George Osborne has to be one of the least opaque men on earth. The past master of delivering what looks to be a cunning plan, we all know by now that that when George announces a plan there is more to it than meets the eye. What is always designed to grab a headline is rarely what it seems to be. Yesterday's announcement on devolving business rates to local authorities is one such move. We already know there are strings attached.
Grants offered to local authorities will, it has already been reported, reduce by more in many cases than the revenues they will be given in exchange. So this is cutting by any other name.
The power to change the rate will be downward only, meaning no real autonomy is given. And cuts are necessarily implicit in this process.
Where there is a local elected mayor increases in rate will be permitted, but subject to local business veto: the mandate has now been extended to companies. Double voting will now be allowed by those in the business community. The threat to democracy is obvious.
No one knows how the redistribution of revenues will be permitted, but it is essential within the existing system. Westminster collects more business rates, apparently, than Birmingham, Manchester, Sheffield, Liverpool and Bristol combined. That's despite the fact that the population of Westminster is 227,000, compared with 3 million for the five other authorities. Without such an announcement we can presume that the plan is for inequality to increase.
And through all this is the logic of a man who believes in tax competition - the process where business taxes are competed downwards with the aim of either closing down government services that it is claimed can no longer be afforded or of shifting the obligation to pay for them onto ordinary people.
My suspicion is that this is a 'pasty tax' in the making. Those Tory council who cheered this yesterday may within weeks to come be wishing to hand their new powers back to Whitehall. And we should hope they do. This is a move intended to damage local democracy and increase inequality at the same time. For both reasons it needs to be opposed.
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It seems to me that he wants to build a EuroZone within the UK by abolishing redistribution of wealth under the front of localism.
Where will be Germany (London) and where will be PIGS (no jokes)? We already have plenty of Luxembergs in far flung places and an autocratic central bank like the ECB that are above trivialities such as accountability and democracy.
The neoliberal race to the bottom continues at pace.
Well said, Richard. Your observation about Osborne is sound (we’ve witnessed it so many times now I can’t believe anybody doubts it). And the impact on local democracy and services will be profound.
Indeed, so obvious is it that this policy will result in gains for a few LAs and losses for many that I shook my head in dismay listening to the numerous local politicians “celebrating” this new freedom and autonomy. Yes, you now have the freedom to compete each other to the bottom, and to take the flak for all the fallout that follows, while central government looks on with glee: ‘well it has nothing to do with us.’
And so much for Osborne’s “discovery” of the north – by which he actually seems to mean the NW. I assume he realises that unlike London with a single unifying mayor who can in some policy areas override the various local councils, that doesn’t happen elsewhere. So, take Greater Manchester: eight local authorities all now competing against each other. Similarly in the west midlands: Birmingham, Wolverhampton, Solihull, etc. The north east: ditto. And even here in the east midlands, where we’ve seen some particularly egregious past examples of retail parks in one council area sucking the life out of the retail environment in another. That will be as nothing to what we’ll see in the future.
One final point on the Tory commitment to local autonomy. Earlier in the week I saw an announcement that central government was “cracking down” on local authorities who took political decisions to spend/invest or not spend/invest money in certain companies/countries. This political “grandstanding” – as I think it was referred to (and the current and previous government know a thing or two about that) was not to be tolerated, hence central government would legislate to control it. So much for local autonomy!
This is not about autonomy
This is about outsourcing cuts
And Osborne washing his hands of responsibility
On the equality/poverty issue, I found this excellent article several screens down on The Guardian web site, Richard.
As so much of the punish the poor welfare reform agenda is clearly based on the US model I thought it very insightful and telling.
Of course, it’s too late the reverse this now: the policies implemented under the previous government combined with those due over the next few years will deliver US style poverty levels. But nevertheless, worth reading about the reality – for those who have never witnessed the not much talked about downside to the American dream.
http://www.theguardian.com/society/2015/oct/06/welfare-cuts-extreme-poverty-us-warning-uk-professor-kathryn-edin
I have tweeted it out
I had missed it
Thanks for the link
Most opaque surely?
No. Osborne is an open book. He is a clever operator, and devious to boot. But his ambition to succeed Cameron is obvious, and his desire to set traps for Labour informs all his policies. I think he is being too clever by half with this deeply cynical move, and suspect it could backfire spectacularly. We can but hope.
Another top tier of officials with powers to flaunt. Such a small country with yet more divisions. And that they will manage a health and social budget well is very debatable, another split in the NHS. Of course now we are not the darling buds of May time, but to appear to consult people and then decide what is best for us is risible. When I was a girl my Dad used to take me and my sister and two brothers to Queen’s Park in Manchester to listen to the band, my lovely Mam at home too tired, making a meal, washing etc. So fond of my home city still. What is my point, think it got lost reminiscing. Have to say silly louts with thuggish behaviour, understandably with a grudge really need to use their frustrations in a more intelligent way at the Tory conference. I guess my way is old hat but I think manners do make the man.
Syvia-I’m too from manchester and it’s worth pointing out that there were only 4 arrests out of a crowd of over 60,000, even the police praised the protesters-off course the media seized on a very small numbers of incidents. It was heartening to see so many turn out.
Point taken Simon, also not much if any media attention given to large NHS demo.
The best quote I read a couple weeks ago from a young medic.
” This government is like a cat disembowelling a sparrow”.
This sounds like more ‘divide and conquer’ and an encouragement to more ‘beggar your neighbour’ economics. The whole approach of the Tories is to set the populace against one another so they don’t notice the financial cathertering being applied. The Tories will enjoy watching the various competing ant hills attack each other (perhaps ant don’t do that) while the financial industry lines their pockets and they sit their watching the fate of the masses like a pantheon of corrupt gods.
Yes. This is all sold under the guise of “devolution”!
Devolution was a key Labour policy prior to the last election too. I argued against it – my concern was exactly as you’ve described in the article. It would mean giving local councils more responsibility in exchange for less cash! A Labour government may not been quite so ruthless but they’d still have played the same game.
So its down to local councils to fight this as hard as they can and tell govt they don’t want “devolution” unless they have the money to pay for it.
I discuss the absence of any theory of devolution in The Joy of Tax
It is quite logical that all can’t be as it seems. There must be some redistribution of rates to allow for wealthy and poor areas. If the wealthy areas keep all the funds they collect then where do the additional amounts come from for the poorer areas? You just juggle other figures to make it happen, unless he really plans to increase spending at a local level, which seems highly unlikely.
Of course the comments on George in paragraph one apply to all the incumbents of number 11 no matter what their political persuasion.
The speech said “local government” would keep 100% of business rates, not “each local authority will keep 100% of its business rates”. These are very different things.
The more reliable rumours suggest that the existing redistribution system will be kept in place.
We also don’t have a timescale, but I would suggest that this change is at least 3-4 years away.
I’d be more worried about the ‘extra responsibilities’ coming local government’s way, in exchange for the small budget boost (to local government collectively) that this would provide.
But Osborne is letting the world think otherwise