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Tories to rethink funding

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An incoming Conservative government could introduce an Australian-style independent grants commission to ensure councils’ funding is allocated transparently.

And while shadow ministers consider financial reform, a separate Tory policy commission on localism is contemplating measures to encourage more parliamentarians to remain councillors.

Speaking at the Conservative Party’s spring forum in Gateshead last weekend, shadow local government minister Bob Neill said the mechanism used to distribute central government grant among councils could be unfairly manipulated by ministers. He revealed he is due to meet with Australian officials to discuss how the Commonwealth Grants Commission operates.

“We want to find a more transparent means of allocating funding and we are prepared to look abroad,” he told a fringe event.

In his landmark report on the future of local government, Sir Michael Lyons last year said ministers should consider creating an independent commission to assess the costs of new burdens imposed by central government. The suggestion was vetoed. The Australian model goes further than Sir Michael’s proposal by advising how general revenue should be distributed between the states.

The proposal will be considered as part of a “full scale review” of funding for local services to be conducted by Mr Neill and shadow communities and local government secretary Eric Pickles this summer.

This will consider allowing councils to benefit from the proceeds of economic growth potentially by retaining the extra council tax and business rate revenue that results from building more houses and attracting more firms to an area.

With a Guardian/ICM opinion poll this week giving the Tories a 13-point lead their strongest showing since Margaret Thatcher’s election win in 1987 the first signs are emerging of leader David Cameron’s local government policies.

Former local government minister David Curry has been commissioned by policy review chairman Oliver Letwin to investigate new localist policies. A core group of Mr Curry, Local Government Association chairman Sir Simon Milton, LGA Conservative group leader Margaret Eaton and County Councils Network chairman Tim Palmer has been formed.

Speaking after a meeting on Monday, Ms Eaton said the group would be addressing the division between Parliament and local government.

“In France, the same people do both jobs,” she said. “You might have someone elected locally who can also be in Parliament so it’s a more joined up view.

“In this country it isn’t easy to carry on doing both. Maybe we do need to have more encouragement”

Ms Eaton insisted the work by Mr Pickles and Mr Neill would feed into the group’s work. “It will be very joined-up,” she said.

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