The Intergovernmental Dimension of Local Government Financial Stress: A European Comparative Analysis

PhDThis thesis investigates the relationship between intergovernmental structures and financial stress in local government. The research compares three European constitutional systems: England, as a centralised case; Germany, representing a federation; and the Netherlands, constituting a unitary-decentralised system. The impact of intergovernmental structures on local finances is identified by concentrating on three core institutional arrangements: intergovernmental financial regulations, grant funding systems, and local tax space. The thesis applies a mixed methodological approach. Based upon a unique panel dataset, the econometric research identifies the institutional causes of local financial stress. The statistical results are complemented by 48 elite interviews, conducted among intergovernmental stakeholders across the three systems. The thesis applies an innovative policy dynamics framework. Findings demonstrate that local financial stress should be primarily understood as a manifestation of a set of inter-related institutions. The results show that despite the constitutionally stronger position of local government in Germany, local financial error accumulation is stronger than in the English system, with the Dutch system occupying a position between the two. A more centralised structure carries a high risk of implementing intergovernmental design failures; however its fluid institutional structure generates a higher capacity to comprehensively address financial errors. More decentralised structures, in contrast, prolong institutional adjustments, resulting in intergovernmental arrangements that are stable over time but contain larger risks of local financial error accumulation. The research findings have both theoretical and practical implications. The thesis expands second-generation fiscal federalism beyond its dominant focus on the meso-level and demonstrates that a higher sensitivity to constitutional varieties improves the cross-system applicability of political economy theories. The thesis also develops an integrated policy dynamics framework that contributes to stronger theory building in public administration studies. Practically, the thesis provides relevant knowledge to policymakers on how to improve the sustainability of local government finances within different institutional contexts.Queen Mary University of Londo

The impact of demographic trends on local government financial reserves: evidence from England

Local government in England has experienced significant financial volatility in recent years due to cuts in central government funding and increased demand for service provision. Using a panel data set of English local governments over the period 2005–2016, this study investigates the impact of demographic factors on the financial reserves held by different types of English local governments. Dissimilar effects are traced on local governments’ saving capability of different grant funding mechanisms and whether local governments are involved in social care provision, and how they provide these services. Findings show that local governments actively act upon financial uncertainty by expanding their reserves through implementing changes in both their income and expenditure structures, including revenue generation through alternative sources such as capital investment. The potential, however, to expand reserves differs significantly between local governments and has reduced due to growing demand for social care services

The US compliance assurance process: a relational signalling perspective

Cooperative compliance programmes have been introduced in various tax jurisdictions, with its pioneers including Australia, Denmark, Ireland, the Netherlands, the UK and the US. Such programmes are part of a wider trend in regulatory systems that emerged in the 1980s, and attempt to better balance interests between the tax authority and corporate taxpayers, and seek to reflect a more collaborative working method, as promoted by the Organisation for Economic Co-operation and Development (OECD). This paper examines the US cooperative compliance arrangement, known as the Compliance Assurance Process (CAP), and probes the nature of the relationship that ensues between the regulator and regulatee under CAP, the motivations of each party to the arrangement, and the manner in which the relationship is (or is not) sustained. This paper sheds light on such matters pertaining to CAP by examining its evolution and operation through the lens of regulation theory, drawing in particular on the work of Etienne (2013), who develops typology of ideal type interactions and relational signals in regulatory settings. It is also informed by interview data from two separate studies involving interviews with senior in-house tax executives/advisors. Drawing on Etienne’s typology facilitates a better understanding of the limits of cooperative compliance in the context of large businesses, particularly in the US environment. This paper shows the importance of adequately capturing the motivations of regulator and regulatee, demonstrating they do not carry equal weight nor have they remained stable over time, and addresses the implications of these differences for the success of an initiative such as CAP. It also demonstrates that interactions between regulator and regulatee follow multiple logics, and highlights and critiques the high level of interaction required, especially during the initial stage of responsive regulation-based relationships. The paper concludes with some broader considerations around regulatorregulatee relationships, including the potential role for recent technological innovations in this context

Representing territorial diversity: the role of local government associations

This paper argues that local government associations (LGAs) form a key element in central–local relations. They contribute towards defending local discretion through their three roles: as the collective voices of local authorities; as countervailing public-interest groups; and as feedback mechanisms for central government actors. LGAs are understood as hybrid organizations and their role and influence analyzed in terms of (1) their relationship with central government; (2) their capacity to manage the dilemmas of collectively representing territorial heterogeneity; and (3) the extent of competition from other political and functional interests. These roles are studied by comparing LGAs in England, Germany and the Netherlands

Stakeholder attitudes towards audit credibility in English local government: A post-audit commission analysis

