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Councils should raise 50% of budgets – Herald

Douglas Fraser
The Herald, 30.6.08

Scottish councils should raise more than half their budgets and set competitive tax rates to attract people and businesses into their areas, under radical plans set out today by a new think-tank.

The impact would set local tax bills soaring, though that could be balanced by a cut in central government taxation.

Reform Scotland has warned that the SNP\’s new relationship with local authorities denies them autonomy over finance, saying that is the wrong direction for reform.

The Edinburgh-based think-tank argues that, instead, central government should legislate for a much more radical change in its relationship with councils, giving them wide-ranging rights to do what they want unless specifically barred from doing so. This would mirror the relationship Holyrood has with Westminster.

But it wants to go further, by letting local community organisations take on powers from councils, for instance to run primary education, planning and leisure as community councils do in Norway and France. Norway, for example, has more than 434 municipalities, half of them with fewer than 5000 residents, and they raise 43% of their income from local tax. Reform Scotland also wants to see voters in the four largest cities given a referendum on whether they want a directly-elected leader to take charge of urban government.

The think-tank is positioned on the centre right, in favour of limiting the scale of government and its new report, Local Power, is close to the direction of travel for the Scottish Tories, who want to position themselves as champions of local powers.

The proposals for reforming local taxation do not support the SNP plans for local income tax, saying it would be wrong to set these centrally, as Finance Secretary John Swinney proposes to do.

They would move local government back towards the position it was in before the poll tax was introduced.

Central government block grant accounted for only around half of income then.

Through a series of reforms, including the SNP\’s council tax freeze, the amount raised by local government is now below 20%. It is falling due to the council tax freeze, and with the proposed local income tax, councils would be left with no autonomy over local taxation.

Reform Scotland\’s writers argue that if councils raise more of their own budgets, they will be more responsive to the public. And if they could keep the proceeds of local business rates, it would be an incentive to grow commerce in their areas.

According to Ben Thomson, chairman of Reform Scotland: "Greater financial accountability will give councils a far greater incentive to provide high-quality services and real value for money.."

The think-tank carried out a survey of Scotland\’s councils which found a strong appetite for the changes it is now suggesting.

With 175 responses, meaning nearly 15% of the total, this found 69% felt councils do not have enough autonomy from the Scottish Government to run services, even after the removal of billions of pounds of tied finding.

Read the Herald article here