The Regional Monitor

Sir Michael Lyons’ inquiry into local government finance and council tax has, finally, published its findings. But what was once a long-awaited and much-anticipated report came out with a whimper on Budget Day, and the impact it is likely to have in future remains uncertain.
For the short term, greater flexibility for local authorities is the aim, with this achieved through removing the cap on council taxes, the introduction of new supplementary business rates, a reduction in the number of ring-fenced and specific grants and possible charges on domestic waste. To improve the fairness of council tax – so often the subject of Daily Mail and Daily Express front pages – Sir Michael recommends the automatic payment of benefits, and raising the savings limit for pensioners. Whitehall and local government needs to be clearer about the levels of national taxation allocated to authorities, and there should be improved incentives to promote economic prosperity and growth – for this, he looks to reform of the Local Authority Business Growth Incentive Schemes.
But that’s not all: in the medium term, Sir Michael envisages introducing a new power for councils to set a tourist tax. Council tax would be better reformed, with new bands for the cheapest and most expensive properties, and a complete revaluation of council tax to improve fairness of the system. And a set proportion of national income tax should be assigned to local authorities. While in the long term, Sir Michael recommends far more radical thinking, such as the possibility of a local income tax.
Local government minister Phil Woolas praised the report, but immediately ruled out any revaluation of council tax in this Parliament. Like Sir Michael, he argued that the council tax itself was not so much the issue as the increases taxpayers, and particularly those on fixed low incomes such as pensioners, were facing. But for the Conservatives, shadow local government secretary Caroline Spelman described the proposals as a “tax bombshell for families”, while Liberal Democrat local government spokesman Andrew Stunell argued the report’s conclusions were “disappointing” and “timid”.
Published on Budget day, Sir Michael Lyons’ report was largely overlooked in favour of Gordon Brown’s 11th – and probably last – Budget statement as Chancellor of the Exchequer, and his surprise ‘cut’ in income tax. But the issue will not go away. May 3 has promised not only changes in the balance of power in the Scottish Parliament and National Assembly for Wales, but also on certain councils in England.
Local authorities face a number of key challenges over the next year, and beyond: for example, the possible charging for domestic, unrecycled, waste may not be easily dismissed when it is considered that recycling rates in England still lag dramatically behind other, comparable, EU countries. And with an ageing population, the issue of who pays for social care is one that will impact upon an increasing number of families.
So is Sir Michael Lyons’ report enough? Well, that depends largely on whether the government will implement them, but as for Sir Michael Lyons himself, his distinguished career in local government has come to an end and he now faces another, almost as daunting, challenge – as chairman of the BBC.