Rates and Wrongs : Why council control over business rates must consider the Barnsley question.
A serious conversation about the financial mechanisms underpinning local government is urgently overdue and the resource review at present underway is welcome. Recent top line announcements, on liberalisation of Business Rates and the notion of ‘free councils’ are a hint at a strong financially localist direction. However, there are serious questions in this about redistribution and the extent to which we can liberate wealthier areas from their redistributative relationship to poorer areas. Get this wrong and we may end up widening inequalities and worsening place resilience.
At the heart of this debate, is the ‘Barnsley question’, first posited from the floor, during the CLES/Localis fringe event in Manchester Town Hall during Conservative Party conference in the autumn of 2009. This question highlights the problem whereby full retention of business rates locally, would see a local authority like Westminster gain £950M whilst Barnsley would lose £42M. The question thus posits: Can we accept this and if not what would be the formula for redistributing business rate income from wealthier areas like Westminster to poorer ones like Barnsley.
Recent work by SIGOMA, the Special Interest Group of Municipal Authorities (based in Barnsley!) shows stark differences between areas with low business tax bases and more prosperous areas and has calculated that ‘Liverpool the most deprived area in England, would only be able to fund about a third of its budget requirement from its business rate tax base. Compare this to Westminster which could fund 480% of its budget requirement in 2009/10’. This disparity gets right to the heart of localism and to the core of the choices bedevilling central-local political reform.
The disparity is not simply an urban and metropolitan one, looking at the County Councils, were business rates to be retained at district level they would also be big losers throwing the whole question of the two-tier authority settlement into question. Again using SIGOMA’s figures it can be seen that the biggest net losses would be suffered by the large counties of Lancashire, Kent and Essex.
The arguments for reform being advanced, not least on this website by James Morris MP[1] and the welcome and thought provoking pamphlet from Localis on role of the Formula Grant[2] must confront the Barnsley question head on. In this there has to be both a rejection of those advocates of total liberalisation and a pure localism, or those who wish to retain an oppressive centralism. More financial autonomy is key. However, there is a role for the centre to ensure we find a localism which can work for the many and not just for the few.
No comments:
Post a Comment