Councils fight for financial freedom

Local authorities will come to be regarded as puppets of Whitehall unless they are given more financial freedom, CIPFA said last week.

The public sector accountants’ institute issued the warning as it called on the government to support the conclusions of a House of Commons committee which wants control of business rates to be returned to local authorities.

Its findings were published in a report on local government finance last week.

Tony Redmond, chief executive and finance director at the London Borough of Harrow council, represented CIPFA at the hearings of the Commons environment, transport and regional affairs committee.

He said: ‘The return of the business rate to local authority control would not only lead to greater financial independence and autonomy, but would also help re-establish effective links with business to complement local authorities’ community leadership and economic development roles.’

MPs sitting on the committee agreed such a move would be the ‘least worst option’ – a conclusion backed by the Local Government Association leader Sir Jeremy Beecham.

Vernon Sore, CIPFA’s director of policy and technical affairs, said he was pleased MPs had accepted the link between democratic renewal and the proportion of finance raised locally: ‘Democratic renewal cannot be achieved without genuine financial accountability at local level. Local authorities must be, and must be seen to be, accountable both for the decisions they take and for their financial effects,’ Sore explained.

‘If this is to be realised, local authorities must once again become responsible for raising most of what they spend in line with local aspirations and needs.’

But the British Chambers of Commerce rejected the call, saying it would mean a return to the ‘dark ages’ of unpredictable rate rises.

Grants from central government currently comprise around three-quarters of local government funding. The Commons committee rejected propositions that there was no connection between the amount of finance raised locally and democratic accountability and local autonomy.

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