The Conservative Party and the Lib Dems speak about increasing the devolution of responsibilities to local authorities (LAs) or county authorities, but do they really mean it?

It's quite easy to propose an increase in the areas where LAs provide services, but if they don't also propose collecting a large proportion of the funds required for providing their services locally, councillors will tend to make decisions that win them votes on the basis of ignoring the industrial interests of an area. There are few votes given by Directors and Shareholders.

The Conservatives would continue with the current system which relies substantially on grants from central government. The Lib Dems propose a system of local income tax. Neither system gives the councillors a direct reason to work closely with business, in a mutually beneficial way, and yet if local authorities and business could work better together, that would go a long way to delivering the more efficient country that would make us all happier and wealthier.

Our proposal is that all taxes that are truly local should be paid locally, and local government should aim to raise most of its revenue locally (with a residual that allows central government to compensate for the social, economic and geographical differences). That means paying not only business rates locally, but also other charges like the landfill tax, and a new, modest, local sales tax to increase the total amount of tax raised locally and spread the load over different sources.

We will not eliminate central-government funding, but if we increase the funds raised locally in this way, and remove local authorities' responsibility for funding education, we will have raised the share of LA revenue that is paid directly from the present 20% to over 70% of LA expenditure. That would go a long way towards making local government more responsive to the interests of local employers and of the local population, many of whom depend on local industry for their employment.