I have been enjoying the Conservative Party Conference from my arm chair in front of the TV. Manchester was always a long way for this southerner and, while I enjoyed Birmingham where I could stay on a narrow boat and walk to the conference centre, I am very glad I will not have to run the gauntlet of Corbyn’s left-wing thugs in Manchester. I think their behaviour warns us of worse to come. Maggie had the courage to take on Scargill and the miners who were bent on bringing down the government. I hope that courage resides as strongly in the present government.
George Osborne may have made councillors’ hearts beat a little faster when he promised radical devolution from central to local government by handing over £26 billion of business rates (National Non-Domestic Rates or NNDR) to local councils. After nearly half a century in which local government has lost more and more power to the Treasury and, more recently to central planning, this may sound like really good news but I am not so sure. As always with local government, the devil will be in the detail. Eric Pickles tinkered with the local government finance system when he was in charge of local government but the result was so complex and conditioned that I am not sure local councillors noticed the difference.
Let’s look at some of the complexities.
Firstly, local government is funded from four main sources:
- charges that councils are allowed to make for some services;
- council tax, paid by local residents and based on the historical value of their homes;
- business rates which are set as a national poundage on the rateable value of business premises, are collected into a national pool. The pool is then apportioned with some being handed back to councils and some retained by central government.
- government grant which has declined substantially over recent years and is a balancing figure to top up councils for the difference between the above three sources and a government calculation of each council’s financial need.
Complicated? You are not kidding! If Osborne is serious about handing over the whole of the business rates to local government, he will have to work out how to deal with the huge differentials in revenue between economically successful areas and those that struggle. This is no easy task and I can detect lots of “ifs and buts” in the small print that is beginning to emerge in some of Osborne’s throw away remarks. For example, in my own district council of Cherwell, business rates payable in the current year work out at about £521 per head of population while Oxford City has £548 and South Oxfordshire just £319. Further afield, Birmingham City collects £391 per head of population while Boston in Lincolnshire collects just £302. Currently, half of business rates are siphoned off by central government while half stays with local councils.
The problems do not stop with huge inequalities in income from business rates around the country. There is also the nightmare of two-tier areas with county councils and district councils. For example, in Oxfordshire, there are Oxfordshire County Council and five district councils: Cherwell, Oxford City, South Oxfordshire, Vale of White Horse and West Oxfordshire. County councils are large, strategic authorities with child and adult social care as the largest area of spending, followed by highways and waste disposal and a plethora of smaller duties. Their spending dwarfs that of their district councils whose main responsibilities are planning, housing, recreation and waste collection. However, of the 50% of business rates handed back to local government, 40% goes to district councils and just 10% to county councils; the inverse of their spending patterns.
Quite how civil servants will unravel these and other complexities is not clear from the Chancellor’s announcement nor from the response of the Local Government Association. My guess is they have not worked much of it out yet and they have got until 2020 for the full implementation of the scheme. My best guess is that the Treasury will never let go of the stranglehold they have on local democracy and the final translation of George Osborne’s announcement will leave local councils as financially constrained as ever. I hope I am wrong.
If local government hopes MPs will welcome and encourage devolution, they should think again. My experience of many MPs of all parties is a dislike and a distrust of local government, linked with an appalling lack of understanding by many. I remember a picture in the local media of David Cameron with members of Oxfordshire Fire & Rescue Service (a county council function) in which he heaped praise on tiny West Oxfordshire District Council. His view of local government has always been of this small council whose boundaries match his parliamentary constituency and that view seems to be matched by many MPs.
In my view, it is the strategic authorities that offer the best opportunity to grow our economy and to improve people’s living conditions. Authorities like Cambridgeshire and Oxfordshire if only the latter would wake up, co-operate across the council tiers and embrace the need for economic growth. In the metropolitan areas, it is the Manchester model of co-operative working that Osborne has seen and is promoting that has every prospect of delivering rising living standards through economic growth. The opportunities are there for the taking if national politicians could see strategic councils or collections of such councils as allies in delivering political and economic success and not as competitors. America and many European nations enjoy strong and independent local government where being a state governor or city mayor is a stepping stone to a successful national political career. I am afraid many UK MPs who have served as councillors seem unwilling to admit to the fact when they get to Westminster. Check out a few MPs’ CVs if you don’t believe me!