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Department for Communities and Local Government — Central and Local Government

Part of Estimates Day — [1st Allotted Day] — Vote on Account, 2010-11 — Department for Business, Innovation and Skills – in the House of Commons at 3:47 pm on 10th December 2009.

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Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West 3:47 pm, 10th December 2009

Absolutely. Of course, the Government have introduced the supplementary business rate, although that is largely for Crossrail. Schemes have been introduced that allow for business income to be raised locally against specific local projects. That has re-established a relationship between local businesses and local councils and demonstrated how local businesses benefit from local spending. Their acquiescence in contributing towards that spending is also encouraged when they know what it is for.

Unsurprisingly, the Committee reiterated its opposition to capping. When there is capping, democratic accountability between a local electorate and their local council is essentially removed and central Government try to second-guess the decisions of local councils. If local councils believe that they are delivering such a good and improved service to their local electorate that their local electorate will be willing to pay higher tax, the Committee and I felt that that is for them; if the local electorate did not agree, they would know what to do. We reiterated our view that capping should go completely.

We also considered forms of grant allocation and recommended some improvements. We were very constrained about what we could suggest in relation to Government grants. During our visit to Denmark and Sweden, it became apparent to us that the level of equalisation required between different authorities in those countries is small compared with what would be required in this country. The income difference between the poorest and richest councils in those countries is much less than the gap in this country because they are much more equal societies-partly as a result of their histories, but also because of their political systems.

When we look at the difference between our poorest and richest councils and the amount of money that needs to be reallocated through the equalisation process, it becomes difficult to think of ways in which one could reduce the contribution that central Government grant makes to local government income. We therefore contented ourselves with making several recommendations about transparency. We said that the advice and evidence that was given to the Department to inform changes in the grant formula should be made available on the DCLG website so that people could see how the formula was arrived at, the factors that had gone into it, and the advice that had been given; that the Government should do everything they could to increase the transparency of the grant allocation process; and that the maximum amount of detailed material should be published on the website. That would at least go some way towards enabling people to have a more informed debate about the outcome of the grant process instead of their being reduced to complaining, as we all have, about our own areas being funded less adequately than others without relating that to different needs.

We made some recommendations about constitutional change. We felt that it was important to enshrine the position of local government and the commitment to subsidiarity in a constitutional framework so that future Governments could not swing things back towards centralisation. We suggested that the European charter of local self-government, to which we signed up some years ago, should be put on to a statutory basis. We also said that there should be a Joint Committee of the House of Commons and the House of Lords to scrutinise and monitor legislation to ensure that none went through this House or the other House that took power away from local government, but preferably did that the other way round. Essentially, it would be like the connection between the Human Rights Act 1998 and the Joint Committee on Human Rights, but in the sense of protecting local government from further central Government encroachment.

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