More ideas and fewer parking fines, please

Councils must open themselves up to new ways of increasing prosperity in their towns and cities

There will be a substantial number of very grumpy, even angry, drivers on the road today. Over the years, particularly in our towns and cities, we’ve become acutely aware of the enormous increase in parking charges; the proliferation of signs saying what we must and must not do; the regular changes in road markings; the encroachment of bus lanes, and we’ve put up with it all without so much as a squeak of protest, thinking it was intended to make our roads safer or to improve air quality.

Apparently not. Yesterday it was revealed that local councils are raking in almost £820million from parking fines and tickets alone, an eyewatering 10 per cent increase on the year before. Now these punitive charges look like an expertly designed scheme of financial extortion, mainly to generate a secure additional source of revenue. In other words a big con.

But councils aren’t just ripping off motorists. Over time, squeezing out funds through excessive parking charges becomes a deterrent to outsiders visiting, to shoppers using local shops and to businesses investing in an area. It undermines the local economy, with difficulty parking directly linked to the decline of high streets across Britain. Its parochialism should see it dubbed the Royston Vasey tax (from the League of Gentlemen) where you only have “local shops for local people”. According to the RAC Foundation, there’s not a great deal of evidence for the money being consistently used to fund local roads, either.

What is going wrong?

I’m not without sympathy for councils, as they have considerable cost pressures following constraints on local government block grants and increased demands on services. Nevertheless, too many seem to think that the answer is deflecting the blame for their lack of leadership and imagination on to central government, while squeezing people through stealth charges. Although there is an element of truth to the “cuts” narrative, the real story is poor decision-making, and a failure to make the big and necessary reforms. Councils, with a number of very honourable exceptions, stick to tinkering and slicing at budgets rather than fundamental change.

But that doesn’t explain why they would be so willing to embrace measures that will have such a detrimental impact on the health of their local economies over the medium and long term. Surely, you’d think they would want to be as business-friendly as possible? But that’s not the incentive central government gives them.

The UK is often described as having one of the most centralised tax systems in the world, with the vast majority of local authority revenue coming directly from the Treasury and restrictions on where that revenue is spent. It’s a good way of ensuring that loonie-left councils don’t waste it all on councillor junkets to Venezuela, but it’s a bad formula for giving local authorities a stake in rising prosperity.

That’s why the last government correctly committed to passing on full control of business rates by 2020. This should be delivered. Not only will this provide approximately £23billion of devolved funds for councils, but it will mean they have a real interest in growing that sum: by making their areas attractive for entrepreneurs to set up firms, and making it easier for customers to stop and visit shops. If they want to be really appealing, they might even consider a tax cut, perhaps replace parking fines with free parking.

We should go further. Local authorities should be able to keep their share of the around £10billion raised in stamp duty in England. This is much more substantial funding than the new Homes Bonus, and would create a huge incentive to build more homes in their area. In addition, I would devolve housing benefit spending to give councils an added interest in saving on the welfare budget.

But for all this to work, local authorities need to discard their anti-growth mindsets and embrace the new powers they are being offered, and voters need to hold them accountable for doing so. Rather than unfairly milking motorists, it’s high time councils thought through how they can entrench prosperity, not deprivation, in our towns and cities.