Lyons Inquiry final report and associated documents
This section of the website provides links to all parts of Sir Michael's final report on the form, function and funding of local government, and to documents from launch of the report.
Lyons Inquiry conference: Final Report and Recommendations, 27 March 2007
Launch of the final report, 21 March 2007
Printed copies of the final report can be purchased from The Stationery Office
, quoting ISBN: 978-0-11-989854-5
Final report contents
Preface by Sir Michael Lyons
(Adobe Acrobat file, 2,962kb)
Part I: Background to the Inquiry
1. Local government: a continuing debate
Context for the Inquiry
The history of local government
(Adobe Acrobat file, 696kb)
2. Local government in the 21st century: what is it for?
Theories of local government
The modern role for local government
What do we want from local government?
(Adobe Acrobat file, 224kb)
Part II: Problems and solutions
3. What is limiting modern local government?
High degree of central control
Lack of flexibility
Expectations and pressures on services
Poor incentives in distribution of national resources
(Adobe Acrobat file, 275kb)
4. Central government's contribution to reform
What this means for services
(Adobe Acrobat file, 408kb)
5. Local government's contribution to reform
Place shaping - the challenge for local government
Improving local accountability
Innovative, local solutions to public service challenge
(Adobe Acrobat file, 280kb)
Part III: Funding
6. Funding reform: an introduction
Objectives for reform
Framing a package of reform
(Adobe Acrobat file, 163kb)
7. Household taxation and local charges
Council tax benefit
Local income tax
Local service charges
(Adobe Acrobat file, 419kb)
8. Business taxation
Section 106 and planning gain supplement
Taxes on tourist pressures
(Adobe Acrobat file, 279kb)
9. The funding system and incentives
incentives, equalisation and grant
Shared revenues to support local services
(Adobe Acrobat file, 266kb)
Part IV: Conclusions
10. A developmental approach
Legislative and policy changes
Options for future governments
Underpinning the developmental approach
(Adobe Acrobat file, 163kb)
Summary of recommendations
(Adobe Acrobat file, 126kb)
(Adobe Acrobat file, 101kb)
Download full report
, excluding annexes
(Adobe Acrobat file, 5,521kb)
Annexes to the report
Understanding the current grant distribution system
(Adobe Acrobat file, 121kb)
Introduction to the modelling used in the report
(Adobe Acrobat file, 108kb)
Background to support Chapter 7
(Adobe Acrobat file, 342kb)
Background to support Chapter 8
(Adobe Acrobat file, 136kb)
Background to support Chapter 9
(Adobe Acrobat file, 148kb)
Summary of submissions
(Adobe Acrobat file, 167kb)
Stakeholder views on Barker, Eddington and Leitch
(Adobe Acrobat file, 133kb)
Research and stakeholder engagement
(Adobe Acrobat file, 156kb)
Research published alongside the final report
Lyons Inquiry survey 2007
(Adobe Acrobat file, 1,853kb)
Place-shaping: a shared ambition for the future of local government
Lyons Inquiry final report and recommendations
Sir Michael Lyons has published the much anticipated final report from his independent Inquiry into the future role, function and funding of local government - Place-shaping: a shared ambition for the future of local government. He said:
"I believe that local government is an essential part of our system of government today. Local government's place-shaping role - using powers and influence creatively to promote the well-being of a community and its citizens - is crucial to help improve satisfaction and prosperity through greater local choice and flexibility.
"In my final report, I call for a new partnership between central and local government. This needs to be based on changes in behaviours from all tiers of government to achieve a stronger relationship - creating a shared ambition for the future. Central government needs to leave more room for local discretion and recognise the value of local choice; while local government needs to strengthen its own confidence and capability, engage more effectively with local people, make best use of existing powers, and stop asking for central direction.
"I have also concluded that council tax is not 'broken', but is seen as unfair and has been put under too much pressure."
Sir Michael presents a mosaic of reforms which tackle a complex set of problems. They include essential reforms in the short-term to tackle the most urgent problems and more radical reform options for future governments.
Short term recommendations include:
- greater flexibility for local authorities to place-shape with less control from the centre - by reducing specific and ring fenced grants, a new power to levy a supplementary business rate in consultation with business, and a new power to charge for domestic waste to help manage pressures on council tax, and an end to capping of council tax;
- changes to improve fairness of council tax, recognising that council tax benefit is a rebate, automating the system to ensure 1.8billion pounds in unclaimed benefit helps the poorest households, and raising the savings limit for pensioners to 50,000 pounds;
- improving transparency in the funding system by being clear about the contribution made by national taxation, and ensuring a more independent voice to inform Parliament and the public; and
- improving incentives for local authorities to promote economic prosperity and growth, initially through reform of the Local Authority Business Growth Incentives Scheme.
In the medium term the Government should:
- revalue council tax to update the tax base and improve fairness;
- at the same time, reform council tax by adding new bands to reduce bills for those in the lowest value properties, paid for by increased bills for those in higher value properties paying more - there should be no increase in average council tax bills as a result of this;
- consider assigning a fixed proportion of income tax to local government;
- find ways to improve the incentives within the grant system; and
- consider introducing the power to levy a tourist tax if local government makes a strong case based on local public support - this would be appropriate only in some areas.
In the longer term, future governments could consider more radical reform options such as local income tax or re-localisation of the business rate, but these reforms may require greater public support and understanding than currently exists.
Sir Michael concluded:
"Some of these changes can start immediately, building on current changes to the performance framework and Local Area Agreements; others can be taken forward in the Comprehensive Spending Review; whilst some require primary legislation. This package of reforms is designed to set out a developmental approach towards a more devolved and ambitious future for local government, based on improving relationships between central and local government, better local choices, more effective management of pressures, and greater public trust in the system as a whole."
Sir Michael Lyons
Sir Michael Lyons has a distinguished background in local government. Between 1994 and 2001 he held the position of Chief Executive of Birmingham City Council. Before that he was Chief Executive of Nottinghamshire County Council (1990-1994) and Wolverhampton MBC (1985-1990), following an earlier career in both central and local government with a particular emphasis on urban regeneration and economic development. Between 1980 and 1983 he also served as a Birmingham City Councillor.
He was knighted for services to local government in 2000.
Sir Michael was Professor of Public Policy (2001-2006) at Birmingham University and was Head of the Department of Local Government Studies (2001-2004). He was Deputy Chairman, then Acting Chairman, of the Audit Commission (2003-2006). He was also a member of the independent review of the Fire Service in 2003.
Sir Michael has previously published two reports of his Inquiry work on local government role and funding, which started in the Summer of 2004: "Lyons Inquiry into Local Government: Interim Report and Consultation Paper"; and "National prosperity, local choice and civic engagement: a new partnership between central and local government for the 21st century".
Earlier reviews for Government that Sir Michael has undertaken include:
- "Well Placed to Deliver - Shaping the Pattern of Government Service", published in March 2004, which dealt with the relocation of public sector jobs away from London and the South East; and
- "Towards Better Management of Public Sector Assets - A Report to the Chancellor of the Exchequer", published in December 2004.
Sir Michael is a non-executive director of Mouchel Parkman plc, Wragge & Co and SQW Ltd. His own consultancy has clients in both the public and private sectors. He is also Chair of the English Cities Fund, and Chairman of the City of Birmingham Symphony Orchestra.