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		The New Localism By Dan Hannan MEP British Tories are accustomed to being different from other Centre-Right parties in Europe. Where we believe in the free market, our Christian Democrat colleagues favour a mixed market. Where we are attached to our nation's independence, they want more European integration. Where we favour personal freedom, they incline towards a benign corporatism inspired by Catholic social teaching. In one area, though, we have a great deal to learn from them. Across the Continent, Right-of-Centre parties are seen as champions of local autonomy against the bureaucracy of the state. Ever since the French Revolution, it is the Left on the Continent that has sought to centralise power. The tradition of Jacobinism and, later, Marxism saw regional particularisms as belonging to the feudal age. The Right, therefore, tended to take its stand on the defence of local traditions. Even in Spain, where conservatives historically opposed Basque and Catalan self-government, they at the same time supported the traditional privileges of the various regions; it was the liberals who wanted to standardise everything. The sole exception is the British Conservative Party. Our historical record on local democracy is, not to put too fine a point on it, lamentable. A hundred years ago, Salisbury, great man though he was, opposed the principle of elected local councils. In more recent years, we became the party of rate-capping, the poll tax and the uniform business rate. These policies may have been understandable in the context of their time; but they have left us with the reputation of being uneasy with the very idea of local democracy. Quite apart from being harmful in itself, this reputation damages our credibility in other areas. We should sound more convincing in our opposition to European harmonisation if we applied that same principle at home. People would be readier to believe that we want to take powers back from Brussels if they could see that we also favour the devolution of powers at home. Our denunciations of the "unelected" European Commission would ring truer if we were equally exercised about the unelected agencies that wield executive power in Britain, from the Financial Services Authority to the Child Support Agency, from the Commission for Racial Equality to the Health and Safety Executive. It is not enough to cant about the importance of local government: all politicians do that, and the voters discount it. Stronger stuff is needed. We should be prepared to adopt a radical and new approach, informed by the model of town hall democracy in the US, or that of local referendums in Switzerland. Our guiding principle should be that decisions ought to be taken as closely as possible to the people they will affect. Where possible, this means devolving power to the individual citizen, whether as a patient, parent or commuter. Where collective action is needed, we should prefer the village hall to the county and the county to the kingdom. We should seek to maximise accountability by electing public officials. We should create a proper link between taxation, representation and expenditure at the local level. Let me give just two examples of what I mean. One of the most powerful quangos in Britain, although we rarely think of it as such, is the police service. As things stand, individual chief constables are often left to take policy decisions - whether or not to treat the possession of cannabis as a criminal offence, for example. The only democratic input is through the police authorities, on which only a minority of places goes to elected councillors, who are in any case represented proportionately according to political affiliation. At every local election, candidates from all three parties solemnly promise to "put more police on the beat". But they have no power to do so. The decision on how to deploy police personnel is taken by the chief constable, as they well know. Hearing this promise year after year, but seeing few changes, voters unsurprisingly become cynical. Just imagine, though, if elections really could decide such issues. What if the powers currently exercised by the police authority and the Crown Prosecution Service were exercised by the largest local party? Councillors would then have to decide, for example, whether to prosecute homeowners who shoot intruders. They would have to weigh up how much to spend on speed cameras, and how much on additional foot patrols. Ideally, they should also control the criminal compensation budget, and have to judge how much to spend on compensation and how much on prevention. And, every four years, they would have to offer themselves for re-election on the basis of their record. This, surely, would give voters an incentive to visit the polling station. We might go further by placing these powers in the hands of an elected local sheriff. There is some evidence that the personalisation of administration boosts turnout and encourages the office-holder to work that little bit harder. And what goes for policing applies, mutatis mutandis, to education, the relief of poverty and much else. Decisions which, in the United States, are left to local communities -- the school curriculum, the management of local hospitals, the remit of the fire service -- are decided in Britain by the Secretary of State in Whitehall. Even if this person is the best and wisest of politicians, he or she cannot possibly hope to apply a uniform policy that will suit all needs. In any case, the very remoteness of decision-making is a problem in itself. If, for