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LGA CONFERENCE: LOCAL GOVERNMENT FUNDING HAS PROBLEMS - RAYNSFORD

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By Mithran Samuel ...
By Mithran Samuel

The current local government finance system is top-down and raises serious accountability problems, according to minister Nick Raynsford.

But, speaking at a fringe meeting on Wednesday, he said any reforms would have to balance competing goods, notably equity and council freedom.

Mr Raynsford is currently leading a review into the balance of local government funding, just 25% of which is raised locally, compared to almost 60 per cent on the eve of the poll tax.

But Mr Raynsford added: 'It was the highpoint in terms of local balance of funding but it was not the high point in terms of local control of resources.'

However, he said the current system restricted councils' autonomy and left the public unclear as to who was responsible for financial decisions.

He also admitted gearing - the significant impact on council tax increases of a modest rise in council expenditure - had been a real problem this year.

Somerset CC executive member for finance Jill Shortland (Liberal Democrat), speaking at the same meeting, said: 'Council tax is rapidly becoming the unfairest tax in Britain.'

She quoted figures from the Office for National Statistics showing that in 2001/2, the poorest paid seven times as much of their income in council tax than the richest.

Raising the spectre of the poll tax riots, she added: 'If we don't change things this year, we will see marching on the streets next year.'

The review is scheduled to take a year and is currently inviting submissions.

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