Will Councils have pride in Lyons?
22 March, 2007

Chris Leslie, Director, New Local Government Network
Yorkshire Post

For over two years now a little known group of civil servants and policy specialists have been beavering away in an attic room in Whitehall, led by a former council chief executive, grappling with grandiose concepts of devolution, local democracy and life as we know it. Sir Michael Lyons and his team have been whipping up quite a frenzy among the local government fraternity. And finally, the apotheosis of their work is at hand, with a weighty 400 page report due to be published with Gordon Brown’s Budget.

So will anything change? Well, to cut a long story short, probably a few headlines will be generated about council tax and business rates, and the attention will then shift to whether the next Prime Minister is likely to accept or reject Lyons’ pearls of wisdom. Given that the collected works of the Lyons tome is only being delivered to Ministers this week, it’s not completely unreasonable that they reflect and think about some of the recommendations. After all, some of the changes could have quite significant costs attached.

For instance, I suspect that Lyons will look at all the possible options for raising council revenues – and come to the unsurprising conclusion that council tax (based broadly on property values) is the least unacceptable option available. This means that the difficulties caused at present by council tax could be tackled in a couple of ways. First, for the pensioners with high value properties but little income, a reform of council tax benefit will be suggested. At present only around 60% of those entitled to council tax benefit discounts actually apply for them – so reforms to broaden this will surely be suggested. Second, council tax is an improvement on the poll tax, but it is still a relatively ‘flat’ tax, with those in the highest value multi-million pound properties only paying twice the level of the average ‘band D’ council tax payer who pays roughly £1200 annually. Those living in the least expensive properties still have to pay quite a sum at ‘band A’, so it seems only reasonable to expect the wealthiest half-a-percent of households to contribute a little more, to ease the burden on the sizeable number of Band A householders. If Lyons is brave enough to make such a modest recommendation it could still cause ‘shock’ headlines in the Daily Mail, but it would seem fair to me – though I would be surprised if the Government adopted such a recommendation straight away.

For shopkeepers, firms and businesses across England there could also be some implications from Lyons’ conclusions. He probably will not want to return business rate setting powers to local councils, but he might allow councils to keep a bit more of the income, rather than seeing all the money flow into the national Treasury as it has since the mid 1980s. The reason he is keen to give councils a little more of a stake in business rates is because councils need to be motivated to grow their local economies. If a council equates more local business with a bit more revenue, they will have a stronger incentive to improve local facilities, road and rail links, industrial estates and so on – in order to help businesses thrive locally.

Lyons may also draw together a host of other smaller suggestions, giving greater freedoms and more flexibility to councils to break from Whitehall control and ‘do their own thing’. Expect some stories about powers for councils to introduce congestion charging, or possibly charging for rubbish disposal by weight rather than the flat rate currently through the council tax. Again, national politicians are keen to steer clear of responsibility for these things – it will take bold councillors to make the leap and introduce these changes.

At the end of the day, many may look at the Lyons report and ask whether the fundamental questions have been answered – in particular, whether we can rebalance the relationship between the dominant bigger brother of national Government and the little brother of local government relying on the centre for 80% of it’s revenue. Unless the balance of funding begins to shift so councils are accountable for more of the money they spend, the balance of power will continue to be skewed always towards London-centric decision making. At the New Local Government Network we have argued for more council money to be raised locally, which would give local people a greater stake in council decisions – and keep councils and councillors more on their toes.

Whatever Lyons finally recommends, it will be down to Gordon Brown to give the final verdict. He says he wants a ‘new politics’ to emerge. Rejuvenating local democracy would be an excellent start.