Scotland looks set to go one step further than Westminster and hand back some real power to local government. The Local Government Committee of the Scottish Parliament has recommended that a greater proportion of local finance be sourced locally, that business rates be returned to local government control, and a reduction in ring-fenced grants.Currently across the UK national government provides up to 80 per cent of council funding, and much of that money is ring-fenced for a specific purpose. Councils on both sides of the border have been calling for a return to the autonomy they enjoyed in the pre-Thatcher era, but it looks like Scotland is to stride ahead.
CIPFA in Scotland have welcomed the report.
The next step is for the introduction and testing of a new capital finance system ‘based on prudential rules’. The ‘prudential framework project’ will develop a Prudential Code to underpin a new system of local authority finance. This would allow councils to borrow for capital investment while providing safeguards that would ensure that borrowing was affordable.
To read the full committee report visit www.scottish.parliament.uk/official_report/cttee/local.htm