Localism on crack

July 16, 2010

The terrifying prospect of Eric Pickles as Tom Cruise still lingers after his recent LGA speech. But amongst all the one-liners, the shape of localism is becoming clearer.

First it’s cash and rules-light – ‘less money, more freedom’, as Jon Rouse puts it. Second, as Julian Dobson says, it’s a bit centralist right now. That’s not surprising – the Minister has the tricky job of devolving via the machinery of central government.

Most importantly, localism points in several directions at once. Councils get more freedom, but so do community groups and local people. For me, this is the most radical bit – and the most radical idea isn’t big city Mayors, but direct votes on local taxes.

The Economist memorably referred to local referendums as ‘the crack cocaine of democracy’. So should we be worried about what Eric might (or might not) call ‘freebase localism’?

The referendum proposal focuses on council tax. At the moment Whitehall can cap council tax levels ‘to protect council taxpayers from excessive increases’. The Coalition wants to replace capping with local votes on whether taxes are too high.

Getting rid of capping is a good thing. It’s not transparent, and it’s verging on the undemocratic. It’s not obvious we need to replace capping with direct votes, however.

*

In the jargon, local people already have choice (of parties), voice (in local elections) and exit (moving out). Of course local elections are every four years, voter turnout is often low, and many people don’t find it easy to move. Direct democracy seems to raise turnout, and plugs people straight into decision-making.

The big problem with Eric’s proposal is the loaded question issue. It’s effectively a massive nudge for lower taxes – although the Coalition is silent on what ‘low enough taxes’ means in practice. That will put an automatic, and potentially destabilising limit on council revenues. In turn, that makes it harder for Councils to provide effective services – especially in a ‘post-bureaucratic’ age of changing social structures and more demanding consumers.

California is an extreme example of where low-tax bias takes you. Under Proposition 13, the state has capped property taxes *and* requires a supermajority for any revenue-raising measures. Right now, recession-hit public finances are in a total mess, but it’s proving politically impossible to pass a budget. As a result, one small town is now disbanding its police force.

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Councils might get round the loaded question if they had other means of raising money, besides council tax. Right now they don’t: over 80% of council finance comes direct from Whitehall.

The bigger issue here is the disconnect between local taxes, local votes and local services. Because the latter are largely grant-funded, it’s not properly clear to voters what they’re voting on, and how that vote might change local  services. Worse, Council tax hasn’t reflected real house values for years.

As Dermot suggests, councils should call the Coalition on localism. As well as proper incentives for housing growth, how about:

1) new money-raising tools – a green light for Accelerated Development Zones, and borrowing on the Housing Revenue Account;

2) a clearer link between local taxes and local services – the Review of Local Government Finance should push a revaluation of council tax, relocalising the business rate, and arguably a local income tax (as proposed by the Lib Dems).

With all this in place, I’m not sure local referendums are needed. Votes will really make a difference to services – and taxes. That should raise both turnout and political engagement. And if local taxes are too high, politicians will exit via the ballot box.

In other words, really show us the money. And just say no to crack.

4 Responses to “Localism on crack”


  1. Good summary max. Eric should also take note that it was Cuba Gooding Jr, not Tom Cruise, who coined that particular phrase…


  2. What’s interesting is that when it comes to money, the rhetoric of localism rapidly disappears. Hence the centrally-imposed freeze on council tax. Yes, you can have mayors, but don’t you dare leave revenue-raising to your local electorate.

  3. Max Says:

    It does feel as if localist and low-tax instincts are colliding here.

    In theory, Coalition Ministers should be quite keen on things like participatory budgeting – which are very localist and big society-friendly, with their emphasis on crowd-sourcing and co-production.

    The evidence from Brazilian cities like Porto Alegre suggests co-budgeting is effective at meeting need *and* empowering local people. Tower Hamlets is doing something similar with its ‘You Decide’ exercises.

    It’ll be interesting to see how far these ideas are taken up in the Decentralisation Bill …


  4. […] Squareglass blog agrees that the referendums will essentially load the system in favour of low tax increases. […]


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