A non-political Grants Commission should be established in the UK to identify the real needs of the UK’s nations, regions and local authorities, as a means for setting in place a fairer method for distributing central funding. This call to move tax distribution decision making away from Whitehall is made by the New Local Government Network in a pamphlet ‘New Localism, New Finance’.The pamphlet argues for the abolition of the current ‘Barnett formula’ which it is claimed “bears no relation to needs”. The proposals, which draw on extensive research from Australia and Canada, outline how a radical overhaul of how we fund local public services across the UK would help boost equity and efficiency without introducing complex formula or creating perverse incentives. The proposed Grants Commission would be independent of central government and determine the needs of the UK’s twelve standard regions.
The proposals also include creating regional commissions to distribute local authority funding in a way that is as free as possible from political interference. Scrapping the current formulae for distributing central government funds to the elected local authorities of England would result in a coarser assessment of needs that would produce a fairer outcome.
There are also proposals for further changes, including the raising and spending of taxes. They include a reform of the Council Tax by increasing the number of bands at the top and removing the rebates for second or holiday homes, full freedom for local authorities to collect congestion charges and apply the proceeds as they see fit, removal of restrictions on local authority borrowing powers, returning the business rate to local authorities and the introduction of a land value tax.