Lyons inquiry into local government - Place-shaping: a shared ambition for the future of local government
Background
In July 2004, Sir Michael Lyons was asked by the Deputy Prime Minister and Chancellor of the Exchequer to look at changes to the English local government system to make recommendations on council tax reform and to assess the case for giving local authorities more powers to charge for services as well as other options enabling authorities to raise supplementary revenue.
This remit was extended in September 2005 to cover local government's role and function, and in December 2006 to consider the implications of the Barker, Eddington and Leitch reports.
He has already published two interim reports:
Consultation Paper and Interim Report (December 2005)
National prosperity, local choice and civic engagement (May 2006).
The report is a long one and reaches a number of conclusions about the role of local government and its relationship with both the local community and national government.
The report also has recommendations regarding council tax and council tax benefit, especially for pensioners. These include:
Council Tax should be retained as a source of revenue for local government. The option of change in the longer term to shift the balance towards other taxes and charges, such as local income tax, remains open.
The Government should conduct a revaluation of all domestic properties for council tax. Transitional arrangements to ensure households do not face steep tax increases from one year to the next should be considered at the point of revaluation.
Subsequent revaluations should take place regularly and automatically at intervals of no more than five years.
At the revaluation the Government should introduce new property bands at the top and bottom of the current structure. Lower bands to enable those in the lowest value properties to pay less. Higher bands so that the extra for those in the lower bands are paid for by increased bills for those at the top.
It could also consider the introduction of separate bands for Inner London to reflect the unique shape of the property market in that region and to reduce turbulence there.
Council tax benefit should be recognised as a rebate rather than a benefit, and re-named ‘council tax rebate’, to properly reflect its main purpose: adjusting households’ liability to council tax.
The Government should ensure the grant system reflects realistic data on the number of student households exempt from council tax in their areas. This should be done in time to inform the forthcoming negotiations on three-year settlements.
With regard to pensioner claimants the Government should build on recent efforts to streamline delivery of council tax rebates by adapting IT systems so that the Pension Service can act as a portal to rebates for all callers, regardless of pension credit eligibility.
Further improvements to the claims process should be pursued to allow the Pension Service to liaise directly with local authorities in processing pensioner rebate claims.
Ministers should examine the scope for data sharing between agencies to proactively deliver council tax rebates to those who are entitled, with a view to achieving a step-change in the
take-up of council tax benefit.
The Government should increase the savings limit on council tax rebate eligibility to £50,000 to help 370,000 pensioner households.
The Government should, over time, abolish the savings limit in CTB for pensioners, so aligning council tax rebate thresholds with the criteria for eligibility to the pension credit.
Effect of these recommendations on Northern Ireland, Scotland and Wales
Currently these recommendations only apply to English council tax and rating policy. Decisions on council tax banding and revaluation are devolved matters on which Scotland and Wales have their own policies, and Northern Ireland has an entirely different system of local rates, which is currently being reformed.
Policy and spending on benefits is managed on a Great Britain-wide basis, so the recommended changes to council tax benefit would affect individuals in Scotland and Wales, and the level of benefit spending in those countries. However, they will not affect the budgets of their devolved administrations. Council tax does not operate in Northern Ireland, but the report states that consideration may need to be given if there are any consequential implications for its benefits system.
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Lyons inquiry into local government - Place-shaping: a shared ambition for the future of local government 
