What’s the point of a Motion bemoaning a crisis but failing to suggest a solution?
Liberal Democrats have conferences to decide Party policy, not indulge in hand-wringing! Declaring that local government has a funding crisis without stating what we’d do about wastes our time and money as conference-goers. That’s why I’m asking for a reference back to FPC for F23 at York.
The Party last seriously debated local government and its funding in 1998 – the year I co-founded ALTER. We’ve progressed since then but in 2019 we funked the big one: reform of Council Tax.
In the 1998 policy paper the most significant citation was a 1996 House of Lords report that “demolished the circular argument” that local government expenditure is all part of national government expenditure, saying it’s “Humpty Dumpty” logic! Its only because Treasury says so and only because councils are over-controlled and haven’t in living memory had real freedom of action: “other economies can be successful while doing things differently” (4.1.5).
If we believe in devolution then what Whitehall compels councils to do, as minimum levels of statutory services, ought to be funded centrally – 100%, taking appropriate account of geographic and demographic differences in cost of delivering services. Councillors should only be held to account by local electors for how efficiently they use those external funds.
Anything that democratically elected councils decide to do in addition should be 100% funded from local taxes, set locally using their local choice of tax bases, as was decided by Conference in 1999.
Among those taxes would be a levy on the annual rental value of land: Site Value Rating (SVR). In 2018 we approved that for all English councils, calling it Commercial Landowner Levy (CLL) and scrapping Business Rates.
The following year a parallel motion to scrap Council Tax and replace it with SVR on all occupied residential land was proposed but failed to make the cut to Conference agenda.
Our 2019 Manifesto said we’d “give power to communities to … decide how their taxes are raised” with “fair taxes”, with a nod towards taxing income from earnings less harshly – compared to wealth. The sole reference to council tax was in relation to second homes!
I have sat on the last three Tax Policy Working Groups and none of them paid much attention to local taxation, although it was in their remit. The latest (2013) paper “Fairer Taxes” was preceded by a consultation paper on local finance, which was understandably subsumed within it. Mansion Tax got the headline but there was an emboldened heading “Shifting the burden of taxation from income towards wealth”, specifically “to encourage employment and growth” and a commitment to “launch a consultation to determine how to implement Land Value Tax”. This was to happen “early in the next parliament”.
4.2.4 in the paper indicated how residential properties might be treated under LVT, using such well tried devices as
- Deferral for those on low incomes
- Exemptions (e.g. tax-free allowance) for low value principal homes
- Using income tax system to collect LVT as an annual rent, with tax-free allowances transferable between earnings and ‘notional’ rent (for an owner-occupier).
Andrew Dixon, a member of the Lib Dem Business Network Board, was the main author of CLL. Rebuffed by FPC, he decided to create the campaign FairerShare, which proposes replacing council tax, Stamp Duty Land Tax and the ‘bedroom tax’ with a Proportional Property Tax (PPT) levied on owners, with revenue shared between central and local government.
This almost exactly mirrors what ALTER proposes as the replacement for council tax and some other property taxes, except that its tax base is capital value, not just the land value. PPT would even require annual revaluations of land, which is not difficult using modern computer-aided mass assessments (CAMA) – widely used in many advanced countries for decades. CAMA produces accurate land-only valuations as a by-product.
Dixon is also active on the All Party Parliamentary Group (APPG) on Land Value Capture (LVC), founded by Sir Vince Cable in 2018. The APPG’s Secretariat is the Coalition for Economic Justice and ALTER’s Treasurer Joe Bourke arranges its meetings.
So turning to the debate at York, lets refer it back to FPC and ask them to ensure that implementing LVT gets high priority in this year’s manifesto. By adopting the approach ALTER advocates – or something similar to PPT – we can help solve the agonizing political problem left by this Government to its successor: lack of money to maintain vital local services.
* Cllr Dr Tony Vickers is the Membership Secretary, Lib Dems ALTER.
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17 Comments
I had rather hoped that someone would submit an amendment to this rather bland motion, but in the absence of one, then referring it back or simply rejecting it might make much more sense.
Can anybody explain why adult social care is a local rather than a national government responsibility ?
“what Whitehall compels councils to do, as minimum levels of statutory services, ought to be funded centrally – 100%,
YES!. I wonder what would happen if a local council did exactly that – split its spending in 2, one tranche for central gov mandated services, and the second tranche for local decisions. And then approved a budget spending exactly what central gov send on the central gov demands. Seems more than fair to me.
@Christopher Haigh “Can anybody explain why adult social care is a local rather than a national government responsibility ?”
As a former Cabinet Member for Social Care, Chris, I’d sum it up this way :
because it needs to liaise and cooperate in a face to face way with the local NHS, education and police services in a person centred way. I can’t imagine a civil servant in Whitehall being in the least interested or exercised by the needs of an at risk 90 year old with disability and infirmity needs about to be discharged after a lengthy stay in hospital, with an at risk fifteen year old in need of protection or with a young mother with children about to be evicted.
Like David Raw, I was also a cabinet member for Health and Social Care. The problem with HSC is lack of money, not lack of competence or willingness. It’s failing because the Tories are starving it of cash and trying to blame local authorities for it.
