Her letter represents the county council's submission to the ODPM's Balance of Funding Review and makes some key points:
- The current system of local government finance produces annual increases in council tax that are too high. Any system that produces a 4% increase in council tax for every 1% increase in local authority spending (the so called 'gearing effect') must be wrong. The current system contradicts the principle that changes in taxation should accurately reflect changes in spending.
- Nobody can be happy with the present local government finance system. It is outdated and needs to change to reflect the changing role of local councils as community leaders and their power to promote well-being.
- Making small changes to the grant formulae is not enough - there is a need to tackle the range of problems associated with local accountability, including the unfair burden on people with low and low fixed incomes.
- Council tax is an 'efficient' tax to collect but takes too much proportionally from those on low incomes.
- Local government should take back responsibility for collecting business rates.
The letter also reiterates the areas for improvement of the current system identified by the Local Government Association:
Accountability - whoever is responsible for incurring the expenditure should also be responsible for raising the necessary revenue.
Transparency and Intelligibility - Changes in local taxation should accurately reflect changes in spending. Changing the balance of funding in favour of more locally raised revenue would redress 'gearing' and allow councils to vary spending without a disproportionate effect on council tax
Fairness - Tax needs to be fair in terms of ability to pay and should be comparab le between authorities in terms of tax paid and level of service received
Stability and Predictability - Local authorities need improved predictability about their resource forecasts.
Freedom and Flexibility and Partnership Working - The local government finance system needs to change to give local authorities the freedom to respond flexibly to local needs and to encourage partnership working
Democracy - The United Kingdom, compared internationally, has one of the highest proportions of local government income coming from central sources rather than local taxation.
Mrs Rudkin also urged that the review of the local government finance system should lead to:
- Financial assistance being given to people on low and low fixed incomes
- Local authorities being given access to a much wider source of income. This would remove the 'gearing' effect and provide the means for real flexibility in service provision.