High Peak Liberal Democrats

Reform of local government needs reform of local government finance as well.

At its most recent meeting on 20 February, the Lincolnshire County Council, without unfortunately the support of the Labour Group, took its first tentative step on a journey already completed by counties such as Wiltshire, Cornwall, Cheshire and Bedfordshire among others, by agreeing to investigate the possible replacement of the present two tier system of local government in the county with a single tier unitary system which could save us up to £30 million.

There is still a long way to go; but many of us feel that, whichever party or parties form the next government, the present complex mix of major councils in England will finally have to be rationalised, especially if more powers really are going to be devolved to local communities. In addition, we really must come up with a fairer way of funding the more streamlined, transparent and effective form of local government that should emerge.

Council Tax bills will soon be dropping through our letter boxes and there is no doubt that, this year, they will be considerably higher. However, despite the increase, the individual amounts on the bill represent, with the exception of Parish Precepts, only about a quarter of the money required to deliver services in these areas. The rest mainly comes from Central Government Grant, which has been progressively reduced over the past five years.

A tax on property has been one of the principal ways of funding local government since the 17th century. Other methods have been considered, such as Local Income Tax (LIT), as suggested by the Layfield Commission in 1976. In the 1980s Thatcher government plumped for the 'Community Charge' aka the Poll Tax, levied on individuals, together with depriving local councils of most of their traditional income from business rates and returning only a small proportion in comparison. The last time the Poll Tax was introduced it produced the peasants' revolt. For the peasants' revolt of 1381 read the Poll Tax riots of 1990.

Faced with such unrest, the Council Tax with its bands was hurriedly cobbled together and introduced in 1993 based on property values at that time which, with the exception of property in Wales, have never been updated. Believe it or not, there were people back then who actually complained that their homes were in too low a band, presumably because they had resale in mind! I doubt whether this would happen today.

So, what should we do? We could stick with the present system and undertake a proper revaluation, which, I am sure, would not be popular with many people. We could add some extra bands at the top end. There aren't many 'mansions' to tax around here! We could have a fresh look at LIT, but that won't be the answer in Lincolnshire where wages and salaries have been historically lower than elsewhere.

We could look at a combination of LIT, possibly by allowing councils to retain 2 or 3% of the income tax we currently pay together with a simplified property tax. In Japan, for example, they have a property tax on all buildings, both residential and commercial, based on floor area, of which the local authority keeps 55%, with the rest going to the government.

One thing is certain. Unless we come up with a fairer way of finding the money to pay for the services we value, there will be precious few of them left by the end of this decade.

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