The Commission on Strengthening Local Democracy
Verity House
19 Haymarket Yards
Edinburgh, EH12 5BH
[email protected]
14 December 2013
Reform Scotland submission to the Commission on Strengthening Local Democracy
Since Reform Scotland was established nearly six years ago we have consistently argued that more
powers should be devolved down to councils, communities and individuals, so that services can better
meet the different needs and priorities being faced across Scotland. Scotland is a diverse country and
as such we believe that local democracy should be strengthened so people are able to shape their own
lives and those of their communities. I have outlined Reform Scotland’s approach in more detail in
answer to the specific questions set by the Commission.
1. LOCAL DECISION MAKING: Do you think that decisions about local issues and
services are made locally enough in Scotland at the moment? If not, what does deciding
‘locally’ mean to you? Please illustrate your answer with any examples from your own
experience.
Prior to devolution most Scots had an understanding of what Westminster did and what their council
did. The advent of the Scottish Parliament confused this relationship, not least because, since its
creation, Holyrood has sucked up powers from councils. For example, the Scottish Government has
frozen council tax and removed policing from local government control. Reform Scotland believes
that power should be devolved down as far as possible to reflect the different priorities across the
country. The issues facing Glasgow are very different to those facing the Highlands. Therefore, giving
our councils the tools necessary to address these issues is vital.
Reform Scotland believes that each tier of government should be responsible for raising the majority
of what it spends. Councils in Scotland today are arguably responsible for zero per cent of all tax
revenue raised (due to centralisation of NDR and council tax freeze) despite being responsible for a
significant proportion of expenditure.
Our report Local Taxes, published in March 2012, explained in detail how council tax and nondomestic rates could be properly devolved to councils, giving them far greater control over raising
the money they spent, as explained below.
Business rates are a form of local taxation and Reform Scotland believes that as well as collecting the
tax, councils should be responsible for setting it too. Just as it has been argued that there is little
incentive for the Scottish Government to improve the economy if any increase in revenue as a result
of faster economic growth is returned to Westminster, the same argument applies to business rates.
There is little incentive for an individual council to develop the local economy if any increase in
business rate revenue resulting from a stronger local economy is simply returned to Holyrood.
Devolving business rates to local councils would restore the link between local economic
development and higher revenues. It would give councils a real incentive to work with local
businesses to improve the performance of the local economy.
Devolving business rates would obviously lead to a reduction in the grant given to councils and would
result in a situation of net winners and losers since some councils account for a larger proportion of
0131 524 9500, The Executive Centre, 7-9 North St David Street, Edinburgh, EH2 1AW,
www.reformscotland.com
Reform Scotland is a charity registered in Scotland (No SCO39624) and is also a company limited by guarantee (No SC336414)
business rate revenue collected relative to their resident populations than others. Some of this is due
to differences in economic performance across the country and some due to council boundaries not
reflecting real economic flows. Reform Scotland recommends that, in the first year of operation, the
Scottish Government grants to each council should be based on the grant they received the previous
year, less the business rates collected from the council area. Councils would then receive the revenue
raised from business rates in their area, with the remaining part of their revenue grant adjusted to
ensure no council was better or worse off.
Each council would then have to decide whether to retain the business rates inherited or to seek to
increase or reduce business rates. Councils would have an incentive to provide a competitive
economic environment. A council could seek to increase business rates which might have the effect
of increasing income in the short term, but is likely to lead to poorer economic performance and lower
income from business rates in the longer term. However, the increase in local financial accountability
is more likely to provide an incentive for councils to design business taxation policies and broader
local economic development strategies to support the growth of local businesses, encourage new
business 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.
Reform Scotland also believes that local authorities should be able to introduce other taxes, such as
a ‘bed tax’ if they feel they are appropriate for their area. If the electorate disagrees, they can register
this protect at the ballot box. Such schemes also increase diversity and allow councils to learn from
the experiences of other local authorities. Importantly, they also make councils less dependent on
central government grants.
As well as giving local authorities freedom to raise and cut council tax as they see fit, we also believe
that local councils should be able to choose to whom the tax applies, where discounts can be offered
and indeed the type of local tax they wish to operate. There are a number of different types of local
taxes which are used around the world; each with its own pros and cons. Reform Scotland believes
that it should be up to local authorities to decide what type of tax system they want. There is no reason
why, for example, Edinburgh couldn’t operate a council tax system while Midlothian used a Land
Value Tax. By allowing different forms of tax to exist around Scotland, this would help to increase
diversity as well as discovering which systems work best for different communities.
2. LOCAL ACCOUNTABILITY: How important do you think it is for locally elected
people to be responsible for decisions about local issues and services? Do you have any
examples of why this is the case?
3. LOCAL PRIORITIES: How well do you think that communities’ local priorities are
accounted for in the way that national and local government works at the moment?
What is effective, and if there is room for improvement, how should things change?
Devolution was never supposed to stop at Holyrood, but it has. This is why Reform Scotland’s reports
on a range of issues from healthcare to policing and finance to planning have argued that more power
needs to be devolved down to our local authorities and beyond to make those services more
responsive to local needs and priorities as well as making service delivery more accountable and
transparent.
