Local Government Revenue - Reviews and Reports

ODPM Local Government Revenue Report

The ODPM commissioned a Select Committee in February 2004 to conduct an inquiry into local government revenue in order to inform the public debate.  The committee was chaired by Andrew Bennett MP.  At that time remember, the Balance of Funding Review had not yet reported.  We therefore had two inquiries running together looking at the same or similar issues.  This inquiry looked at:

  1. What is the role and purpose of Government grant in ensuring adequate local government revenue?
  2. Is the current balance between centrally and locally raised revenue appropriate?
  3. Should businesses contribute directly to local services?
  4. Is the council tax a viable and adequate source of local revenue?
  5. What other local taxes might be acceptable? (e.g. a congestion tax, workplace parking tax, tourist tax, earnings related tax or sales tax.)
  6. Should there be a ceiling on local government expenditure and taxation, and if so how should controls operate?
  7. To what extent does Central Government control or influence contribute to local government expenditure and taxation?

The Review made a number of recommendations, the key ones being:

  1. Local authorities should have control over a much greater proportion of their income, at least 50%.
  2. It is much more appropriate for local authorities to be held to account for local decisions, including the level of local taxation, through the ballot box.  If the Government insist on retaining capping, capping should be selective, rather than general and selected local authorities should be given a year in which to meet the requirements
  3. Local authorities should be given the freedom to implement local priorities, and be judged for these decisions by the local electorate
  4. The Committee recommends that the Government dramatically reduce their inspection regimes on local authorities
  5. Council tax should be retained, provided it and council tax benefit are reformed
  6. Banding should be expanded at either end of the scale with divisions in what are now bands A, G and H
  7. Multipliers should be changed to ensure that the new bands are broadly in line with household income
  8. Consideration be given to regional and sub-regional banding
  9. Rename Council Tax Benefit (CTB) to Council Tax Rebate (CTR)
  10. Improve the take up of CTB
  11. Local Income Tax is a non starter
  12. The cap which prevents business rates increasing by more that the rate of inflation is removed
  13. Government returns business rates to local authority control as soon as possible
  14. We believe that local authorities should have the opportunity to introduce a "basket of local taxes"

Many of these recommendations are quite reasonable, but the retention of the council tax system is disappointing, and once again, CTB is seen as the answer to the problems, which it isn't.  It is ludicrous that a taxation system can only be sustained because of a benefit system.  This, more than anything else, demonstrates how bad a system this really is. The Government is effectively paying itself!
Members of Isitfair were invited to appear before the committee and give oral evidence.   We duly attended on 11 May 2004 and a transcript of our appearance can be read here (questions 338 - 388).


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