example, social security were decided locally, and there were a direct link between welfare payments and tax-bills within each county, people would take a very different attitude to the neighbour whom they knew to be signing on while working as an electrician. It is one thing to steal from "the government" -- another to do so directly from your local community. Which brings me on to the second idea: the reform of local government finance. This may not sound an intrinsically sexy subject although, as Margaret Thatcher found when she introduced the community charge, it has a disproportionate ability to rouse passions. Labour is now finding the same thing, and for the same reason, namely that it is the one part of people's tax bills that is not normally deducted at source. We meekly hand over thousands of pounds through income tax and VAT, but only when it comes to the rates do we actually have to write out a cheque to the taxman. It is therefore important to get this issue right. Our four guiding principles should be as follows. First, councils should be responsible for raising their own revenue, and answerable for how they spend it. Across the EU as a whole, local government is responsible for raising 65 per cent of its own finance; in Britain, that figure is 25 per cent the rest coming from the Treasury. Second, there should be as close an approximation as possible between the electorate and the tax-base. Most forms of taxation fall disproportionately on one section of the population. The current system of council tax penalises non-working homeowners, generally pensioners; the poll tax fell most harshly on the working poor; a local income tax would disadvantage everyone with a job. In every one of these cases, especially the last, a chunk of the population would find itself exempt, and would therefore have an incentive to vote for higher spending, knowing that the bill will be picked up by someone else. Third, any new tax should visibly replace an existing one. It is neither right nor politically sensible simply to propose an additional fiscal burden. Fourth, the tax system should be so structured as to encourage downward pressure on rates. At present, we have the opposite: a temptation for councils to "spend up to cap", knowing that any savings they make might lead to a cut in their grant from central government. Indeed, profligacy is positively encouraged: the worse a council performs, and the poorer it makes its residents, the more hand-outs it attracts. One system of local tax would fulfil all these criteria: a Local Sales Tax (LST), levied at the point of retail. By happy coincidence, the sum paid by the Treasury to town halls (£66 billion last year) is almost identical to that raised by VAT (£64 billion). It would therefore be feasible to scrap VAT -- an unpopular and complex tax -- and replace it with an LST that would be payable only once, at the point of sale. LST rates would be set by local councils, giving them an incentive to keep the rate low, lest their shoppers cross the county line in search of bargains. Best of all, everyone would pay it, because we all buy things. There would therefore be no section of the electorate with an incentive to vote for higher spending. These two ideas -- democratic local control of policing and the LST -- are not offered in isolation. Rather, they are examples of a whole new approach to local democracy, aimed at empowering the citizen at the expense of the state. In adopting such an agenda, we would be returning to our political roots. People often dismiss the concept of town meeting democracy as an American notion that could not easily be imported into Britain. In truth, however, it is an old English idea that thrived in the New World while it withered in the Old -- rather like the strains of vine that survived in California while the phylloxera blight wiped out their ancestral stock in Europe. Pluralism in our domestic administration would bring tremendous advantages. In other Western countries, politicians rarely emerge on the national stage without first having proved themselves in their home region. Not only does this give them the advantage of having run budgets, but also the experience of executive decision-making. Perhaps more important, it means that ideas can be trialled locally and, if successful, mimicked nationally. In the US, most of the recent federal reforms, from zero tolerance policing to workfare, were developed at the state and local levels. Once, such things happened in Britain, too. Even as late as the 1970s, Tory councils pioneered a policy which, when applied nationally, became the mainstay of Margaret Thatcher's popularity: council house sales. In revitalising our towns and shires, we should be returning to our Eighteenth Century roots, rediscovering the country Toryism that traditionally informed our suspicion of the central state. That ideology, transplanted to the fertile soil of North America, produced the greatest democracy on Earth. It is time to bring it home. Dan Hannan MEP Daniel Hannan is a leader-writer for The Daily Telegraph and a columnist for The Sunday Telegraph. He also writes for a number of European newspapers, and has a regular column in the German daily, Die Welt. He has been a Conservative MEP for South East England since 1999, having previously worked as a speechwriter. He is President of the Referendum Group, a pan-European network of campaigners against the EU Constitution. He speaks French and Spanish. His publications include A Treaty Too Far, The Euro: Bad for Business, Time for a Fresh Start in Europe and What if Britain Votes No?