David Raw is right that central government cannot run social care and it needs local knowledge and local initiatives.
Like so many other services that used to be properly (or at least half decently) funded HSC is being used to score points in political football. It’s simply not acceptable and LibDems must call it out for what it is, not blame councils for what they cannot afford. We need more power and more money at local level, not less.
Mick Taylor is correct when he says, “Lib Dems must call it out for what it is, not blame councils for what they cannot afford. We need more power and more money at local level, not less.”
Exactly so, Mick, but……, it would have been easier and more consistent for the Lib Dems to do so if they hadn’t trooped through the lobbies to support and participate in the decisions of a government which reduced that “power and money”.
@Mick Taylor, David Raw, thanks for your explanations. It is because of escalating care home costs and lack of central government funding that our local authority is verging on bankruptcy , shedding hundreds of jobs and attempting to close down leisure centres. Local inhabitants then constantly complain about the ineffectiveness of the council in it’s other responsibilities. The Government puts up wages costs without any charge on itself.
Care costs will start to skyrocket when baby boomers start needing care.
@ Christopher Haigh The Dilnot review was set up in 2010 under Sir Andrew Dilnot, but the government ran away and shelved it in 2011.
Successive political parties (all of them) have shied away from it ever since. You’ll find a search on ‘The Dilnot Report on Social Care’ interesting reading. It’s shameful it wasn’t implemented post 2011. Privatisation will cure nothing and it has a very dodgy financial record.
So very sorry to hear about Kirklees. My late Mum (who lived in Cleckheaton) got good help and support in 2006/7 – her final year.
Tony Vickers’ indignation is understandable. Local taxation, with local government services, should surely have been a higher priority for our party years ago, and this motion needed strengthening. Mick Taylor, there were amendments sent in, one of them from myself and Michael Gooding (MBG here), with 15 signatures. But drafting advice was very late, and our revised amendment then seemed forgotten: it is only in the last couple of days that we have been told that part of it has been accepted as a drafting amendment but that another amendment was considered stronger. We look forward to reading it, and to a lively debate on Sunday. I feel particularly concerned about the effect on the poor of both higher council tax and cancelled services, while Michael has offered time after time motions on reform of council tax.
The question of local government finance has been regarded as too hot to handle by UK governments since the ‘Poll Tax’ fiasco over thirty years ago. The Poll Tax had one virtue – most people paid it – and enormous weaknesses – rich and poor paid the same. The sticking plaster system we have enherited probably had two few bands and as there has been no revaluation since, it has favoured the rich more and more as time goes on. I see a combination of SVR and local income tax as the way forward to provide adequate finance for local government. There would still be a need for some equalisation to provide for poorly resourced areas but government grants should otherwise be confined to encouraging particular vital initiatives. A borough, like where I live, with some good and some opulent housing and a healthy proportion of comfortably off people should be self-sustaining for local government finance.
Yet more evidence that WE can come up with solutions to the big issues of the day which the public want sorting out. But will we?
David Raw,
The coalition government passed the Care Act in 2014 as a response to the Dilnot Report. It included a funding cap to come into effect in April 2016, but Cameron delayed it until 2020 and May abolished it. Did Johnson set a new cap or was it just proposals?
@David Raw “ because it needs to liaise and cooperate in a face to face way with the local NHS, education and police services in a person centred way.”
That can be achieved with central funding as per NHS Trusts, Doctors surgeries, academies etc.
Which sort of leaves the sole reason for adult social care to come out of local authority budgets and council tax is to move the cost off the governments books. It also supported the (Conservative) government narrative over local councils and their spending, of which the majority weren’t Conservative run… Remember a large part of the care sector, before Thatcher was paid for out of the NHS budget.
@ Michael BG “The coalition government passed the Care Act in 2014 as a response to the Dilnot Report”.
Your comment applies only to England, Michael. Anybody can set up a token target and then keep thinking up excuses not to implement it. That’s what happened post 2014. In 2017 Mrs May took fright when the horses started snorting at the beginning of her general election campaign and did a rapid U turn.
@ Roland “Remember a large part of the care sector, before Thatcher was paid for out of the NHS budget”.
Yes, indeed I do remember, Roland….. Thatcher started to privatise elder care enabling a number of unscrupulous individuals and companies to make a great deal of money out of it (that’s when some of the over borrowed ones were not going bust). Maggie spent her last years privately in the Savoy Hotel ….. but not all of us can afford that.
There’s a published list (by Daily Mirror ) of MPs who jumped on the money merry-go-round. They’re not all Tories….. you’ll be surprised at some familiar names. Just google search the last para below.
https://www.theransomnote.com › news-commentary
Union group UNITE have released a list of 70 MPs with proven links to private healthcare providers.
@david – interesting list.
Leaving aside LVR that I support, we have the challenge of distributing resources from those that produce it to those that need it. This requires some central mechanism and will be subject to political debate. The fairest solution might be to collect some aspect of revenue centrally and then redistribute it according to flexible mechanisms. This would provide a basic comprehensive service from local authorities. It is not fair to allow discretionary services to be completely funded locally.