Give councils direct power to raise tax

If English local government were financially independent, and local councils could make decisions for themselves, then local democracy would be rejuvenated at a stroke

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The Independent Online

England is the last country in the empire still ruled from Whitehall. As Scotland, Wales and Northern Ireland enjoy the fruits of devolution, the English have one of the most over-centralised countries in western Europe. We look across our borders and see the powers available to the devolved legislatures and the choices they enable. English citizens are right to see the free prescriptions available in Wales, the scrapping by Northern Ireland of Air Passenger Duty for long-haul flights, and no tuition fees for Scottish students at Scottish universities, and ask: “Why can’t England make its own decisions, too?” 

English regional devolution has been tried and rejected, and there is little appetite for an English parliament. But if English local government were financially independent, local areas could make choices for themselves, and local democracy would be rejuvenated at a stroke. A simple way to do this is that England, too, should enjoy financial devolution comparable to the other nations of the Union.

This is not a fearful leap in the dark; the  precedent is already set and carefully worked through by the Treasury. The Scotland Act 2012 reduces the rate of income tax levied in Scotland by the UK Government by 10p in the pound, and enables this to be made good (should they choose) by a new Scottish rate, set by the Scottish Parliament. Scottish income tax will come into force from April 2016.

The Silk Commission, looking at further devolution in Wales, has recommended similar powers for Wales and it’s a fair bet Northern Ireland won’t be far behind. The English, too, should be able to retain a comparable income tax take which could be distributed through English local government. Having secured its base budget this way, local government should be free to use whatever financial powers the local electorate authorises, for example setting a tourist tax, as is common in much of Europe.

Today, the Select Committee I chair publishes proposals which would make freedom for local government possible as a right not a privilege, and we show how to extend it beyond a few pioneering cities to all local areas. Arguments between Eric Pickles and local councils about capping council tax are at the heart of why we need a new statutory settlement for local government. Access to a share of the income tax take for England, equivalent to current spending, would allow local government to provide services for communities, and the overemphasis on council tax would be reduced. Also if, with local consent, they were allowed to raise local taxes, they would have greater freedom about how to find financial solutions that benefited their local areas.

Devolution and greater independence for England through its local government can quickly become as much of a reality as devolution is in Scotland, Wales and Northern Ireland.

Graham Allen MP chairs the Select Committee for Constitutional Reform