‘Ditch the begging bowl and grow’

Speaking to the Yorkshire Post, Brandon Lewis said authorities should stop complaining about funding cuts from central government and start to capitalise on new rules allowing them to keep half the business rates they collect.

Mr Lewis, a former council leader who became a minister in last year’s Government reshuffle, was dismissive of complaints from council leaders that they are being forced to slash services after seeing their funding cut by a quarter by central Government.

“We have got to move away from this thing about the begging bowl,” he said. “For years, this has been the way local government works – we argue our council is worst off and we get more money.

“Actually, it should be about what we can do locally to develop our economy and our local area, to increase our tax base.”

New rules coming into force this April will see councils permitted to retain 50 per cent of the business rates they collect each year.

Previously the money has all been returned to the Treasury, which then redistributes the funds to councils in grants based on relative need. Ministers say the new rules will give councils an incentive to push for economic growth in their local areas.

“We’re moving from just over 50 per cent of money being raised locally to 70 [per cent],” Mr Lewis said. “That’s a big shift in the way it works. This is an opportunity for authorities, a big opportunity.”

A separate report published by MPs this week says the Government must go further, demanding that Whitehall offer a raft of new tax-raising powers to town halls.

Parliament’s political reform committee highlighted the glaring disparity between the powers available to the devolved nations of the UK and those available to the regions of England.

“Now that devolution has successfully been established in Scotland, Wales and Northern Ireland, it is time to revisit what the devolution of power could mean for communities in England,” the committee’s latest report states.

The committee welcomed the Government’s decision on business rates, as well as measures including City Deal devolution packages agreed with city regions.

But its authors make clear that ministers must go further if areas such as Yorkshire are to enjoy genuine power over their own destinies.

“These measures fall short of giving local councils real financial autonomy,” the report states.

“We believe that to achieve fully the potential of localism, local government requires financial freedoms. Power and finance must go together if local government is to become an equal partner with central government.”

Graham Allen MP, chair of the committee, said the long-term answer is to allow councils to keep a portion of the income tax collected in their local area .

“I would like to see English local government retain a sizeable part of the income tax take for England, and have the ability to implement other revenue-raising schemes, with local consent,” he said.

“This ‘tax transparency’ would allow the ordinary voter to see what their taxes were spent on, allowing them better to hold all levels of government to account. These measures could revitalise local democracy and kick-start the local economic growth that we so desperately need.

“We are seeing the devolution settlements in Scotland, Wales and Northern Ireland evolve to include devolved powers of taxation. Why should we in England be the only part of the Union yet to have a devolved settlement?”