Local government – time for change?

One of the themes that emerged during the debate on Scottish independence was a call for greater decentralisation within Scotland. All parties pay lip service to local government and some occasionally wax lyrical about a vibrant local democracy as a sign of a healthy society. However very little in the way of concrete proposals for reform of our current local government set-up has seen the light of day. Much of the criticism of local government stems from the popular dislike of the Council Tax. This has been frozen for so long now that it would appear to be beyond repair or revival. No party has as yet come up with any acceptable alternative. The new Commission on local tax reform may succeed where others have failed to tread. However, the Council Tax is not all that is wrong with the current set-up.  I have some major criticisms of the present regime – it is neither local, democratic, independent nor does it allow for proper government.

There is little about local government in Scotland that merits the word local. As is well known, Scotland is pretty much unique in Europe when it comes to this level of government. Firstly, we are almost alone in having just one tier of local government. Apart from the rest of the UK, every other country has a regional or county authority in addition to a local authority. Secondly, Scotland has the smallest number of local authorities – 32. On the other hand our local councils are among the largest in terms of population and area. While many countries have seen a reduction in the number of local authorities, none has gone as far as Scotland. Denmark for example, carried out a major re-structuring of local government in 2007. This still left the country with 98 local councils – more than three times the number in Scotland. Yet Denmark has an almost identical population to Scotland. Whatever our current set-up is, local it is not.

It is not very democratic either. At least as far as participation goes. There are far less councillors per capita in Scotland than in any other European country. Far less people put their name forward for election, and the participation at elections is the lowest in Europe. This is almost certainly in large part due to the large size and remoteness of our councils.

Size of course is only one part of the equation. We need also to think about the government part of local government. It is impossible to work out a coherent concept of local without first determining what is the purpose of local government. What is a local authority there to do?

We are all reasonably familiar with the range of services provided by local authorities, from bin collection to education and social work. There may though be less familiarity with what actual powers a local authority has in relation to these services. This brings us to the heart of the matter – to what extent do local authorities actually govern? As regards government, there are two aspects to this which seem to me to be crucial.  The first is the power to raise money and the second is the power to decide on what services, if any, should be provided. This to me is what government is all about – taking key decisions on the raising and spending of taxes.  Under our current system, local councils have very little of either power.

The powers they do have are of three kinds: mandatory, permissive and regulatory. However only actions that are permissive are under the full control of councils. In the case of Education and Social Work, the two main mandatory functions which also take up most of the money and employ most of the staff, councils have very little, if any, scope for decision taking.   Dundee Council for example cannot decide to start primary schooling at the age of seven instead of five.  It cannot decide to reduce the school leaving age to 14.  All the key decisions relating to schools and social work are taken at the national level.  This includes class sizes, qualifications for staff and salaries.  Now all of this is a good thing.  Hardly anyone in Scotland wants 32 different schooling systems or social work standards.

It is also worth pointing out that this is the norm across Europe, even in the Nordic countries so beloved of local government reformers. It is the national governments and parliaments which take the key decisions in relation to education and social work, not the local authorities. This centralising trend has also spread to Switzerland, probably the most decentralised country in Europe. There, it is the cantons which have responsibility for all aspects of education. But even in Switzerland the 26 cantons have all agreed to a new Harmonisation programme, which will ensure that all schools across the country will have the same basic structure and will work to the same national learning outcomes or curriculum.

What local authorities do in Scandinavia and now in Switzerland is to manage and administer what is in effect a national service. They get to decide where to build new or replacement schools for example, but they have virtually no say in what is taught or how it is to be taught or who can do the teaching. These decisions are all taken at the national level, as here in Scotland. The same will apply to most other public services run by local authorities. The key decisions on level of provision and standards are taken at the national level.

When it comes to finance, things appear to be very different in most of Europe, certainly in the Nordic countries. But, I would suggest, they only appear to be different. There, local authorities are responsible for raising a much larger part of their income, mainly through personal income tax. In most Nordic countries only local authorities can set income tax. However there are pretty strict limitations on how much this can vary from one authority to another. Then there is the matter of equalisation, whereby richer local authorities have to raise extra revenues which go to the central government which in turn hands this money to the poorer local authorities. So in effect it is the national government which determines how much income local authorities have to spend. It is just much more obvious here in Scotland.

This should not be surprising. Since it is the central government which sets the key objectives, standards etc the central government has to ensure that local authorities have the necessary income to deliver the services. The alternative would be to take the delivery away from local authorities and set up a national service. Which of course is what happens here in Scotland with the health service and now with the police and emergency services. NHS Scotland is completely funded out of general taxation and there is no local element whatsoever. At least not in the sense of an elected element. As its name confirms health is seen as a national service, and is funded accordingly.

In this regard it is worth noting that in most of northern Europe health services are also part of local government, usually at a regional level. In Denmark for example there are five regional councils, whose main responsibility is to manage the provision of hospital services. They are not too dissimilar from our health boards, but with some development and transport responsibilities. They have no revenues of their own and are funded directly by the government and local authorities.

Moving forward

The main criticisms of the current system are to do with size and finance. As regards size, for most functions the 32 local authorities are simply too large to be a focus for local decision making. On the other hand, for others, planning, the environment and transport for example, these authorities are often too small. One way forward would be to revisit the need for a regional tier of government for these and similar functions.

In relation to the remaining local government functions smaller authorities are more likely to meet the needs of local people. With the mandatory powers in relation to education and social work, local authorities primarily act as a provider of services. They have little in the way of decision making powers. Their main role is to ensure that the service meets local needs. Smaller sized authorities are more likely to reach decisions which reflect the views of the people living in that particular area. This would also be the case with the range of discretionary powers over the likes of arts, libraries, community facilities, leisure and recreation etc.

When it comes to finance a distinction may need to be made between education and social work services and discretionary services. In the case of education and social work, since the role of the local authority is to manage the delivery of what is in effect, a national service, it may be more appropriate that all of the finance for these functions should come directly from central government. Local authorities should not have to raise money for a national service.

The other main powers – discretionary and regulatory – can be self-financed through taxes and charges. There may still be a need for some equalisation element to ensure that poorer authorities are not disadvantaged, but in general terms, local councils should be responsible for raising the money to pay for whatever discretionary services they wish to deliver.

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