Monday, September 21, 2009

Local Councils Should Be Funded Locally

Update 4:12pm: Daniel1979 humbly requests that you please disregard this post.  I would press delete, but that is not really very fair - I am pretty certain now that the assumptions I based part of the below on are wrong (i.e. proportions of council tax retained locally).  I am not happy with myself for being wrong, I usually reference when possible; however I had something in my head that I had read previously that I either must have mis-interpreted, or would now have proven discredited.  To go into much more detail would be an even more non-sensical and unwarranted ramble. 

But as I got it wrong here I will leave this up, with this acknowledgement that, again "I was wrong"... 

Thanks to Man in a Shed on Twitter I have just seen this article.

Thereis a £2.5bn blackhole in local authority finances, i.e. the difference between predicted costs and expected revenues so taxes.  Council Tax will have to rise so as to pay for this shortfall.

Except, the Scottish Executive has intervened, and with the co-operation of Alistair Darling Scottish Council Tax will be frozen in Scotland, whilst Council Tax in England, and presumably Wales and Northern Ireland will increase on average by £50 per house.

This is unfair, but is legal under the devolution that Labour has imposed upon us all. Scottish councils will have contributed to that shortfall, and under the present system of collection, Scottish Taxpayers should be included in the revenue collection.  If councils are projecting a £2.5bn blackhole then could always cut their budgets, not ask for more cash. This will not happen, and here's why. 

When Council Tax is collected by your local council, nearly all of it then goes up to Westminster, when it is then doled back out to local authorities according to their budgets, and local iniatives. In my opinion, Council Tax should be set by local authorities and kept and spent by local authorities. If a council cuts its costs, and becomes more efficient, it still needs to raise as much revenue in Tax, because about 75%... (Not sure on the current number... I will try to find out and link later)... has to go to Westminster to go into the national pot. There is no real incentive for Councils to be efficient.

If Council Tax and spending was decided locally, Councillors would become accountable for it in local elections, smaller councils could tax less and a "fairer" system would develop because the effects of council tax raises and cuts could be felt and reflected locally, and there would be greater motivation for efficiencies and local people to keep spending in check.  Areas which would favour a higher tax and higher spend policy can have it, where as areas favouring smaller state and taxes could also have that and everybody could be happy.  Some national Government assistance would be needed for grander projects imposed from above, and concerning select councils, but the ratio of tax collected and sent to Westminster could be reversed, at least.

Add to this Conservative proposals to publish Public Expenditure and Top Earners salaries and I believe a situation could develop where by Council Tax could be slashed as wastage and extravagance could be tracked and eliminated. 
By placing decision making on Council Tax closer to the Scottish voter, the Scottish voter will receive a benefit that they will be happy for.  Everyone in the UK should be able to take these decisions, but at an even more local level which is fair to all people of the UK.


Blue Eyes said...

Are you sure? I thought that the councils kept the cash they raise, but are subbed about 80% of their spending money from central government.

Daniel1979 said...

You know what BE, in looking for a link back to something I read over a year ago (which led me to think this) - I think I may be wrong on this.... I had better brush up on my local tax issues a bit!

Apologies all.

Blue Eyes said...

I should add that I don't disagree with your main point that councils should be responsible for raising all the money they spend. It certainly would concentrate minds somewhat with the added benefit of making people realise where the bulk of their tax money is spent.

Tarquin said...

I think, even though I disagree with it all being put into a national pot (which I think we've established, doesn't happen) to raise all cash locally would be unfair - you would have small councils in commuter belts with big houses and loads of money, and poorer areas getting far less to spend per person - so I agree with the central subsidy

Now road tax - that's a general taxation, despite it's reasoning