NLGN reaction to new review of local government finance

May 12, 2010

Responding to the announcement today that the Government is to undertake a full review of local government finance, NLGN Acting Director Anna Turley said:

“It is very refreshing that both the Conservatives and Lib Dems feel strongly enough to tackle the issue of local government finance in their Coalition Agreement. Given the way the Lyons Inquiry was pushed into the long grass, there may well be scepticism about commitment to fundamental reform, but we look forward to working with the new coalition government to resolve the current unsustainable system.

Political devolution, as advocated by both parties, can only occur alongside financial devolution and it is more than apparent that the current system of local government finance is broken. Councils remain too reliant on centralised grant funding and overly dependent on council tax as an income generator, and they do not posses enough financial levers to properly shape their local economies. The business rates system should be reformed to allow councils greater flexibility and incentives to encourage new commerce, and any review of local government grant allocation must ensure that funding is distributed in a fair manner.

Thankfully any review can draw upon Michael Lyons 2007 Inquiry and we very much hope that some of his core recommendations are incorporated. We also hope that NLGN’s ideas and proposals to introduce additional council tax bands, scrap capping and extend council tax benefit will be considered fully and incorporated.

NLGN are also pleased to see the Coalition Agreement commit to ensuring welfare to work provision reflects more closely the results achieved in getting people back into work. We particularly welcome the emphasis on reforming the funding mechanisms to reflect the fact that early investment delivers later savings in benefit expenditure, as we advocated in our recent report ‘We Can Work it Out: Local Employment and Skills for Economic Recovery’

There will of course be huge questions to be answered over the next few weeks about key Conservative and Lib Dem polices relating to local government. What will the Government’s policy be on elected mayors? Will the coalition Government introduce referendums for council tax and elected Police Chiefs? Will there be consensus on the future of Local Area Agreements, Total Place and the Regional Development Agencies? Therefore we very much look forward to receiving further detailed announcements on policy and working closely with the new Communities Secretary of State Eric Pickles MP”.


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