Where next for Lyons?
19 April, 2007

Chris Leslie, Director
LGC

The so-called ‘purdah’ period before the local elections began so soon after the Chancellor’s Budget that little further Ministerial comment has emerged on the next steps following the Lyons’ report. Sir Michael concluded in two halves – a short term push for council tax reform which was not accepted, coupled with a longer term package of recommendations which are still on the table. It has been some time since local government was not ‘waiting’ for either a white paper or inquiry report or Bill to be published just around the corner. Instead, we now know the options facing Ministers. There’s no doubt that fundamentally shifting the balance of power is needed, but it will not occur over night. Crucial to this is the need to address funding anomalies. Although capping, banding and valuation arrangements are not set to change imminently, there are still four things to fight for in this autumn’s Spending Review. First, Lyons’ recommendations on tougher targets to reduce ring-fenced central funding were given a positive nod, and we now need more urgent detail here. Second, the next phase for Local Area Agreements was illustrated by Lyons, and extending the ‘convening’ influence of councils over greater areas of public expenditure would be a major prize. Third, the signs are good for local retention of aspects of business rates – either through LABGI ‘plus’ or a business rate supplement. Such a change could offer the prospect of a steady revenue stream with potential hypothecation to lever much needed new capital investment. And fourthly – perhaps most promising of all – is the prospect of local ‘assignment’ of other revenues that currently accrue to the Treasury, including a small share of income tax receipts. Lyons reported in significant detail on the potential benefits of assignment, shifting the management culture in the public services away from the grant-dependent ‘big brother / little brother’ era, towards a greater local motivation to help create jobs (and therefore more income tax payers!). If Ministers eventually spot the fact that assignment needn’t disturb the public one iota, yet could radically incentivise local innovation, then we’d be onto a winner!