Cllr Andrew Lawrence is the Shadow Spokesman Regeneration, Community and Housing on Medway Council. He previously served as a councillor in Lewisham.
We are in another protracted Conservative Party Leadership contest and candidates are making lots of promises to Councillors on how they will listen to Local Government under their Leadership. We are hearing about a return to conservative values, particularly from Kemi Badenoch – which is welcome following a period of distinctly unconservative governments. Below, I describe what the new leader might want to consider as they take on a most difficult job, and which could re-energise Local Government.
Following Gordon Brown’s disastrous period in office, George Osborne was forced to implement cost savings to rescue the UK economy. Cutting the Local Authority Grant became an easy target, and he did so with impunity whilst at the same time increasing spending on government-funded services such as welfare, and enabling new spending programmes such as free school breakfasts.
Local Government finance faces a host of challenges including workforce, productivity, two years of runaway inflation, higher interest rates, housing, and an inexorable demand for services – particularly in adult social care and children’s services. The ability to improve services and meaningfully to invest in the regeneration of people and place is virtually impossible with authorities such as Medway being fast relegated to paying for Social Services and not much else.
Council Tax rises are legally capped at five per cent regardless of demand and external factors such as inflation. This cap designed to protect council taxpayers from profligate left-wing local authorities is both undemocratic and unconservative and one consequence has been the rise in Local Authority Trading Companies – chasing new revenue streams – and which have dabbled in property speculation with disastrous results.
In my own local council, which switched to Labour in 2023, the leadership has tapped into the borrowing game through emergency borrowing at £15 million this year and a further £25 million in future years, all of which will need to be paid back. Yet we still have the lowest council tax in Kent…
Capped increases create a position where there is no longer any point of difference between the party in power and the parties in opposition. Our electoral success is based entirely on the performance of the Party running the Government. Over the last 14 years, opposition parties running local Councils have avoided accountability by blaming central Government for the lack of funding.
The next Conservative Party leader should commit to a fundamental change in the relationship between central and local government. The cap on increases in tax revenue should be removed and there should be an end to the competitive bidding of relatively small amounts of money held by central government for specific projects.
This first step is going to be painful in the short term. The British people have consistently said they want better services, but they do not want to pay the taxes to provide for those services. Politicians of both parties have brainwashed the electorate into believing that by taxing wealthy people we can solve all of society’s problems. The government borrows in order to shield the electorate from the realities of providing the service needed – money which future generations will have to pay back. Conservatives once believed in sound money, so today’s spending came out of the tax that we raised today. A return to sound money is imperative if this country is ever to achieve financial stability.
More controversially, the way that local Government services are paid for needs at least radical rethinking or overhaul. Property based taxes are a very inefficient way to raise taxes. The constant chatter on revaluation is a regular part of Local Government conversations. Property taxes require expensive administration departments and take no account of the ability to pay and, of course, not everyone is liable to pay council tax.
Has the time come to take another look at a flat rate Local Income Tax (LIT) as a top-up to existing revenue streams? HMRC is already using real time information on wages and could quite easily collect a LIT on behalf of Local Authorities. The gradual transition away from property taxes to LIT would be more efficient, fairer, and importantly, broadening the tax base which pays for local services.
A budget set by the Local Authority and held accountable at the ballot box will restore interest in local elections – which have a woefully poor turnout. True points of difference on budget proposals will appear, and I believe a new interest will be sparked in becoming a councillor who will have real power to effect change in their area.
Additionally, the new leader should ensure that Conservative councillors have a direct say in local government policy through a new partnership with the Conservative Councillors Association which is embedded in the constitution of the Conservative Party. Local councillors should, with Ministers, shape policy that Local Authorities have to implement.
The new Leader should bring forward plans to create Health Boards formed of locally elected councillors to bring a much needed injection of accountability to the ICB which exists in a democratic vacuum, yet provides services to millions of residents. Being in opposition is an opportunity to propose meaningful change – let’s hope our new Leader grabs the opportunity with both hands.