Municipal Independence Referendum?

The Scottish referendum may have resulted in a ‘No’, but I doubt it was a coincidence that as the vote neared, new campaigns, reports and demands from the Local Government Association, Centre for Cities and ResPublica were all highlighting the need for the devolution of powers to a much more local level. Like the focus of debaters of Independence versus Union, the powers requested by cities and local government are economic. Or at least financial.

Coming from the United States, with not only a federal system of States, but a tradition of powerful mayors and municipalities, I was astonished when I first learned the extent of centralisation of tax and spend powers in the United Kingdom. Unlike American property taxes, British Local Authorities have no say over how Council Tax is levied on different types of residential property. They can increase Council taxes by a percentage, but since the most recent Parliament’s austerity measures, not without penalty. Business rates aren’t retained by the city or district that collects them. The money all goes to Westminster and then is redistributed by a complex formula.

Business Improvement Districts (BIDs), collecting extra rates from local commercial properties for extra local services, have more revenue-raising and spending discretion than the Local Authorities who are providing the baseline services that the BIDs are aiming to supplement. The centralisation of government finance thus acts as a straightjacket on local governments responsible for delivering the vast majority of public services.

Local transport is one such service or group of services. Not only does Central Government control the transport budgets for local government, its formulas are so obscure that the amounts received in expectation of concessionary fares reimbursement are unobtainable and apparently unknown. The funds for subsidising privitised bus operators’ commercial services are usually given directly to those operators. Capital funding has been cut dramatically, then replaced only partially by pots of funding allocated after competitive bidding processes, the most recent controlled by the unelected Local Enterprise Partnerships (LEPs) who can cite few transport planners on their payroll. Even the Department for Transport (DfT) has admitted that the LEPs might require some professional assistance.

Is it any wonder that transport is a key topic in the various calls for devolution of powers and funding? The latest publication from the DfT makes the absurdities of transport finance even more obvious as it deals with those most local forms of travel: walking and cycling.

As political momentum mounts to increase investment in cycling, the DfT have published a ‘Cycling Delivery Plan’, which includes a target to double cycling activity and supports the aspiration to spend £10 per head on cycling by 2020. Yet there is no central source of funding committed. The closest thing to it is a vague promise of ‘a continuous source of seed funding’ of an unspecified amount for an unspecified number of ‘Partner Authorities.’ Otherwise, local government will be expected to ‘seek out new funding opportunities’, utilise stretched highways maintenance budgets and request investment from the LEP-controlled Local Growth Funds.

There may be £10 per capita in there somewhere, but it won’t be easy to find without changes to local government’s ability to raise revenue. Nor will it be easy to increase funding for walking projects; despite the document’s title, walking is the subject of another target and other actions within the consultation draft plan, and, I would argue, is in even greater need of attention than cycling:

Which brings us back to devolution. American cities have made great, rapid strides towards making their streets more pedestrian- and cycle-friendly, often from a more car-dominated baseline than the UK. They have done this both by having powers for local taxation, borrowing and spending and by benefitting from the political leadership to promote and follow through on significant change. If UK cities, counties and unitary Authorities are to do the same, they need the financial tools with which to act.


7 thoughts on “Municipal Independence Referendum?

  1. Good reflection on Devo Manc Hannah. I think the move is significant not necessarily for its content, but for its intentions and potential. Devolution is rather meaningless in the long-term, if it is not based on reasonable fiscal devolution. However, with the genie is out of the bottle since the Scottish referendum, I believe it is only a mater of time.

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