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Interview: Clark draws line on fiscal devolution short of tax raising powers

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The communities secretary appears to have ruled out passing tax-setting and raising powers to local government, in his clearest indication yet of how far government will go on fiscal devolution.

Speaking to LGC at the Local Government Association conference in Harrogate last week, Greg Clark also set out his expectations for devolutions bids.

While encouraging all areas – including those outside of big cities – to be bold in their demands for devolved powers, he said they must prove their requests were in the national as well as local interest.

Asked whether he was open to proposals for fiscal devolution – such as powers to raise local taxes or set council tax or business rates – Mr Clark said he “was not persuaded” that was “necessary or desirable”.

“My view has been and continues to be that there is so much ability to take spending that is currently made on behalf of places by London, Westminster and Whitehall and to have that repatriated to the places themselves,” he added.

Mr Clark did point to the potential for councils to retain larger shares of money that is collected by councils but “spirited away” to the Treasury, such as business rates.

“My encouragement to places would be to be as ambitious as they can in those areas,” he added.

Asked whether the rural and two-tier areas would have access to the same range of powers as cities, Mr Clark said: “Absolutely.”

In his speech to the conference he called for every place in the country to consider “how they can assert their strengths and make their mark”.

“We must be a nation of muscular communities – north and south, east and west, town and country,” he said.

During his speech, Mr Clark frequently praised local government and the sector’s success in dealing with severe cuts over the past parliament.

He described his predecessor Sir Eric Pickles’ relationship with the sector as “rumbustious” but paid tribute to him as the “Godfather of decentralisation”.

Mr Clark also pledged to argue for the “most reasonable” and “intelligent” financial settlement he could get for local government.

He promised to “make the case” for multi-year financial settlements during discussions with the Treasury as part of the government-wide comprehensive spending review.

Speaking to LGC, Mr Clark appeared to suggest this was likely to be for discrete areas of funding, such as the multi-year transport settlement agreed with Greater Manchester, rather than the local government finance settlement as a whole.

He said any devolution of funding would need to be balanced with the need to redistribute resources across the country.

“The concept of [devolution] deals captures the idea that it’s a conversation between what is in the local interest and what is in the national interest,” he said.

“We live in a United Kingdom in which we have a common system of taxation and a system in which we do transfer resources within the country…that is part of the national interest that you then need to balance with the local interest.”

Greg Clark

Communities secretary pledges to fight for an ‘intelligent and reasonable’ financial settlement in break with ‘rumbustious’ Pickles

Asked whether councils could expect to see any change to how funding is distributed and cuts are made following the spending review, Mr Clark said he was committed to doing two things.

“One is to allow local councils to have a greater ability to take some of the money that they didn’t have access to before from central government and secondly, where they are ambitious and reforming in terms of the changes that they might make, that they keep the benefits of that,” he said.

Communities secretary Greg Clark on…

Elected mayors: He urged councils to think first about the powers they wanted and “then see what governance arrangements are required”. He said the “more substantial the powers the more the change in governance that’s required” but added it was “not prescriptive”.

The role of district councils in devolution: Mr Clark said there was no reason why districts could not “initiate” and take a “leading role” on devolution deals.

DCLG’s capacity to deliver devolution deals: “I owe it to you that when you get your act together and when you make a set of ambitious proposals you’re not kept hanging around by me or my officials. You won’t be.”

Council tax referendums: The 2% referendum limit is “not something I have plans to change”. However, Mr Clark said he understood the “substantial costs” associated with holding a referendum were “not trivial”.

Lifting the housing revenue account borrowing cap: Mr Clark said he was “very willing” to negotiate “bespoke arrangements” with local authorities.  

Localising fees and charges: Mr Clark said he had “looked with interest” at proposals and would consider them.

Local plans: The process takes “too long”, said Mr Clark and added he wanted to make sure councils did not have to satisfy “such onerous” requirements to get them signed off.

*Mr Clark’s comments came in response to questions from members of the District Council Network at the LGA conference. Reporting by David Paine

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