 billion, as grant. This offers autonomy from Whitehall funding decisions and provides incentives to create jobs.

He also discusses allowing councils to keep the funds from growth in the number of companies paying business rates in their area. He shows that if retained for five years councils could raise £3.2 billion.

It is possible to imagine Lyons’ recommendations marking a route to major reform. It would require a new Prime Minister delivering Lyons’ short term measures swiftly. Change would only accelerate if the new funding streams and a reformed council tax came during the next Parliament.

Lyons has given central government an easier route to reform. Any new Prime Minister who understands the challenges faced by 21st century public services will seize it. For local government the long march to autonomy continues.