Central and local government powers report

20 May 2009

Wholesale cultural change across central government, closer Parliamentary scrutiny of national ministries, and reform of local authority finance are all required if communities are to reap the benefits that a shift of power and responsibility towards local government could deliver, says the Communities and Local Government Committee in its latest report.

The report examines how and why reform is essential to ensure local authorities in England gain sufficient genuine autonomy to shape the development of their communities and unlock the full potential of local innovation.

Launching the report, Chair of the CLG Committee Dr Phyllis Starkey said:

"We are still a long way from an equitable and healthy balance of power between central and local government in this country. Central government must take radical steps to tilt the balance of power towards localities, and local government must become more ambitious.

"Much must be done to counter the post-war tendency of Governments of all parties to expand their powers at the expense of local government. Whilst we fully accept that the Government should set strong national strategic goals, it should also pay much greater heed to the benefits of local autonomy. The Government recognised these benefits when it signed up to the European Charter of Local Self-Government so now it and Parliament should act to enshrine these principles in UK law.

"Local authorities clearly know their communities better than Whitehall does, particularly for instance when it comes to local health inequalities, policing needs or tackling the local impact of the economic recession. Given the extent to which communities differ, local authorities should have the flexibility - whilst respecting reasonable national minimum standards - to vary their priorities to better reflect local aspirations. This flexibility should include the ability to raise more of their own money - reducing central taxation if necessary to ensure that the overall tax burden does not increase.

"Our famously unwritten constitution depends upon strong popular participation at a local level. This won't improve unless local people believe that their local government can make a real difference."

Key recommendations in the report call for:

Cultural change at a ministerial level, across the civil service, and in Parliament, to establish a higher threshold before intervention in local issues, combined with more assertive local authorities demonstrating that they have the drive, determination and vision to improve lives in their communities.

Local councils to be empowered to assimilate local policing, health and healthcare services into their strategic vision. Linked to this, the Department of Health and Home Office should work with CLG to establish a local authority commissioning model for local policing, health and healthcare, bringing forward pilot projects in localities with matching boundaries and where some joint commissioning already takes place.

Significant reform of local government finance to enable local government to raise more of its own money. Serious consideration should be given to a supplementary local income tax, to be introduced alongside council tax and with a corresponding reduction in central taxation. Prompt action should also be taken to return business rates to local authority control, and to end central government capping of council tax increases.

The Government to prove its ‘localist’ credentials by introducing ‘constitutional’ legislation placing the principles of the European Charter of Local Self-Government on a statutory footing. Government Ministers would then declare the compliance of Bills with the Charter in the case of each new piece of domestic legislation, and include an analysis of compliance within related impact assessments.

A new Joint Committee (of the Commons and the Lords) to scrutinise Government compliance with this new constitutional settlement.

The report does not underestimate the size of the challenge. It looks in particular at the extent to which public expectations, income inequality, and the fate of previous attempts to introduce substantive financial reform, act as obstacles to changing the balance of power between central and local government.

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