0131 524 9500, The Executive Centre, 7-9 North St David Street, Edinburgh, EH2 1AW,
www.reformscotland.com
Reform Scotland is a charity registered in Scotland (No SCO39624) and is also a company limited by guarantee (No SC336414)
4. STRENGTHENING DEMOCRACY: What do you think should be done to strengthen
local democratic decision making in Scotland? Do you have any ideas or examples
about how this could improve people’s lives?
In 2005 Reform Scotland published Renewing Local Democracy. We argued that Scotland’s 32 local
authorities and 14 health boards should be replaced by a smaller number of local authorities
integrating the powers of all these bodies.
Our suggested 19 new local authorities should have greater fiscal powers to help ensure that they are
responsible for a greater proportion of their own expenditure. Given the current limitations of the
fiscal powers of the Scottish Parliament, at present this could be done only by giving councils full
power over council tax and non-domestic rates, which would also require legislation to enable the
councils to have control over issues such as the tax base, the bands, discounts etc. Further powers
could be devolved once they are first devolved to Holyrood.
Reform Scotland favours a diverse structure of local government in Scotland, reflecting the diverse
circumstances of the different parts of Scotland. Two options which we feel should be considered by
the new councils would be an enhanced area committee system where more decisions are taken for
the local area by the councillors from that area and directly-elected mayors, or provosts as they could
be known in Scotland. Reform Scotland does not believe that either of these options should be forced
on a local authority from the centre, but should be options that they could introduce should they wish.
To enable this, Reform Scotland would recommend the introduction of legislation which would allow
local authority areas to hold referendums on the introduction of a directly-elected mayor where 5 per
cent of the population signs a petition or a council resolution is passed. Mayors would help address
the problems of local government’s lack of visibility and, therefore, accountability. As they are
elected by the public across their council area, rather than just one council ward, they have a stronger
democratic mandate and a much greater incentive to focus on responding to the concerns of their
electorate.
Local authorities should, in turn, consider devolving greater responsibilities to community councils
in order to better involve the local community and encourage participation within community
councils. While some community councils are viewed as effective, others are not and participation is
low. However, just as is the case with local government, if a community council is seen to have no
meaningful role in a community it is very difficult to encourage volunteers to become interested and
increasing responsibilities should help address this issue.
Reform Scotland does not think there should not be a single model for community councils across
Scotland, rather local communities in conjunction with their local authority should develop a system
that best suits their area and circumstance.
5. SCOTLAND’S FUTURE: Has there been enough discussion about local democracy in
the debate about Scotland’s future? If not, what should be addressed and how might
this be achieved?
6. OBSTACLES AND CHALLENGES: Do you have any concerns about strengthening
local democratic decision making in Scotland?
Worryingly, there appears to be an appetite for reforming public services by bringing more power to
the centre. While this may be being done in the name of efficiency (i.e. apparent financial savings
from merging the police) or to save people money (council tax freeze), the end result is the erosion
of local accountability and decision making.
0131 524 9500, The Executive Centre, 7-9 North St David Street, Edinburgh, EH2 1AW,
www.reformscotland.com
Reform Scotland is a charity registered in Scotland (No SCO39624) and is also a company limited by guarantee (No SC336414)
Whilst there is near unanimity that more powers should be passed down to Holyrood, on the basis
that politicians in Scotland are better placed to make decisions for the people of Scotland, this
argument has yet to apply to local government in Scotland.
Reform Scotland believes that the major challenge has to be convincing politicians, the media and
the public of the need to extend devolution beyond Holyrood.
Ben Thomson
Chairman, Reform Scotland
Enclosed: Responder information form
0131 524 9500, The Executive Centre, 7-9 North St David Street, Edinburgh, EH2 1AW,
www.reformscotland.com
Reform Scotland is a charity registered in Scotland (No SCO39624) and is also a company limited by guarantee (No SC336414)
Name of Organisation (if appropriate)
Forename
Surname
Address
Reform Scotland
Ben
Thomson
7-9 North St David Street
Edinburgh
Postcode
Telephone
Email
Twitter name if applicable
* I am responding as:
EH2 1AW
0131 524 9500
[email protected]
@reformscotland
An individual
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a rural area
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area
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urban and rural
parts
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further discussion about your submission?
No
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Short description of the main purpose of your organisation: Reform Scotland is a public policy institute or
'think tank' which was established as a separate Scottish charity, completely independent of any political party or
any other organisation and funded by donations from individuals, charitable trusts and corporate organisations.
Its objective is to set out policies in Scotland that deliver increased economic prosperity and more effective public
services based on the traditional Scottish principles of limited government, diversity and personal responsibility.
0131 524 9500, The Executive Centre, 7-9 North St David Street, Edinburgh, EH2 1AW,
www.reformscotland.com
Reform Scotland is a charity registered in Scotland (No SCO39624) and is also a company limited by guarantee (No SC336414)