The logic of devolution requires reviving local democracy

The logic of devolution requires reviving local democracy

by Alison Payne
article from Thursday 10, September, 2020

THE SCOTTISH PARLIAMENT has undoubtedly brought power and democracy closer to Scots while enabling greater time and focus to be given to our specific circumstances and priorities. 

However, while devolution transferred power from Westminster to Holyrood, it also centralised power in Edinburgh.  Arguably over the 21 years of devolution, one of the biggest areas of disappointment has been local government.  Reinvigoration of local democracy is badly needed. 

This is why Reform Scotland is delighted to back the Member’s Bill of Green MSP Andy Wightman (pictured) on the incorporation of the European Charter of Local Self-Government.  As the Policy Memorandum notes:

over the past century the status, powers and freedoms of local government have been slowly eroded and marginalised. Governments of all persuasions have tended to concentrate more executive and fiscal power to the centre.

The aim of the legislation is to make the European Charter of Local Self-Government directly enforceable in Scots law and to require the Scottish Government to act in a way that agrees with the Charter.  The Charter commits signatories to guarantee the political, administrative and financial independence of local authorities. 

The independence of our local authorities is vital, not least because Scotland is a very varied country and councils across Scotland face huge differences.  Not just in terms of geography and population density, but also in economic growth.  Circumstances in Edinburgh and Aberdeen are very different to those in Dundee and Dumfries; but equally Edinburgh and Aberdeen also face different challenges.  In the current climate, the impact of Covid-19 is also being felt differently across the country.

Yet despite these differences, councils across Scotland struggle to make a major difference to their local communities because they have no real control over fiscal powers.  One-size-fits all centrally directed policy solutions will not and cannot work. Councils need to be able to tailor solutions to local need.

The Scottish Government’s 2018 ‘Democracy Matters’ consultation noted there was a “growing recognition that it is often better for decisions about the issues that affect different communities in Scotland to be taken with more active involvement of those communities” and that this could help enable “public services to work in ways which meet local circumstances and reflect the priorities of different communities”.

Reform Scotland welcomed this sentiment. More decision making needs to be devolved away from Holyrood and towards local government and beyond.  Local government in Scotland requires renewal.  It should have the ability to take advantage and introduce policies which are right for each individual area but that cannot happen without additional finance powers also being devolved beyond Holyrood.  

While Reform Scotland welcomes Andy Wightman’s Member’s Bill, it must be the first step towards greater decentralisation. Without devolving local taxes, which are ‘local’ in name alone, to councils there can be no change to the one-size-fits-all mentality.

Devolution of non-domestic rates would allow council to vary how and to whom the tax applies based on their own circumstances. It would also ensure that non-domestic rates are the genuinely local tax they are supposed to be. An increase in local financial autonomy and accountability is more likely to give councils an incentive to design business taxation policies and broader local economic development strategies to support the growth of local businesses, encourage start-ups and attract businesses to invest, since this will benefit the council directly by increasing its income from business taxes. Passing control of business rates to local authorities would also mean giving them control over business rates relief schemes. As a result, it would be up to each individual local authority how the tax operated within their area. 

It is possible to re-adjust the block grant to ensure that in Year 1 no council loses out, creating an equivalent of the fiscal framework that could be used for local authorities moving forward and encouraging them to develop local tax regimes that are best suited for their area and help encourage growth.

Such a policy should not mean a ‘race to the bottom’, rather it allows councils to make genuinely local decisions.

Council Tax also needs to be fully devolved.  Although the freeze was lifted, increases were then capped by the Scottish Government. This has tied hugely the hands of local government as well as confusing accountability and obscuring transparency.

While the Scottish Government’s decision to review council tax is welcome, there is a real concern that this simply leads to one centrally controlled tax being replaced with an alternative centrally controlled tax. 

Reform Scotland believes that local authorities should have complete control over their local tax– including the rates, bands and indeed form of the tax. This would allow individual councils – should they choose - to retain, reform or replace Council Tax with another form of local taxation. Crucially, this would be a decision about a local tax made by a local authority for its local area, taking into account local circumstances and priorities. A true local tax.  

There should be no problem with some local authorities maintaining a Council Tax system, while others may opt to choose from a range of different forms of taxation, including a land value tax. The most important element is that the tax is fully devolved to the local authority and, therefore, local councillors making decisions on local taxation and are fully accountable to the local people affected by those decisions.

The Scottish Government sees the logic in devolving power from Westminster to Holyrood, therefore it should be able to see that the logic applies in equal measure to the devolution of power from Holyrood to local authorities.

Alison Payne is Research Director of Reform Scotland. 

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