Research Project

Control Shift: A constructive analysis of Conservative proposals for local government and decentralisation
4 October, 2009

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To coincide with the Conservative Party conference, the New Local Government Network (NLGN) is today publishing the most in-depth analysis of current Conservative local government policy by a think tank.

NLGN has analysed Conservative proposals for the local state as set out in their February 2009 Control Shift document. It argues that whilst plans for introducing new financial incentives for business growth and housing would help to put councils at the heart of economic development, the Conservatives should also focus on fundamental reform of local government finance.

In particular NLGN supports proposals to introduce the ability for councils to reduce as well as increase business rates as a general step towards ‘denationalisation’ of business rates and plans to introduce a wider power of general competence which would help to clarify current uncertainty over the existing ‘power of community well-being’.

However, NLGN has urged the Conservatives to look again at some areas of policy that might be perceived as ‘anti-localist’. In particular we disagree with proposals to introduce separately elected police commissioners, arguing that there is “little to convince us that they would be any more effective than a newly empowered council leader or directly elected mayor” and urge the party to reconsider proposals on referendums to veto council tax increases, suggesting that it could undermine the role of locally elected representatives.

On local government finance we argue that the Conservatives should clarify how they intend to overhaul the outmoded and unpopular Council Tax and reduce local authority funding dependency on the Treasury. Whilst the party proposes financial incentives for councils that keep council tax increases below 2.5%, NLGN argues that this “would perpetuate a centralising dysfunction in the revenue and expenditure planning at a local level and is not a sustainable substitute for proper reforms to the local government finance system.

In summary the main points of the analysis are:

There are positive elements in this paper which should be welcomed, including:

  • building on the Government’s moves to grant financial incentives to councils who pursue positive economic activities including new housing growth or new business growth
  • proposing a variation to the Business Rate Supplement Bill by allowing councils to reduce as well as increase business rates by a small proportion
  • developing the ‘power of wellbeing’ introduced in 2000 into a wider ‘power of general competence’ as a way to remove any doubts about the right of councils to act
  • retaining Regional Development Agencies albeit in a reformed manner if local councils so desire
  • endorsement of voluntary sub-regional groupings
  • positive support for elected mayoral referendums

However, there are aspects which are less welcome, for instance:

  • the concept of separately elected police commissioners was dropped by Government recently because of the risk it poses to disjointed local service decision-making, and we are not convinced that separate elections for different areas of local policy will strengthen multifunctional local democracy
  • referendums to veto council tax decisions by councillors may undermine the nature of representative democracy and prompt many to expect the same right to referendum on any issue for national policies too the proposal to abolish Comprehensive Area Assessment would remove a key driver for joined up, outcome focused local service delivery and needs to be thought through carefully it would be worrying if steps were taken to ‘remove politics from grant settlement’ because of the need to bolster rather than weaken democratic accountability over any such decisions

While there are some significant steps in the right direction, there are three areas where further clarification would help:

  • Council Tax is becoming outmoded and is highly unpopular, yet there is no indication whether a Conservative Government would overhaul the local property tax regime beyond their initial plans for capping council tax inflation
  • the Conservatives should say more about whether they would shift the central-local balance of power by addressing the imbalance of funding created by the dependency on Treasury grant for 80% of local government income
  • they should clarify whether or not local government services will be one of the areas in which they will match the Government’s investment plans – as they have committed with health and defence – and if not, what will be the difference in investment
Publication Date: 4 October 2009
Authored by: Chris Leslie and Liam Scott-Smith