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About Levels of Goverment

What controls does central government have over local? 

The period from the 1860s until the 1930s have been seen as one in which local councils were relatively independent.  Parliament required them to provide some services such as schools and refuse collection and gave them a range of powers to do other things such as provide rented housing but was largely left alone by Central Government, except from some fairly light regulation.  The London County Council ran a health service, East Ham its gasworks and Hull its own telephone exchange. Central controls developed in several stages:-

-        After 1945, the expansion of the Welfare State meant that health and social security was controlled centrally and nationalisation of industries took electricity and gas away from local authorities, although they did take on some new functions such as town planning.  Central government also became more involved in making sure that social housing was built and began to intervene in education, for example, ensuring the creation of comprehensive schools.

-        Economic problems from the mid 1970s led Governments to want to reduce public expenditure and local government was an easier target for this than trying to control central government spending.  The Conservative Government in the 1980s also wanted to ensure that more services were provided by the private sector.

-        With the end of Empire and more limits to British economic and foreign policy and more decisions taken through the EU, elections have come to depend increasingly on issues such as health and education. Governments have become more concerned to ensure that local authorities were efficient and provided good schools and so began to intervene in this area.

-        The desire of the Coalition Government, after 2010, to reduce the deficit has led to a major reduction in public expenditure.  Local authorities are now mostly just providing the services that central government requires them to and abandoning other areas of spending in which they had taken the initiative themselves.  The Coalition Government has also looked to by-pass local authorities and encourage initiatives at a more local level, often depending on voluntary work by local people.

The types of controls have been:-

a)     Local authorities in Britain have only ever had one type of tax to fund their spending, though they can raise money from charges, for example, for parking or using council swimming pools.  This is a property tax based on the value of a house for residents and the value of a business property for firms. In other countries local authorities have much more control over their finances and can set a local income tax or a local sales tax.  The property tax, called the local rate, was never very popular because it came as a single demand in April, whereas other taxes such as income tax or VAT are paid by people in small amounts over the year.  As Central Government put more demands on local government to provide services after 1945, the rate was not enough to pay for them and so increasingly Central Government provided a grant to each local authority based upon a calculation of their needs.

In the 1980s a battle took place between a Conservative Government that wanted to reduce spending and Councils, mostly Labour, which wanted to maintain services and, as Central Government cut back its grant, increased their rate to pay for them.  As a result of this the Government introduced Ratecapping – legislation to give Central Government the power to limit the amount by which a council could increase its rate and took away control of the business rate from local authorities.  In 1989, Mrs Thatcher, against the advice of some of her ministers, decided to replace the rates with a tax on each person, which became popularly known as the poll tax, based on the argument that if everyone paid local taxes they would vote out Councillors who put them up. It was very unpopular and seen as taxing poorer people at the same level as richer people and contributed to her replacement as Prime Minister.

John Major abolished the poll tax in favour of a Council Tax, very similar to the rates.  Governments have continued to use powers to cap the Council Tax and, under the Coalition, every local authority is limited to Council Tax increases of 2% a year unless the electorate votes for a higher increase in a referendum.  As part of its deficit reduction plan, the Coalition has made large reductions in the grant that it gives to local authorities so that they have had to cut back on almost all of their services.

b)     As we have no written constitution, local government does not have the level of protection from Central Government intervention that it does in other countries.  Central Government is able to pass legislation to abolish local government or change the boundaries of local councils.  It can change the way in which they operate, for example, by introducing elected mayors. It can require local authorities to provide services or it can take services away, for example, public health has just been moved from the NHS to local authorities.

c)     Central Government has intervened in the way that services are provided.  Local authorities have always contracted out some of their work to the private sector but most areas such as parks maintenance, refuse collection and architectural design of new public buildings were provided by their own staff.  In the 1980s, the Conservative Government required local authorities, by a process of Compulsory Competitive Tendering, to open bids from the private sector for all this work.  Council tenants were given the right to buy the house they rented and local authorities were encouraged to transfer their council housing to housing associations or private landlords. The Blair Government allowed schools in poorer areas to become Academies, largely free from local authority control, and the Coalition Government has greatly extended this by allowing other schools to become Academies and by allowing groups of people to set up Free Schools, also outside local authority control.

d)     Central Government has increasingly regulated local government.  Legislation has given Government Ministers wide ranging powers to intervene and even take over the running of a council from Whitehall under certain circumstances, as has happened as a result of the child abuse scandal in Rotherham.  The Major Government required every school to provide information on examination results and these were compiled in national league tables. The Blair Government introduced the Best Value system so that the standards each local authority service achieved could be monitored by Central Government, replaced by the Coalition Government with similar National Performance Indicators.

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