Our local authorities are facing financial collapse. Central governments in both Westminster and Cardiff continue to cut funding. Many councils across England have already declared bankruptcy including Birmingham, Europe’s largest local authority. How can Cymru avoid similar fiscal armageddon?
Amidst rapid technological development, increasing healthcare demands, a need for educational change, and the impacts from global climate alterations on agriculture and migration, the communities served by local authorities are changing. The widening gap between available financial resources and municipal spending needs are further exacerbated by the cost of living crisis, housing shortages, and an ageing population. All place unparalleled burdens on funding models created in a century gone by.
Centralised government, centralised funding
The single biggest problem in meeting the demands on our councils is the centralised nature of funding. The people of Cymru need a new form of governance, which would devolve powers to communities, giving people the flexibility to shape and structure their economies.
Their municipal regions must have revenue sources to fund local amenities which answer their needs for fairness, efficiency, predictability, transparency, and sustainability. Presently, the ability to ‘deliver’ this is in the hands of the Westminster and Cardiff governments. Neither appears willing to relinquish its love of centralised governance and control, despite Westminster having told local authorities to get into debt to fund themselves.
Few revenue sources fulfil the list of all desirable properties. Innovation in the funding of local authorities can take myriad forms and must be decided on by a community’s elected representatives. What follows are some tried-and-tested, successful alternatives to central government support and control in modern times.
Innovative funding for local authorities
● Public-private partnerships (PPPs): governments have turned to PPPs for infrastructure projects like building and maintaining roads, bridges, and public facilities. The private sector invests in the project and, in return, may receive revenue through user fees, tolls, or other revenue-sharing models.
● Tax increment financing (TIF): involves earmarking the future increase in property tax revenue from a specific area to finance current improvements or developments in that area. As property values rise, the additional tax revenue generated is used to fund community projects and services.
● Community bonds: issued to raise funds for specific projects. They’re sold to residents or investors, and proceeds are used for community development initiatives. Repayment may come from increased property values or project-generated revenue.
● Crowdfunding for civic projects: residents and businesses can contribute funds for projects they support, ranging from public art installations to park renovations.
● Land value capture: works through increased land value resulting from public infrastructure projects. For instance, the development of a new metro system may lead to increased property values in the surrounding area. Taxing land based on its appreciated value lets governments fund further improvements.
● Social impact bonds (SIBs): involve private investors funding social programmes. Local authorities only repay the investors if predetermined social outcomes are achieved. This approach shifts financial risk from the government to private investors.
● Municipal lotteries: residents purchase lottery tickets, and a portion of the proceeds goes towards community initiatives.
● Special zoning taxes: councils implement additional sales taxes in specific areas to fund improvements or services within them. This revenue is earmarked for projects such as tourism development, cultural amenities, or neighbourhood revitalisation.
Democratising local authorities
Innovative funding sources for local authorities also include impact fees, which are charges levied on developers to offset costs associated with increased demand for public services resulting from new construction. These fees can fund infrastructure improvements, schools, doctors’s surgeries, and other essential services. Another revenue source is ‘smart city initiatives’, which leverage technology and data to optimise services and generate revenue. Smart parking solutions, for instance, can increase council funds through more efficient and fairer use of parking spaces.
Whichever of the above funding models and their variant forms are adopted, they remain only interim measures in relation to the governmental structural revolution required within Cymru. A clean break from Westminster and its imposed financing formulas would give our nation the opportunity to redesign how communities are seen, treated, and supported. And can even profit.
Setting our own priorities for our country, building our economy and our future at every level, is why everyone who cares for their community must surely support the independentist route for Cymru. Through sovereignty we can rely on our ambition, bravery, and creativity to forge a new way of doing politics and supporting our councils. Ensuring that our liberal values are no longer ignored. And that our communities – and their struggling local authorities – come before Westminster.
