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Kavanagh et al: British Politics 5e

Lyons at Last

At nearly 400 pages in length, the final report of the Lyons Inquiry into local government was as lengthy as it was long awaited.  Sir Michael Lyons, a former Chief Executive of Birmingham and Nottinghamshire councils, had been appointed by the government to undertake an inquiry into local government finance in July 2004. However, in September 2005 the remit of his inquiry was extended to consider the future role and functions of local government.  On 21st March 2007, Sir Michael unveiled his analysis and proposed reforms.

For Lyons, local government has an essential 'place-shaping' role which is understood as "the creative use of powers and influence to promote the general wellbeing of a community and its citizens".  Lyons concludes that local government is currently constrained in performing such a function by a high degree of central control which is in turn the product of a highly adversarial relationship between central and local government. The result, Lyons argues, is that English local authorities lack flexibility and their current financial arrangements lack accountability.

The report catalogues a wide range of proposals. For example, the government is encouraged to legislate speedily to permit local authorities to regulate bus services while political parties are exhorted to seek high calibre potential councillors beyond their traditional activist bases.

However, it proved to be the proposals in respect of local government finance and taxation which attracted most attention. Here Lyons recommended the retention of the current system of council tax, believing it to be "broadly sound". However, Lyons makes a number of proposals to address the perceived 'unfairness' of the tax.  He proposes that new council bands at the top and the bottom of the existing structure should be introduced and council tax benefits should be reconceived as a rebate.  A revaluation of domestic properties should take place in the medium term and then at least every five years thereafter. Central government should cease to use and then abolish its capping powers as part of a more permissive environment for local authorities in which they would be able to levy charges for domestic waste collection, set local supplements to the Business Rate and raise revenue from local tourism taxes.

These proposals seemed to satisfy few however. While the Local Government Minister, Phil Woolas welcomed the report, he nevertheless rejected its proposals to abolish capping, to introduce tourist taxes and to introduce new tax bands.  His Conservative Shadow, Caroline Spelman, believed the report paved the way for higher council tax bills. The Liberal Democrats, for their part, regarded the report as too timid in its proposals.  In the light of such reactions has fundamental reform of local government been kicked, once more, into the long grass?

Critical Thinking Questions

1) Identify the reactions to the Lyons Report from interest groups (for example, the Confederation of British Industry, the TaxPayers Alliance) and groups representing local authorities (for example, the Local Government Association).

2) Do you agree with the contention of the Lyons Report that the council tax is "broadly sound"? What are the respective merits and shortcomings of other methods of raising finance for local government?

3) Does the Lyons Report adequately address the major problems which local government encounters?

4) Imagine you were Sir Michael Lyons. What proposals for the reform of local government would you have made and why?