30 July 2010
Local government can be made self-financing claim IEA authors
Local government has never been less accountable to its electorate and more subject to central government control than it is today. At present, councils receive 75% of their revenue finances from central government and their role is closely defined by Westminster. There is little scope for the development of different or distinct policies in different local council areas. This prevents experimentation and also prevents local government responding to the particular needs of their locality. A new study, edited by local government expert John Meadowcroft, published by the IEA* shows how local government can be made self-financing and how local authorities could then be allowed to develop different and distinct approaches to service delivery.
It is argued that local government could be made self-funded by transforming VAT into a local sales tax used specifically to fund local councils. The local sales tax would be collected by councils who would be directly accountable to their electorates for how the money was spent. Councils could set different tax rates as they competed for revenue and people would be free to move to and shop within those local authorities whose tax and spending regimes most closely corresponded with their own preferences.
The study also examines the case for local government from first principles, analyses the Blair government’s programme of local government modernisation and examines the successes and failures of PFI.
Notes to editors
The IEA is a registered educational charity and independent of all political parties. It accepts no corporate funds linked to research areas and allows no corporate donor to exceed more than 2% of annual income.*The Future of Local Government, edited by John Meadowcroft, Economic Affairs, Vol 26 No 1, The Institute of Economic Affairs, £7.50.
Contacts
Dr John Meadowcroft, IEA Deputy Editorial Director, Tel: 020 7799 8919
Professor Philip Booth, IEA Editorial and Programme Director, Tel: 020 7799 8912
Institute of Economic Affairs, 2 Lord North Street, Westminster, London, SW1P 3LB | tel: 020 7799 8900 | fax: 020 7799 2137 | email: iea@iea.org.uk
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