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FEATURES - ALL THAT GLITTERS IS NOT GOLD

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The worst white paper in recent history? Not quite, but the local government white paper is far from being the savi...
The worst white paper in recent history? Not quite, but the local government white paper is far from being the saviour of local democracy the government had promised it would be, says Robin Hambleton

How disappointing. The local government white paper, Strong local leadership - quality public services, is a damp squib.

It is the least well-argued white paper I have read since the astonishingly bad Streamlining the cities rushed out by the Thatcher administration in 1983 to prepare the way for the abolition of the Greater London Council and the other metropolitan counties in 1986.

As with that white paper, this one smacks of obsessive centralisation and has an entirely misleading title. If the next Local Government Act follows the white paper's proposals, strong leadership in UK local government will arise despite government policy, rather than because of it.

The white paper claims the balance of central/local funding does not have an impact on councils' autonomy. This is tosh.

As I argued in LGC recently, if the balance of funding does not matter it would be logical for ministers to cede massive financial power to Brussels (LGC, 7 December). Take your choice. Either it is fine for 75% of funding to be controlled by a higher level of government - in which case we should give the European Union a real boost. Or it is not - in which case we should get serious about strengthening the financial power of local government.

Those who care about local democracy know the existing balance of funding between central and local government is undermining the government's reform. The over-concentration of power in Whitehall overloads central government with details it does not need. It discourages lively people from entering local politics and puts young people off making a career in local government. Even worse, it is turning off the voters. Obsessive centralisation is an all-round loser.

The problem is that incremental shifts in the central/

local balance of power have eroded local autonomy to the point where local taxation now funds an alarmingly small proportion of council spending. The white paper says this does not have an adverse impact on councils' autonomy. There are four arguments against this.

First, the white paper ignores the golden rule - those with the gold rule. Centuries of experience tell us feeble financial power dovetails with weak political power.

Second, recent analysis of UK experience confirms this view. Starting in 1987, the Local & Central Government Relations Research Committee spent 10 years researching aspects of local government finance.

Sir Charles Carter, chairman of the committee, noted the damaging consequences of the gearing effect, where every 1% increase in spending requires councils to raise council tax by about 4%. He criticised the complexities of the central grant system, which obscure accountability.

Sir Charles made an important point about innovation, which is particularly relevant to modernisation: 'Where leadership is especially needed is in promoting the idea that doing things differently is not a grounds for suspicion or rebuke or bureaucratic obstruction, but the essential means for the emergence of new ideas which can then compete for more general acceptance. Greater local freedom in activity and in method implies a greater local control of finance and a sharper responsibility for that control. I believe at least 60% of revenue requirements should come from locally decided taxes or charges.'

A look at the experience of local government abroad, where councils enjoy far greater financial freedom, provides a third body of evidence. An international comparative study carried out for the Joseph Rowntree Foundation Committee noted Swedish municipalities get nearly 60% of their revenue from local tax. In Spain it is 57%, Austria 52%, Norway 47%, Denmark 47% and France 44%. In the USA local taxes generate an average 41%.

The fourth argument for radical change concerns public perceptions of local government. In 1965 77% of people believed local elections decide how things are run locally. This belief slumped to 54% in 1994 and is probably even lower today. Certainly voter turnout in local elections is on the slide.

The report of the Fabian Society Commission, Paying for progress, published in 2000, offers an in-depth analysis of taxation and citizenship in the UK which provides an explanation. The commission notes that changes in council tax reflect changes in central government grant as much as local spending decisions. As a result, the connection between local taxes and political choices is obscured. In the commission's view 'these arrangements create a serious democratic imbalance between the political and fiscal constitutions'.

Unless there is a rapid rethink - and luckily the next few months provide the opportunity - the government will introduce an Act which will undermine rather than revitalise local democracy.

Professor Robin Hambleton

Associate dean, faculty of the built environment,

University of the West of England

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