Public Sector – Local councils in finance rejig

The government is to reform local government finance, reducing its involvement in spending decisions and its ability to cap council expenditure.

Three consultation documents issued by deputy prime minister John Prescott on Monday proposed shifting power and responsibility for spending to local authorities but to increase the accountability of councils to voters.

While the existing capping system would be replaced by reserve powers to control authorities which dramatically exceed spending, the document proposed referendums on spending and moving local elections to before budget-making, when spending levels and council taxes are set.

The document proposed moving back from a central national business rate to councils setting levels locally – but only after formal consultations between business and local government. A Confederation of British Industries spokesman welcomed such processes.

Jeremy Beecham, chairman of the Local Government Association, said the proposals did not go far enough in restoring autonomy and accountability to local government.

‘We welcome the restatement of Labour’s manifesto commitment to abolish crude, universal capping, however, we do not want to see this replaced by a new combination of central controls of the kind envisaged in these papers,’ said Beecham.

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