An EU flag over London. Pic: Descrier
Lewisham and Croydon councils are among those supporting calls for more fiscal autonomy for local government after powers are repatriated from Brussels following Britain’s exit from the EU.
They join local authorities from all four UK nations in calling for devolution of government powers following Britain’s exit from the EU.
A joint statement from the Local Government Association said: “Recasting the position of local government and broadening the scope of decision-making across the UK is the only way to meet the different needs of our different communities.”
They criticised the current “inefficient” centralised system of public finance for stifling economic growth, adding that an extension of local government funding responsibilities would improve public services.
The Local Government Information Unit, a local democracy thinktank, recently highlighted the fact 95 per cent of taxation in Britain is set and raised by central government. This is one of the most centralised tax setting arrangements of any democratic country.
“The promise of devolution is hollow without a review of our centralised system of taxation,” said Lauren Lucas, head of projects at the LGiU.
Councils are seeking to use Brexit as the catalyst for a fairer distribution of resources. The Local Government Association aims to ensure any post-Brexit constitutional changes are taken at a level closer to ordinary people.
“We need greater distribution within the London model,” said Barry Quirk, chief executive of Lewisham Council, a high need low-income borough. “It’s not just about deprivation and need, but fairness.”
Barry Quirk. Pic: Municipal Association of Victoria
Under the current funding distribution model for local authorities, Lewisham’s low tax rates results in relatively low revenue of £153 million. Quirk believes that Lewisham is not getting its fair share of the capital’s resources.
At a recent council meeting, Councillor Alan Hall, suggested the streets of Westminster were “gold plated”, while Lewisham “must deal with the social ills of London”, adding it seemed “almost Dickensian.”
Many Lewisham residents work in the central London boroughs. The six central boroughs collect 60% of the city’s revenue, but would receive 19% in a proportional system.
Lewisham Council believes greater fiscal autonomy will reduce local government’s dependency on central government and allow it to deliver services more flexibly.
“If you centralise response, you’re not going to meet the need,” said Quirk, in a response in favour of greater devolution and fiscal autonomy.
Many Lewisham residents work in the central London boroughs. The six central boroughs collect 60% of the city’s revenue, but would receive 19% in a proportional system.
Croydon Council has also said that it support the calls for greater fiscal autonomy.
Council budgets have been cut by 40% in the past 6 years, which has put greater pressure on council tax, business rates and fees and charges to cover costs. Councils argue that centrally capped council tax and business rate increases reduce fiscal autonomy and force dependency on unpopular measures like parking fines.
Local leaders are also calling on central government to afford the opportunity to design a successor scheme to various flagship projects previously funded by the EU.
Britain contributed £13bn to the EU budget in 2015. London would have received €87.30 per person from the EU Structural and Investment fund between 2014 and 2020.
In Lewisham, the EU has funded projects ranging from environmental improvements to rivers to training black and minority ethnic (BAME) business advisors.
Lewisham was also on course to receive £4.4m for skills investment from the European Social Fund between 2015-18. However these plans, and others, are caught in limbo amid post-Brexit uncertainty.
The European regional development fund has also funded a variety of enterprise projects in Croydon along with a flagship lung disease research project for Croydon Health Services NHS Trust.
Ex-Chancellor George Osbourne’s ‘devolution revolution’ stipulated that local government will be able to retain 100 per cent of local taxes – including all £26 billion of revenue from business rates – to spend on local government services.
This would phase out the existing Revenue Support Grant that allows central government funds to be used for local initiatives and infrastructure.
However given uncertainty about the future following the Brexit vote, local government leaders are also calling on the government to disclose their plans for the future.
Hackney Council did not respond to our requests for a comment; while Tower Hamlets Council said: “Unfortunately we are in the pre-election period, and we are unable to comment on your story at this time.”
