Labour and Conservative fight it out for the most localist title
Author: Alex Thomson, in the MJ |
It’s great to see the two major political parties fighting it out for the most localist title – both acknowledging that the English state has been far too centralised for far too long.
But Lord Adonis’ proposals raise a few questions for those who care to look beyond the headlines and into the detail.
Firstly, the proposed increase in the size of the single pot from the Government’s £20bn to Adonis’ £30bn is very welcome and it’s great to see skills included – this could be a big step forward.
That said, it is still some way short of Lord Heseltine’s original proposed numbers and those weren’t pie in the sky figures, but budgets that could work better if spent locally, identified by the most experienced former minister still involved in policy development.
Clearly there are still some Whitehall fiefdoms to tackle.
For LEPs this comes with a catch too – the Secretary of State will have the power to hire and fire their chair, which isn’t very localist.
We’re very much in favour of greater devolution of business rates – publishing a report arguing for wholesale devolution in 2011 – and there’s definitely a view in local government that we could and should go further than the current retention system.
We therefore welcome Lord Adonis’ proposal to devolve the full business rate. However, there isn’t much detail in the report so it’s hard to know how the new system would work.
For instance, there’s the question of the safety net.
Currently, those who benefit ‘disproportionately’ from growth (e.g. who have a particularly high starting point of business rate income compared to their assessed need) face a levy that caps the amount they can gain, with the proceeds being used to protect those who suffer substantial falls in business rates.
It’s unclear how this would work under a system of full retention – would it be sink or swim?
Also this proposal is underpinned by the requirement for local government structural reform across most of the country.
While the aim of encouraging more collaboration is laudable, what works in Manchester might not work in Maidstone.
I’m not sure that bribing councils to create combined authorities everywhere is necessarily the right answer.
What about existing counties?
And what about London, where combined authorities cannot be created?
Are London boroughs excluded from the proposed incentives?
And thinking practically, how long will this raft of new combined authorities take to establish themselves, given that they require secondary legislation to be created? Would this mean that, for the first year or two, the only places to benefit would be those areas with pre-existing combined authorities?
Ultimately, retaining a bit more of the growth in business rates and devolving an extra £2bn a year is a step in the right direction, but only a step.
For local public services to be sustainable in the long run, what’s really needed is a total overhaul of local income raising powers.
Others have suggested local property tax retention, levying hotel bedroom taxes or even the dreaded reform of council tax.
To truly free local areas to respond to the economic and social challenges that they face, localism will have to go rather further and rather faster.