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George Osborne’s localist ideal is a race to the bottom George Osborne’s localist ideal is a race to the bottom
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Manchester town hall, built in the late 1860s to reflect the might of the city’s corporation, has a heady effect on the susceptible. Like the town halls in Glasgow and Birmingham, Liverpool and Leeds, it is a palace that still speaks of power even though, generations ago, it drained away to London.Manchester town hall, built in the late 1860s to reflect the might of the city’s corporation, has a heady effect on the susceptible. Like the town halls in Glasgow and Birmingham, Liverpool and Leeds, it is a palace that still speaks of power even though, generations ago, it drained away to London.
George Osborne has been MP for Tatton, a prosperous market town in Cheshire, a little to the south of Manchester, since 2001. And – as he admitted in his speech to the Tory party conference on Monday – he has slowly shed the view of someone born and bred in the capital and come to understand the importance of localism. George Osborne has been MP for Tatton, a prosperous constituency in Cheshire, a little to the south of Manchester, since 2001. And – as he admitted in his speech to the Tory party conference on Monday – he has slowly shed the view of someone born and bred in the capital and come to understand the importance of localism.
Localism has been a coming idea for at least the past decade. Politicians at Westminster have grown frustrated at the lack of effect that pulling the Whitehall levers seems to have on some of the grittier problems of economic and social renewal. But handing powers back makes little sense without also letting councils control their budget.Localism has been a coming idea for at least the past decade. Politicians at Westminster have grown frustrated at the lack of effect that pulling the Whitehall levers seems to have on some of the grittier problems of economic and social renewal. But handing powers back makes little sense without also letting councils control their budget.
Related: George Osborne's changes to business rates: Q&ARelated: George Osborne's changes to business rates: Q&A
Now the chancellor seems ready to take the plunge. For the first time in a generation councils will be allowed to keep the revenue raised from business rates, the tax on non-domestic property whose origins lie in Tudor poor laws. More, if they opt too for directly elected mayors, they will be able to levy a dedicated infrastructure tax to help fund a regional sovereign wealth fund for investment in capital spending.Now the chancellor seems ready to take the plunge. For the first time in a generation councils will be allowed to keep the revenue raised from business rates, the tax on non-domestic property whose origins lie in Tudor poor laws. More, if they opt too for directly elected mayors, they will be able to levy a dedicated infrastructure tax to help fund a regional sovereign wealth fund for investment in capital spending.
For a moment, ignore the threat that it really means that Whitehall just wants to pass the buck on yet another round of really difficult budget cuts. Suppose this really does indicate a return to the sunlit uplands of Victorian Britain, before the concept of success had been so hollowed out that it can only be measured in celebrity, back to the days when city fathers were powers in the land. Sometime, say, in the glory days between Joseph Chamberlain running Birmingham in the late 1890s and T Dan Smith, Newcastle council leader in the 1960s. Might those halcyon days return?For a moment, ignore the threat that it really means that Whitehall just wants to pass the buck on yet another round of really difficult budget cuts. Suppose this really does indicate a return to the sunlit uplands of Victorian Britain, before the concept of success had been so hollowed out that it can only be measured in celebrity, back to the days when city fathers were powers in the land. Sometime, say, in the glory days between Joseph Chamberlain running Birmingham in the late 1890s and T Dan Smith, Newcastle council leader in the 1960s. Might those halcyon days return?
The Osborne plan proposes a complete reversal of the Thatcher doctrine of centralisation. Localities – somewhere between individual cities and whole regions – will be encouraged to work together to plan and manage their economies and the services they need on a scale even grander than the Victorians. This kind of localism holds out the prospect of innovation through diversity, finding a way through many of the thorniest problems that have stumped central government. Making sure school leavers and graduates have the skills that local business needs, for example. Building partnerships between schools, further education and employers. Designing healthy transport schemes. Building affordable housing that supports mixed communities. Weaving together social and hospital care. Re-engaging individuals with the world in which they live and work, humanising the political process.The Osborne plan proposes a complete reversal of the Thatcher doctrine of centralisation. Localities – somewhere between individual cities and whole regions – will be encouraged to work together to plan and manage their economies and the services they need on a scale even grander than the Victorians. This kind of localism holds out the prospect of innovation through diversity, finding a way through many of the thorniest problems that have stumped central government. Making sure school leavers and graduates have the skills that local business needs, for example. Building partnerships between schools, further education and employers. Designing healthy transport schemes. Building affordable housing that supports mixed communities. Weaving together social and hospital care. Re-engaging individuals with the world in which they live and work, humanising the political process.
It sounds like a fantasy, and when you do the sums, it starts to look like one too. Osborne has been playing bluff with business rates for the past five years already, allowing councils to vary them downwards, while bumping them up from the centre.It sounds like a fantasy, and when you do the sums, it starts to look like one too. Osborne has been playing bluff with business rates for the past five years already, allowing councils to vary them downwards, while bumping them up from the centre.
This autumn the government has to identify £20bn of cuts from unprotected budgets. Those no longer include defence, which means the burden is likely to fall more heavily than ever on councils. The temptation, inevitably, will be to raise business rates. Osborne is setting up something like the race to the bottom that is seen globally with corporation tax rates, only between different parts of England.This autumn the government has to identify £20bn of cuts from unprotected budgets. Those no longer include defence, which means the burden is likely to fall more heavily than ever on councils. The temptation, inevitably, will be to raise business rates. Osborne is setting up something like the race to the bottom that is seen globally with corporation tax rates, only between different parts of England.
Worse, he appears to intend to dump the revenue support grant that helps to level the amount of income that councils have, regardless of their tax base, which will hit local authorities in poorer areas where business rates are lower. The flipside of the diversity and innovation that can flourish under localism is to limit access to essential services, the postcode lottery of tabloid headlines. So, the people picking up the bill for localism could be the people least able to afford it and with the least power to change it.Worse, he appears to intend to dump the revenue support grant that helps to level the amount of income that councils have, regardless of their tax base, which will hit local authorities in poorer areas where business rates are lower. The flipside of the diversity and innovation that can flourish under localism is to limit access to essential services, the postcode lottery of tabloid headlines. So, the people picking up the bill for localism could be the people least able to afford it and with the least power to change it.