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Local income tax must wait
Local Government Chronicle – 8 April 2010

Liberal Democrat shadow communities and local government secretary Julia Goldsworthy talks to Mark Smulian

Even keen students of Liberal Democrat pronouncements will have struggled to find references to local income tax in the run-up to the general election - despite the tax's introduction having been a key plank of the party's platform in 2005.

Likewise, it seems to have gone quiet on localism. Has the party that owes most of its English parliamentary seats to its local government presence got cold feet?

The Lib Dems' communities spokeswoman Julia Goldsworthy insists not, and says her party's localist credentials remain strong. But in the current fiscal climate, she admits such policies are not the first priority.

The party's stance on local income tax has shifted to being something that "in the second year of a Parliament we would invite councils to come forward to pilot, instead of rolling it out more widely", Ms Goldsworthy says.

"We are in a different fiscal environment from 2005. Local income tax is part of the package, but we recognise we can't do everything at once," she adds.

Pressures

Ms Goldsworthy fears that pressures on public spending in the next Parliament will test the council finance system "to destruction" as council tax rises while services are cut, leading to public hostility towards local government.

"Local government is vulnerable because, from a central government point of view, it is a pain-free way of cutting because they can offload that pain on to local government," she says, adding that public acceptance for local taxes and spending can be won only if more money is raised locally. The party could, she says, push regional budgets down to councils and restore local control over business rates quicker than it could install a local income tax, although she maintains it must eventually be introduced.

"Our whole driving force is to get local government in a position where they are raising more of what they are spending," she says. "When spending is going to have to be prioritised, probably with some quite difficult and unpalatable decisions, you can't expect the public to become engaged unless there is a very clear connection between what they get and what they pay."

English regional government is another Lib Dem enthusiasm that has faded in the face of public indifference.

Ms Goldsworthy says the party's approach is to let local authorities decide what regional level bodies they need for housing, transport, economic development or anything else, and that if this results in an untidy collection of structures, so be it.

"Ultimately, we want to push down decision-making and resources to the lowest appropriate level and the Government Office regions do not represent any kind of economic, cultural or geographical community," she says. Ms Goldsworthy also rejects the government's approach of tying freedoms and flexibilities to the adoption of particular local structures.

"There are too many cases where additional powers and resources are being used as a bargaining chip by central government, and I think if local authorities want to innovate then central government should be a lot more open-minded," she says.

"City region thinking is quite well developed but no thought has been given to large parts of England where there is no urban hub but a series of market towns, and councils need the freedom to work together to develop an alternative," she adds.

Ms Goldsworthy thinks this freedom should extend to whether councils retain the cabinet system, revert to committees or adopt another structure.

In his first weeks as party leader, Nick Clegg picked a fight with some of his councillors by calling for directly elected local health boards, rather than simply handing health to councils.

Compromise

A compromise eventually arose and the issue will be revisited by a localism working party at the Lib Dems' September conference.

It still causes them internal difficulty. "Politicians are held in very low esteem at the moment. That is clearly true in Westminster but people have a similar attitude to local authorities too," Ms Goldsworthy says.

"People would be most comfortable with a directly accountable link with health boards rather than transferring massive additional powers to councils, but we can see how it works." When it comes to what might be on the party's shopping list in the event of a hung Parliament, Mr Clegg has clearly warned his MPs against speculation.

But while Ms Goldsworthy declines to be drawn on whether proportional representation for local elections would be on that list, she does express her opinion that Scotland's experience of this has been positive.