Headlines: July 7th, 2006

A new report from the think tank the New Local Government Network sets out a series of proposals it believes would lead to a transformation in the relationship between central and local government, including a fundamental reform of the way local authorities are funded, though Council Tax would be retained.The report, “Pacing Lyons: a route map to localism” calls for the abolition of the national target regime and the introduction of a system using citizens and other local public services to drive improvement. The author, Dick Sorabji, the head of policy at NLGN, also urges measures to improve democracy and to encourage people to stand as councillors as well as encouraging devolution from town halls.

On funding, he suggests that Council Tax is retained but that properties are revalued every five years and capping of authorities should be scrapped. Business Rates should be returned to local authority control but capped at no higher than the increase in an authority’s rise in council tax. He also calls for the Local Government Association to design its own system of equalisation of business rate income.

Other funding, he proposes, could come from the local retention of the one per cent rate of stamp duty land tax on the first band of properties valued at 60,000 to 150,000 pounds. He suggests a 10p rate of Income Tax, arguing that Income tax is buoyant and would provide councils with autonomy based on the potential to achieve long term growth in this income. He also wants the first 10 pence of the 50 pence fuel duty to be assigned to local government and for a link between car ownership and council policy through Vehicle Excise Duty. A council would also be empowered to create additional new local taxes if they win support through a referendum.There would still be money from central government through an Equalisation Grant to ensure every council started with the same chance to meet community needs and a Performance Grant that would allow central government to meet its national policy goal