In recent years, substantial changes have been implemented to the audit regimes for local authorities in several countries. Following the abolishment of the Audit Commission, a unique regime for the audit of local authorities has emerged in England, with external audit now fully conducted by private sector audit firms. Auditor appointments for the vast majority of local authorities are now managed by a new organisation, Public Sector Audit Appointments Limited (PSAA). Drawing on the determinants of audit credibility developed by Funnell, Wade and Jupe (2016), this paper examines how local authority stakeholders in the transformed landscape of local public audit in England perceive audit credibility, including the role of PSAA and other audit stakeholders. Findings show that the impact of current arrangements is positively perceived by stakeholders in relation to auditors’ technical competence and independence, at least in the short term, however significant concern is found amongst stakeholders regarding the usefulness of local public audits. Compared to Funnell et al. (2016), we ascribe these differences to the different context of audit in English local government and suggest the relative weighting of determinants of audit credibility are contingent

The US compliance assurance process: a relational signalling perspective

Cooperative compliance programmes have been introduced in various tax jurisdictions, with its pioneers including Australia, Denmark, Ireland, the Netherlands, the UK and the US. Such programmes are part of a wider trend in regulatory systems that emerged in the 1980s, and attempt to better balance interests between the tax authority and corporate taxpayers, and seek to reflect a more collaborative working method, as promoted by the Organisation for Economic Co-operation and Development (OECD). This paper examines the US cooperative compliance arrangement, known as the Compliance Assurance Process (CAP), and probes the nature of the relationship that ensues between the regulator and regulatee under CAP, the motivations of each party to the arrangement, and the manner in which the relationship is (or is not) sustained. This paper sheds light on such matters pertaining to CAP by examining its evolution and operation through the lens of regulation theory, drawing in particular on the work of Etienne (2013), who develops typology of ideal type interactions and relational signals in regulatory settings. It is also informed by interview data from two separate studies involving interviews with senior in-house tax executives/advisors. Drawing on Etienne’s typology facilitates a better understanding of the limits of cooperative compliance in the context of large businesses, particularly in the US environment. This paper shows the importance of adequately capturing the motivations of regulator and regulatee, demonstrating they do not carry equal weight nor have they remained stable over time, and addresses the implications of these differences for the success of an initiative such as CAP. It also demonstrates that interactions between regulator and regulatee follow multiple logics, and highlights and critiques the high level of interaction required, especially during the initial stage of responsive regulation-based relationships. The paper concludes with some broader considerations around regulatorregulatee relationships, including the potential role for recent technological innovations in this context

Using DistilBERT to assign HS codes to international trading transactions

One significant source of national revenue for many countries is the tax levied on international trade. Tax collection can be achieved by accurately classifying international trading commodities according to Harmonised System (HS) codes, which later can be used to impose customs duty/tax rates. The current approach to assigning HS codes to transactions relies on HS codes filled out by international traders and being manually inspected by customs officers. This ap-proach is tedious and prone to error, potentially leading to fraudulent activity. However, commodity texts are hard to classify because of their short length, noise, ambiguity, and use of a lot of technical terms. To address these challenges, our research aims to determine the HS codes automatically from commodity de-scription texts in trading transactions using text classification techniques. This paper proposes utilising transformers models, BERT and its variants, Distil-BERT, which is claimed to be lighter and faster than the BERT model and has the advantage of being deployed in computational resource-constrained environ-ments. The proposed approach adopts a transfer learning procedure to perform fine-tuning hyperparameters of BERT and DistilBERT. It is evaluated using real-world customs data for multi-class classification of commodity transactions in international trading. Experimental results indicate that both models achieve a comparable performance result

Debate: The lack of public sector accounting education within universities and what is next

The crisis within public sector accounting (PSA) has been the topic of much discussion with an emerging consensus that action needs to be taken to manage the demand and supply for statutory audit (ICAEW, Citation2022) and the sustainability of the PSA profession (Baylis & De Widt, Citation2023). In this article, we continue and extend this debate on how PSA can be stimulated and rejuvenated in the higher education context using an alternative educational framework to maintain a functioning and value-adding public sector accountability regime

Regulation of intermediaries, including tax advisers, in the EU/Member States and best practices from inside and outside the EU

This study provides an overview of the regulatory environment of tax intermediaries. It presents a comparative analysis of five selected countries (4 EU, 1 Non-EU). For each country, it provides an understanding of the landscape of the tax profession, the current regulatory framework and its impact on tax compliance and draws attention to some weaknesses across this regulatory space. It also highlights some proposed remedies and direction for further in-depth research in this area. This document was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the Economic and Monetary Affairs' Subcommittee on Tax Matters (FISC)