Time to make councils self financing?4

Tim Aker Campaign

In the space of a day something incredible happened: taxpayer distrust of local government hit a new low as it was revealed, with each drip of information a new smack to council credibility, that dozens of councils had invested considerable amounts of your money in failing Icelandic banks.

After the initial shock set in that councils were stashing away taxpayers’ money, the question was asked to me time and time again – why wasn’t this money spent or given back to taxpayers’ in council tax reductions?

The bizarre system of local government finance has surely allowed this to happen. Your council tax on average accounts for only a quarter of local government spending. At the end of the year the government takes all your taxes and redistributes it in local grants, easily open to political manipulation. Your council gets the grant and if they fall short to fund their spending plans, your council tax goes up accordingly. Then the cycle goes on again…

Amid the quagmire, therefore, councils are free to stow cash away and still plead poverty and increase your taxes. This, very clearly, has to end now it’s widely known that not all of our money taken in tax goes to services.

As tempting as it is to tear into incompetent council leaders and the government, oh and we will nonetheless, the system will still remain broken. The complex granting mechanisms will still continue and councils will remain free to do as they want with our money, taking more and more year on year.

The solution mooted by Douglas Carswell MP and the Euro-MP Dan Hannan in their superb new book ‘The Plan’, is to make councils self financing. They move that we abolish VAT and turn it into a locally-set local sales tax, ending the current council tax regime. This makes sense, firstly, because the amount taken in VAT equates to the same as government spends on local government. Furthermore, tax competition across counties and metropolitan cities would drive taxes down because businesses and consumers will go where the lowest cost is.

But the most vital, crucial element to making councils self financing is that your councillors will be entirely accountable for their actions. Nowadays, when they put their foot in it, they shift the blame to central government or elsewhere. With self-financing, the buck stops at the leader’s office. When your borough over-spends, hikes your taxes or hordes money meant for services or tax cuts – you know who is to blame and you can chuck them out at the next election. Now doesn’t that make it an incredibly tempting idea?

Tim Aker

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Hardeep Singh

Simplicity sometimes provides the most effective solution. I have for sometime looked at this whole political induced mechanism of local authorities/services and always wondered why they have’t adopted a “pay your mentality” like all other walks of life.
Therefore you’d only spend what you could afford and be accountable for your actions. Reality would indeed dawn upon the great accountables (similiar to Elliott Ness and the untouchables!) and they’d have to think twice when spending money. The better they are the more people would be willing to invest in them otherwise they’d be forced to raise their game ratrher than making excuses and passing the buck.
Of course as I have already stated it’s a political mechanism and it’s like that for a reason normally an idealogical one at that. Therefore such changes will be resisted because …….
Hardeep Singh

Oh dear, grammatical mistakes all over the place. I meant to say “pay your way mentality”
http://www.atflynn.co.uk ATFlynn

Well said that man.
Tim, can we progress on from that start? But to do so, look back to the past about a hundred years.
Re-introduce the idea of the Local Economy and Local Taxation. Abandon the idea that Westminster should be in control of Taxation and Spending. Allow the Parish and Town Council, working alongside the County Council, to take complete control of Taxation, then allowing Westminster to submit a request for a precept or warrant for funding to each County. The Boundry Commission could be put to rest, as we could all just return to County Boundries and each County could elect the number of MPs, they were prepared to pay for. Here in Norfolk we elect eight MPs for a population of some 890,000 residents. I think that is over-doing it by some 50%. Enough for now. Lets have some feed-back, you never know we might yet get the better of that bunch of Jackanapes at Westminster and Whitehall. After-all, it is the poor old bloody Taxpayer who foots the bill at the end of the day.
Kind Regards, ATFlynn, “Norfolk’s Mutineer”
Mike Crocker

I agree with the sentiment of your posting; ie. what should we do about an greedy local government system ? There seems to be, however, a hole in the logic of the offered solution. You have aptly shown how, through grant shuffling and groomed accounting our local council have managed to basically rip each citizen off. Now you propose to give these same people the power to set and collect VAT levels within their own area ? Have you gone mad? What we need is to have power back at national government. Councils should be downgraded to Public Works departments funded from a national budget and accountable for their positions to both national government and perhaps a local elected spokesman (Mayor). They have grown out of all proportion and will soon become almost autonimous in their law and tax making powers. I, as a citizen do not want to pay for a UK national government that devolves power to a Welsh/Scottish/Irish Assembly that in turn devolves power out to local councils. It means I paying for the same system of government three times (with three seperate members expence accounts). Police/Fire/Health/Education services should represent national government laws/stratergy/policies; be paid and funded by national government thus they won’t be open to important local officials putting pressure on them via their budget.
No, I’m sorry but giving power to local councils is an idealistic cotton wool idea that has prooved to be unworkable. To give them powers to set local VAT levels is just ludicrous. Will you next advocate cross county border customs check points because your local council will if it means making more dosh out of us all.
Thanks for the rant space, Mike.