Edinburgh should be paying dividend, not levying tax

EVERYTHING local authorities do they tend to do badly - and expensively. In an otherwise handsome city, the really grotty bits of Edinburgh are created by our local authority. The two obvious examples are the soul-crushing council estates and the blight of planning by which large parts of the city are kept in squalor.

My ideal local authority would have no more than three employees: A manager to put everything out to tender; a lawyer to check the contract details and a book-keeper to pay the dividend out to every citizen.

There may be a few core functions that the City would retain, but even ceremonial ones seem better organised by anyone other than the city fathers. The Edinburgh Military Tattoo and the Hogmanay Party are now world famous, but were created in the teeth of opposition from the then- councillors. They even objected to the Edinburgh Festival, complaining of the nudity and the extra queues for the trams.

Almost every municipal service could be provided far more efficiently if it was delivered by competitive tendering. Refuse collection is far better done by contractors at street level, not via a mega-monopoly, city-wide contract. Refuse is highly valuable if graded and recycling helps us make our environment better. Municipal Man treats it just as waste and takes it far out to the sea off the Firth of Forth.

Some services that feature under local authority logos are, in reality funded by national government. Edinburgh’s schools are nominally run by the council, but the cash comes the Treasury in London. The council creams off swathes of this for pointless and unnecessary roles, currently said to be eating up 1 billion by Tory leader David McLetchie.

Edinburgh City Council has a vast property portfolio, but it is ill-managed and often merely left to rot. It should be sold off - but to enhance its value, the crushing planning restrictions must be lifted. Edinburgh City depletes or neuters much of its own property values by wrong-headed planning. Bulldozers may do more good than a posse of social workers (800,000 extra for them this year).

The city council owns all the street and road space, including pavements. These represent huge revenue potential. Instead, all we have is paltry parking meters in the busier city centre streets. Road pricing should be applied throughout Edinburgh. Truly residential streets might opt out and become the joint property of the householders, just as the New Town’s communal gardens are already.

All the truly attractive parts of our city pre-date the heavy-handed Town and Country Planning Act of 1947. The Old Town, the medieval part between the Castle and the Palace of Holyroodhouse, has accrued some of the charm via its sheer antiquity - but past centuries devised construction rules that harmonised with neighbours.

The New Town is a gem often described as the fruit of planning. That may be, but planning was by private contract, specifically the Scots Law feu. All the Georgian splendour of Edinburgh was accomplished without councillors or planners; it was entirely a private matter.

Can you imagine trying to build something as splendid as Charlotte Square now? All the planners seem to permit are "executive homes" of a uniform nature, and homogeneous bungalows and flats. Edinburgh is being made ugly not despite the best efforts of the planners, but rather by them.

There are some evidently blameless City services such as parks and swimming pools or football pitches. Yet all these could be provided better in the marketplace. Why should non-swimmers subsidise swimmers? Why can recreational facilities not be highly profitable? The City is spending 2 million upgrading Glenogle Baths. Any private firm could provide a modern pool far more cheaply.

My aim is not just to reduce the council tax bills. My ambition is to energise the council by truly radical reform so that it can pay each of us a dividend instead of charge us a tax.

Edinburgh City Council has a budget of 790m to service the 450,000 population. But only 91 per cent of citizens pay this tax, and 96 per cent of businesses.

My argument is not that the council’s employees are all incompetent, but rather that they lack the knowledge of what their priorities should be or the ability to test alternatives. This is true of all municipal bodies in every nation.

David Hume, one of Edinburgh’s most celebrated thinkers, wrote a comical essay on why all the Edinburgh councillors ran away when Bonnie Prince Charlie took the city in 1745 with the Jacobite Army.

His thesis was that to want to be a councillor, you had to be a rogue or a charlatan for such self-importance to arise in your breast. Hume mocked them as the only people who couldn’t even make money out of a public execution.

We all know private enterprise manages its roles far better than public bodies. Can you imagine Edinburgh councillors running Marks & Spencer or John Lewis better? Councils should not perform any services, they should only tender them out.

Edinburgh still enjoys a wide reputation for money management and "canniness". What a world reputation it could bask under as the only capital city in the world to pay out a dividend.

I’m talking alchemy here. By bringing them to market, the city’s liabilities can be transformed into assets. Many US towns already contract out most of their tasks.

All the established parties campaign on nearly identical promises. The shock of offering an annual payout will allow the new force to win every seat. We need a name for this bold new application of ancient truths. How about the Whig Party? The original Whigs, the first privatisers, had the noble motto "live and let live" and pretty colours of gold and sky blue.

So, let there be candidates in every ward liberating the council’s assets from its own inertia, abandoning all unnecessary tasks and contracting out all the necessary ones.

• John Blundell is the director general of the Institute of Economic Affairs.