Time for System Thinking: A System-wide Perspective of Local Government Finance

In recent years, there has been considerable tension in England between the push for a fluid form of local government built upon local discretion, accountability, decentralisation, and autonomy and the more traditional imperative from the centre for a more static approach that prioritises central financial assurance. This chapter argues that local government financial autonomy and resilience are two sides of the same coin, and one cannot exist without the other—this is the essence of embedded autonomy. All too often each aspect is seen in opposition, with autonomy seen as a threat to the overall resilience of the local government finance system and resilience, bolstered by redistribution and transfer grant systems, seen as a barrier to autonomous working. Instead, we argue that local discretion and autonomy underpins resilience, enabling planning for, and reaction to, change. Local autonomy, discretion, and resilience can only be fostered by a wider system-based perspective of local government equalisation and budget certainty.