Nick Clegg on local democracy: we should try it for a change

by Stephen Tall on July 3, 2008

Nick Clegg today delivered a major speech to the Local Government Association outlining the ways Liberal Democrats intend to give real power back to local people and communities. It’s well worth reading in full – which you can do here – but for those who want the skinny, here’s a few snippets…

On the principle of ‘localism’

I am drawn to the philosophy of decentralisation and local empowerment for many reasons. There’s the basic principle of subsidiarity – the liberal belief that decisions just ought to be taken as close to the people they affect as possible. But it’s more than that. Centralised government simply doesn’t work to deliver the change I want for Britain. It doesn’t improve services fast enough. And it certainly doesn’t deliver fairer outcomes – where everybody gets opportunities no matter their background.

On the so-called ‘postcode lottery’ that results

In Britain today there is often a pervasive notion that the only way to deliver fairness and opportunity for all is to have absolute rigid uniformity. And this generates the media refrain of a postcode lottery. But people are different. Uniform services – almost by definition – do not fit individuals. We need variation, flexibility and personalisation in the way services are run and delivered if they are to fit into real people’s lives.

A postcode lottery is a terrible thing. But the terrible part isn’t that things are different in different areas. The terrible part is the lottery – it’s that you don’t get to choose what fits you, or fits your postcode.

I want things to be different in different places. I want things to be different for different people. I just want people to be able to choose what suits them – not have it handed out arbitrarily by a bureaucratic lottery no-one understands.

What devolution really means

I want to address what I really mean by devolution – because it’s a word that’s often used, but rarely followed through. Real localisation means giving communities autonomy. The power to disagree with central government. And to do something different. I believe this is only possible when communities are in charge of their own money. … if local government is spending central government’s money – central government will want a big say in what it’s spent on.

So at the heart of any real plan to transfer power downwards in Britain must be a plan to transfer taxation downwards. Britain has the second most centralised taxation system in Europe. Second only to Malta. And Malta has a population about the same size as Croydon. This has to change. Until it does, all this talk of double devolution and post-bureaucratic ages will be so much hot air.

The role of the central state

The central state has a vital role – of course. It must intervene to allocate money on a fair basis, to guarantee equality of access in our schools and hospitals, and to oversee core standards and entitlements. But once those building blocks are in place, the state must back off, and allow the genius of grassroots innovation, diversity and experimentation to take off. So in the health service, for example, we should break down the current monolithic structure and give control over Primary Care Trusts given to locally elected health boards, accountable to local people.

Local policing answerable to local people

Police authorities are not elected. But they are allowed to tax people. This breaches the fundamental principle of no taxation without representation. And contributes to the unease people have about the effectiveness of their local police, who often don’t seem to respond to local demands.

I don’t have a simple answer to the problem. In seeking to devolve power, we mustn’t set up a complex series of parallel governance structures at local level – That risks giving voters election fatigue as they’re asked to pick representatives for a plethora of different organisations whose power and responsibility they do not understand.

Councils must remain at the heart of local governance. But that doesn’t mean they have to directly run everything either. Over the coming months, the Liberal Democrats will be exploring ways we can make services like the police more accountable without damaging police neutrality, or councils’ role in local life.

On scrapping the Council Tax

The Liberal Democrats are committed to scrapping Council Tax. It’s Britain’s unfairest tax. Based on property values nearly twenty years ago, instead of what people can afford to pay. But our commitment to Local Income Tax isn’t just about fairness. It’s about localising power, too. Because with a local income tax in place, we can decentralise our tax system. Transferring tax-raising powers from national to local government.

My ambition is to switch from a regime where councils raise just a quarter of the money they spend, and get the rest in handouts from the centre to a regime where they get a grant for just a quarter of the money they spend – and get the rest from local taxes, decided by local people.

Ending the unfair “gearing” mechanism where people see their local taxes soar to pay for marginal increases in the council budget – and don’t understand what they’re getting for their money. I don’t want to go beyond this 75-25 ratio. The government needs some leeway to make up the differences between needier and wealthier councils with a grant that varies between areas. But with 75% of council spending funded locally, we’d have a very different Britain.

On cutting national taxation

A Local Income Tax gives us the opportunity to localise taxes further. Once it is embedded, we’ll cut income tax further at the centre. Cut the grant to make up the money. And let councils raise their local taxes to fill the gap. … We’ll keep cutting national taxes, cut regional grants and funding, give local communities control of the services, and let them raise the money to pay for them. And if they raise taxes too far? They’ll find themselves voted out of office. …

This might sound radical. But it’s what they do in countless other developed economies. It’s called local democracy. We should try it for a change.

The devolutionary challenge to Councils

There is one condition on which I would seek to craft this radical redistribution of power downwards in our country. That councils do the same. Letting go, allowing communities to make their own choices, and take control of their own destinies.

Councils are less distant than central government, for sure. But they can be just as monolithic, as restrictive, and as unfathomable to local people. I am not interested in seeing one set of politicians and officials in London cut down to size simply to give way to another set of politicians and officials in the Town Hall.

The real test of devolution is how much local people, families and communities are empowered themselves.

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Very good. Decentralisation as a strategy, not just as a policy? More of this please.

by Oranjepan on July 3, 2008 at 4:04 pm. Reply #

Good devolutionary stuff, but it is so disappointing that we appear fiscally and politically shackled to the deadweight taxation of productive work instead of a progressive charge on unearned asset wealth.

In Nick’s “countless other developed economies”, local government raises revenue by taxing domestic property. In some places they are so enlightened that they even no longer tax improvements such as buildings. Shock, horror!

Uniquely amongst allegedly progessive parties however, we propose to hand 100% of that publicly created value, on a plate, to anyone lucky enough to have already fenced off a bit of Blighty. That’s redistribution alright – Sheriff of Nottingham style!

Sure, Council Tax is unfair and unpopular. But where is the polling evidence that says the public want a Local Income Tax instead? Lord Rennard?

Why is it sensible to remove economically damaging imposts on jobs nationally, only to load it on again locally? Dr Cable?

And when are we going to put some flesh on our pledge to give councils REAL CHOICE in revenue raising? (i.e. the TYPES of taxes they can deploy, not just how much they can vary the rate of a tax we want to switch from). Conference?

If we haven’t got the guts to put a bullet through the brain of the sacred cow that LIT has become, fine. But let’s at least have the gumption to offer a small and varied menu for local government to choose from – including the ability to zero rate LIT and to levy something economically sustainable, genuinely redistributionist and politically consistent instead.

by Andrew Duffield on July 3, 2008 at 9:29 pm. Reply #

It was good to see him hint at democratising the Police. I doubt we’l have the courage to go the full hog and elect Police Authorities or Commisioners however we could all ways hand the Police precept over to LA and allow they to commission services on 3 year contracts and have a health style scrutiny board keep check on progress.

Having done 2 years on a Police Authority i couldn’t help but admire the light touch, strategic nature and the hard work of many independent and magistrate members. But its not democracy and they have tax raising powers.

You won’t get any change on police practice/culure on the ground till the local BCU commander has a local politican to deal with armed with both carrots and sticks.

On other topics no mention of

1. referenda ?

2. The collosal quanties of regeneration funding and PFI that is beyond democratic scrutiny.

3. the Bristol Planning Inspectorate.

by David Morton on July 4, 2008 at 3:54 am. Reply #

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