Lyons Inquiry

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The Lyons Inquiry was an independent inquiry into the form, function and funding of local government in England. Appointed jointly by the Chancellor of the Exchequer (Gordon Brown) and the Deputy Prime Minister (John Prescott) in the summer of 2004, Sir Michael Lyons produced several reports over the next 3 years, culminating in a final report on the future of local government published alongside the Chancellor's Budget in March 2007.

Contents

Origins of the Inquiry

While local government activities in England are financed from a variety of sources, including central government grant, the key local taxes since 1992 have been the uniform business rate (set centrally but collected locally) and council tax. Both are property taxes, based on the rental or resale value of a property at a given point in time.

The Local Government Act 2003 [1] introduced a commitment to revalue all domestic properties in England and Wales, for the purposes of calculating council tax bills, by 2007. This would have been the first revaluation to take place since council tax was introduced in 1993.

Following that Act, the Government commissioned a Balance of Funding review, [2] which reported with recommendations in July 2004. [3] At the same time, a House of Commons Select Committee conducted an inquiry into local government revenue, again reporting their conclusions in July 2004. [4]

Initial Inquiry

In July 2004 the Government appointed Sir Michael Lyons to undertake a comprehensive Inquiry into local government funding, focussing in particular on:

Work on the Inquiry began in ernest in October 2004, and encompassed the commissioning of research and a number of public consultation events.

In November 2004, the voters in North East England rejected a proposal for an Elected Regional Assembly, following which the Government abandoned its plans to proceed with the introduction elected assemblies across England.

First extension of the Inquiry's remit

In September 2005, the Government announced its decision to delay the revaluation of domestic properties by 2007, citing the ongoing Lyons Inquiry as a key reason for the delay. [5] At the same time, the Government agreed an extension to his Inquiry with Sir Michael, "to cover questions relating to the functions of local government and its future role, as well as how it is funded."

The Inquiry published an interim report in December 2005, [6] which detailed the work conducted on local government funding and invited views on the future form and function of local government. The report included detailed analyses of possible council tax reforms; conclusions on other potential local government revenue streams were not included in the document.

Following the extension to his remit, Sir Michael launched a year-long, multi-stranded consultation exercise with a wide range of groups, as well as commissioning new research.

In April 2006 the Government introduced the Dedicated Schools Grant, a ring-fenced grant to local authorities which could only be spent on schools. This marked a significant change in the structure of local government funding, as education was by far the largest service for which local authorities in England were responsible. [7]

Sir Michael Lyons published his second report [8] in May 2006. In this report, he concentrated on the form and function of local government in England. Key points included:

In October 2006 the Government published a White Paper on the future of Local Government. [9] While the White Paper took on board some of the Inquiry's recommendations - for instance the concept of place-shaping - it was criticised in some quarters for being published before the Inquiry had finished its work on local government funding arrangements. [10]

Second extension of the Inquiry's remit

Following the extension of his remit, Sir Michael had planned to publish his final report before the end of 2006. In December the Government announced that it had asked Sir Michael to further extend his Inquiry to take into account a set of other reports commissioned by the Chancellor. [11]

Final report

The Inquiry's Final Report, Place-shaping: a shared ambition for the future of local government [12] was published on 21 March 2007, on the same day as the Chancellor's annual budget statement. In an accompanying Press Notice Sir Michael announced that his short term recommendations included:

In the medium term, he advised that the Government should:

In the longer term, Sir Michael said that future governments could consider more radical reform options such as local income tax or re-localisation of the business rate, but these reforms may require greater public support and understanding than currently exists.

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References

  1. ↑ Local Government Act 2003
  2. ↑ Balance of Funding Review 2004 Archived 2008-09-08 at the Wayback Machine , website
  3. ↑ Balance of Funding Review 2004 Final Report Archived 2008-12-04 at the Wayback Machine , (pdf document)
  4. ↑ Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions - Ninth Report, Local Government Revenue.
  5. ↑ Council Tax (New Valuation Lists For England) Bill, explanatory notes to the bill.
  6. ↑ Lyons Inquiry Consultation Paper and Interim Report, December 2005
  7. ↑ teachernet website Archived 2009-04-11 at the Wayback Machine , dedicated schools grant
  8. ↑ National prosperity, local choice and civic engagement: a new partnership between central and local government for the 21st century, Lyons Inquiry second report, 2006
  9. ↑ Strong and Prosperous Communities, Government White Paper, 2006
  10. ↑ BBC News Website, news report on the launch of the Government's local authority white paper
  11. ↑ Lyons Inquiry Press Notice, 6 December 2006
  12. ↑ Place-shaping: a shared ambition for the future of local government, Lyons Inquiry Final Report, 21 March 2007
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