Once again and for the umpteenth time the Government is to make everything better in the ‘local’ versus ‘national’ scene. But is it ? They have been talking, inquiring, commissioning and wasting a lot of effort for at least 38 years. The rates were not satisfactory leading to the poll tax blunder. The Balance of Funding Review Group 10 years ago made no discernible difference and the Lyons Inquiry was a council tax exploding ball kicked into touch. 

What’s new? Scotland nearly got away with independence in a fit of anti-european type pique. Westminster/Whitehall government has broken and bankrupted the country’s public finances. The British though a fortunate people have become disillusioned at the way its government is playing out while its politicians refuse to look in the mirror. English laws for the English is now the cry but legislation, over used,  takes place in the rarified setting of Parliament at a distance from everyday operational activity and performance. Here is a view of technical and practical considerations which ‘politics’ doesn’t seem to resolve:

Local electors turned down regional government for the North East and have not chosen the elected mayor option when asked. The reason for the first was that it offered a new tier without any change in the ‘balance of power’. Voters are always rightly suspicious of just more bureaucracy. The reason for the second seems to have been a mix of  councillor ‘closed shop’ Party political behaviour and the populace not understanding the question: what do we know ? We are not ‘hands on’. We don’t care who represents/governs us so long as they know what they are doing and would seek our approval and input on a regular basis in conventional (not Party political) fashion.

Populist talk of “fairness” must be dismissed. It depends on whose side one is on and can only be fulfilled if resources are unlimited. There have to be priorities. The decision-making structure and quality is all. Waste and blunders are unfair though.

 It is now more widely understood that there is a stress point between the need and desire for decentralisation and the need for central control over the money supply, currency stability, and regional monetary cross-fertilisation. Government makes little or no attempt to tell it like it is or trust our ability to understand the realities of the in-year deficit accumulating as debt, putting the numbers on it and rescue plans in financial statements for perspective. To make things worse we know or instinctively realise that ‘they’ are rotten financial managers in the business sense which gives us no confidence.

So the issue comes down to two things:

• The vision and initiative of local leaders and their competence as managers
• The fund flow system as determined by control mechanisms and taxation.

The object of taxation ought to revert to the raising of revenue in the simplest and most effective way. Its distribution is the difficult bit. The two things have become muddled. There is in fact a very simple mechanism for determining how much should go where akin to the tap and cistern concept. But set in concrete apparently is the debatable principle of local taxation for local needs. It is debatable because at the moment we all pay several taxes which become inextricably muddled in  distribution controlled from the centre including the council tax cap. There is little point, for example, in starting a new income tax when we have one already. ‘Feeling the pain’ of the payment for services is corrupted if local councillors say, as they always do, or at least have done, ‘nothing to do with me guv’.

 Local funding, that is if it is to be delegated and locally controlled and accounted for, can come from several sources:

·         A local ‘tax’ as a socially evened-out price determined locally as to method and operation

·         Charges for specific services etc.

·         Income for ‘sold’ services contracted out

·         Income from activities as agent for central government.

·         Borrowing for investment from repayable or dated renewable loans. Note: As a matter of undeniable reality local units can only be off the national balance sheet and avoid control from the centre if they are self-financing from revenue, and loans guaranteed by the local residents alone.  If this is not built into the national governance and control arrangements we are headed for a worse financial mess than we are in now. 

It is sometimes argued by economists on the basis of dubious statistics from other countries, that local taxes can be competitive and therefore naturally regulated. People will certainly move to be near good schools, high employment and well served retirement areas. But it is difficult to imagine moving just for a lower tax particularly while the amount is not what it seems systemically nor subjectively value for money.

 To sum up: the institution of well-paid elected executive mayors may well be a good development but will make no real difference surely to anything beyond marginal managerial performance until the word ‘empowerment’ is defined in operational  and feedback  terms. Perhaps an end to the principle of non-hypothecation (specific taxes must not pay for specific things) is due. This is being partially anticipated in the newly issued personal tax statements which as yet only embrace income tax.