to respond to local priorities rather than the other way around. All new
legislation could be subject to a ‘presumption in favour’ of localism in which
decision-making about public services is passed to the lowest level practicable,closer to those who use them. Codifying this in law would mark a decisivebreak with the past; one that makes a statement.Secondly, rebalancing the power relationship between central and localgovernment needs to be matched by greater financial security andindependence for local areas.
As Labour’s zero
-based budget review considerspublic spending in the round, a key aspect of this should be the overall central-local balance. An independent commission on local government finance, withterms of reference agreed by local and central government, could considerboth the balance of funding based on overall tax take and specifically optionsfor local areas retaining a higher proportion of business rates they raise, whilstensuring appropriate equalisation. It would also need to consider options forlocal revenue-raising: allowing councils to borrow in line with prudential rulesand issue bonds, a reformed and more equitable council tax and otherpotential sources such as land value, tourism and green taxes could allcontribute to local areas becoming more self-sufficient with a stronger linkbetween money that is raised and spent locally.Finally, an assessment of overall public spending should consider the potentialfor radical reform to pool funding across public agencies to allow localgovernment to collaboratively design services that meet their communities
needs. Place-based budgeting was introduced by the Labour Government, ithas never moved beyond pilot stage under the Tory-led government, and nowrequires political determination to become mainstream. Huge funding streamsfrom Whitehall departments could be more effectively spent by giving localareas greater freedoms to provide services organised around needs and with agreater focus on prevention. It would enable collaborative leadership of placefor the common good, moving beyond the situation in which isolatedinstitutions work in parallel and sometimes in opposition. Analysis has shown
that nationally place-based budgeting can deliver savings up to £4 billion a yearor £10.3 - £22.5 billion over five years: at a time when public services arecreaking under the strain of cuts and rising demand, this potential cannot beignored.