Resetting the Rubik’s Cube: Strengthening Local Democracy in Scotland

by Ken Gibb

Last week the main report of the Commission on Strengthening Local Democracy was published.[1] This report delves into the case for root and branch reform of Scottish local governance, local democracy, finance and community participation. It is of the moment in the sense that it follows on from the Christie Commission and the Community Empowerment legislation about to go through the Scottish Parliament.

This is an area of great interest to me. My first serious research was about the poll tax and its potential impact on the housing market. This led to a continuing interest in the arcane world of local government finance. Much more recently I worked with Jim Gallagher on a (still unfinished) project looking at different dimensions of reforming local government [2]. And now I am involved for the next three years in What Works Scotland, which is focused on Community Planning Partnerships and in which local government is a key partner in the analysis of effective public policy [3].

One of the key arguments we developed in our David Hume Institute work was that local government reform and indeed functional local governance has to simultaneously fix three kinds of problem: of geographic scale (how many councils and of what size), the distribution of functions (between local and central government) and finance (how it is all paid for and what proportion is locally-raised). The problem is that fixing one dimension is difficult enough, let alone addressing all three. Hence, the Rubik’s Cube metaphor.

The new report from the Commission is quite high-level , full of plans and intent but relatively short on specific details. it agues for a further commission in the aftermath of the referendum outcome. But it is nonetheless full of interesting and thought-provoking ideas, which do attempt to wrestle with the multi-dimensionality of the different sides of local government.

The objective is to reverse the process the Commission sees of long term de-localisation of local government manifested in larger councils, reduced local control over finance and consequent distancing of key decision-making.

The Commission recommends legislative powers to guarantee a return to local governance strengthening the participative rights of individuals and communities and to sytematically reverse the processes of recent decades. Key recommendations that particularly struck me included:

  1. A bottom up vision embracing deliberative assemblies, participative budgeting and empowered community planning based on legal duties to ensure the community’s role in CPPs.
  2. The precise shape of the newly constituted local democracy and relationship between communities, local governments and the Scottish government should itself be the product of a wide ranging participative and inclusive process.
  3. However, restoring at least 50% of tax revenues locally is deemed essential and would be supported by restoring local control over council tax and business rates but by also adding the new devolved land and building transactions tax to local government. There is a strong commitment to land and property taxation. This principle of increased taxation determined locally is viewed as essential to the accountability and meaningfulness of local democracy. The Commission also suggests limited powers for local government to set new local taxes.
  4. The Commission argues that the European Charter on Self–Governance, focusing on competences of local government and the principle of subsidiarity, should be legally enshrined. The Commission also calls for an independent office of wellbeing to test and monitor the impacts of economic, financial and other social policies on wellbeing (especially in terms of inequalities).
  5. A major investment committed to community learning and development and to setting up a centre for participatory democracy.

Overall, we have a strong call for localising Scottish local government, based around empowering citizens and their communities and by challenging the long term centralized financial settlement. The next stages involve a consultative participative process to take this all forward.

All in all the report raises a number of interesting points.

First, it could be viewed as local government in Scotland (since it is an important voice in the Commission) seeking reforms that will on the one hand reduce the scale and scope of local governments, increase the place and role of the citizen (thereby reducing councilor power), but at the same time offering more control over resources. These will be interesting, indeed challenging checks and balances to achieve in practice .

Second, there are two main attacks on Scottish Government orthodoxy – first of all wishing to reduce their financial control and thereby lessen the gearing effects on council tax but also making a grab for LBTT funds. Ending the council tax freeze is a prerequisite but is quite at odds with Government policy. The faith in property taxation is also against the long term position of the Scottish Government to move to local income taxes. Of course the logic of the Commission includes the possibility of a combination of property and income taxes levied locally.

Third, the approach is quite in tune with the espoused Scottish approach to public policy – of co-production, local assets, partnership and community-level institutions prioritizing policies and engaging fully in policy processes and delivery.

Finally, one thing that is not really addressed in the report is the (unknown) strength of taxpayer resistance to the sorts of things that are being called for. How, in 2014, do businesses feel about ending the principle of the uniform business rate, of granting tax creating powers to local government, to ending the council tax freeze and even I daresay revaluing the tax base as a whole? There is undoubtedly considerable opposition to rational and progressive policy reform ideas regarding local taxation. Moreover, the long shadow of the poll tax makes government remarkably unwilling to tinker with local taxes (as the SNP found out during their minority administration). Even if one was not going to pursue really radical ideas like a land value tax – the powers of conservatism are very strong in this area. Maybe it can be overcome – but it needs to be discussed fully at the very least.

So, lots to think about and one hopes this will be an on-going process that gets sufficient buy-in to allow the debate to grow and strengthen like the local democracy the project wishes to foster.

A final petty point – I really did not like the publishing presentation software that the report is based on. Maybe it was just me but it seemed cumbersome to my untutored abilities.