Councils in England will be able to keep the proceeds from business rates raised in their area under plans unveiled by Chancellor George Osborne. Councils will also be able to cut the rate and some will be able to raise it. Mr Osborne said councils would hold on to £26bn, calling it the “biggest transfer of power” in recent history.
They currently keep up to 50% of the rates – the rest goes to Westminster. The Local Government Association (LGA) said the move was “good news”. But Labour warned it could start a “race to the bottom” with councils competing to cut their rates the most.
This move is actually extremely good news. It does mark a transfer of power of a sort. But since councils are still overly large regional development agencies running to a very tight set of proscribed parameters, usually from way up in the chain, it merely marks a transfer of power of execution rather than self-rule and freedom to innovate. It still cannot be considered devolution. For sure it’s radical as far as radical goes within the current paradigm of governance, but we have no greater say in what it gets spent on.
The Labour notion that it could lead to a race to the bottom is an amusing thought though. The notion that councils could ever contain their rampant greed is comical. But they say it could happen as though that were a bad thing.
I can’t think of a better means of regenerating the North and taking pressure off London than incentivising businesses to leave the capital. I have been saying this should happen for many years along with giving councils complete control over corporation tax too – but that can only happen on the proviso that we see an inversion of the power triangle where councils maintain central government rather than the other way around.
Ultimately, it is the top down nature of government that stifles real democracy and while this is a move to be celebrated I doubt that we will see many councils exercising their powers because they still have statutory obligations set by Whitehall on behalf of the EU and global entities. Until we have freedom in that regard – and freedom from the EU, I suspect this move is largely symbolic. The gesture is right but there are no moves to improve accountability.