Simon Fell: Why there should be a permanent cut to business rates for retail

19 Oct

Simon Fell is MP for Barrow & Furness.

As Benjamin Franklin famously said, “in this world nothing can be said to be certain, except death and taxes.” Our business rates regime assures both: as a tax it is one of the biggest contributors to the death of high streets up and down the UK.

I see the consequences of this first hand in my own constituency of Barrow & Furness. Where once the high street was the beating heart of Barrow, the life is seeping away. Dalton Road, the high street in Barrow, was where local residents met up to shop, gossip and laugh. My constituency surgeries are full of residents and business owners telling me that something must be done.

And we must do everything possible to turn the tide. Covid-19 has hit the high street hard. But even before the onset of the pandemic, retailers – large and small – were struggling to cope with the ever increasing rise in business rates.

It is a regressive tax which is not fit for purpose. Since 1990, business rates receipts have increased from £8.8 billion to £27.3 billion in 2017/18, an increase of 210 per cent compared with a 75 per cent increase in inflation. The UK now has the highest property taxes in Europe, nearly double the rate of the next nearest country, and business rates is a large reason why.

It is a tax which hits hard-working business owners, it is a tax which is a barrier to investment, and it is a tax which costs jobs.

It imposes a double whammy on the high street too: we haemorrhage ‘anchor’ stores like M&S and Topshop which makes it harder to attract shoppers to our independent stores. Those independents are the plucky heroes of Barrow’s street scene and they thrive against all odds. We can’t allow them to pulled into the same downwards spiral.

This tax also hits the north hardest. New research today by WPI Strategy categorically proves that the business rates burden is highest in northern towns such as Barrow and Leigh. Using store data from the thousands of Tesco stores across England and Wales, the paper shows 75 per cent of constituencies in the top 10 per cent of rates burden are in the North and Midlands, compared to just 26 per cent in London and the South. This is because the tax rate does not mirror economic performance, so for areas facing economic challenges the burden is much higher.

The research shows that shops in the top 50 constituencies most burdened by rates have four times the business rates burden of those in the bottom 50. If the top 50 constituencies faced the same burden as those in the bottom 50, they would save £50 million a year.

It is even more important for constituencies such as mine that the Government does all it can to ensure retailers can survive and thrive. Retail makes up 25 per cent more of the job market in the North, Midlands and Wales than it does in London

During Coronavirus, retailers such as the big grocers, took on tens of thousands more staff to help feed the nation. The sector is also a stepping stone into the world of work for many people, offering apprenticeships for youngsters up and down the UK.

But retail provides more than simply an economic boon to northern towns. Shops play an important psychological and social role within neighbourhoods. They are often the only touch points for some of the more vulnerable members of our community.

Encouragingly, the Chancellor recognises the value of retail to our social fabric and economic prospects. At the start of the pandemic he announced that retailers as well as businesses in the hospitality and leisure sectors in England will not have to pay business rates for a year.

This was an extremely welcome move. There is further work going on here too: Town Deals and Future High Street Funds offer the chance to renew the high street and town centres like mine. But that renewal must be backed.

When the rates holiday comes to an end next year, we must continue to relieve the pressure on retailers. That is why I’m calling on the Government to introduce a permanent cut to business rates for retail. A 20 per cent reduction in the overall level of rates would make a huge difference to shop owners in towns like Barrow, Bury or Bolton. It would enable them to retain jobs, keep the doors open, and reduce the number of boarded up stores on our high streets.

Of all the low-hanging fruit available to the Government’s levelling up agenda, reducing business rates would be an easy win with an immediate positive impact.

Simon Fell: Why there should be a permanent cut to business rates for retail

19 Oct

Simon Fell is MP for Barrow & Furness.

As Benjamin Franklin famously said, “in this world nothing can be said to be certain, except death and taxes.” Our business rates regime assures both: as a tax it is one of the biggest contributors to the death of high streets up and down the UK.

I see the consequences of this first hand in my own constituency of Barrow & Furness. Where once the high street was the beating heart of Barrow, the life is seeping away. Dalton Road, the high street in Barrow, was where local residents met up to shop, gossip and laugh. My constituency surgeries are full of residents and business owners telling me that something must be done.

And we must do everything possible to turn the tide. Covid-19 has hit the high street hard. But even before the onset of the pandemic, retailers – large and small – were struggling to cope with the ever increasing rise in business rates.

It is a regressive tax which is not fit for purpose. Since 1990, business rates receipts have increased from £8.8 billion to £27.3 billion in 2017/18, an increase of 210 per cent compared with a 75 per cent increase in inflation. The UK now has the highest property taxes in Europe, nearly double the rate of the next nearest country, and business rates is a large reason why.

It is a tax which hits hard-working business owners, it is a tax which is a barrier to investment, and it is a tax which costs jobs.

It imposes a double whammy on the high street too: we haemorrhage ‘anchor’ stores like M&S and Topshop which makes it harder to attract shoppers to our independent stores. Those independents are the plucky heroes of Barrow’s street scene and they thrive against all odds. We can’t allow them to pulled into the same downwards spiral.

This tax also hits the north hardest. New research today by WPI Strategy categorically proves that the business rates burden is highest in northern towns such as Barrow and Leigh. Using store data from the thousands of Tesco stores across England and Wales, the paper shows 75 per cent of constituencies in the top 10 per cent of rates burden are in the North and Midlands, compared to just 26 per cent in London and the South. This is because the tax rate does not mirror economic performance, so for areas facing economic challenges the burden is much higher.

The research shows that shops in the top 50 constituencies most burdened by rates have four times the business rates burden of those in the bottom 50. If the top 50 constituencies faced the same burden as those in the bottom 50, they would save £50 million a year.

It is even more important for constituencies such as mine that the Government does all it can to ensure retailers can survive and thrive. Retail makes up 25 per cent more of the job market in the North, Midlands and Wales than it does in London

During Coronavirus, retailers such as the big grocers, took on tens of thousands more staff to help feed the nation. The sector is also a stepping stone into the world of work for many people, offering apprenticeships for youngsters up and down the UK.

But retail provides more than simply an economic boon to northern towns. Shops play an important psychological and social role within neighbourhoods. They are often the only touch points for some of the more vulnerable members of our community.

Encouragingly, the Chancellor recognises the value of retail to our social fabric and economic prospects. At the start of the pandemic he announced that retailers as well as businesses in the hospitality and leisure sectors in England will not have to pay business rates for a year.

This was an extremely welcome move. There is further work going on here too: Town Deals and Future High Street Funds offer the chance to renew the high street and town centres like mine. But that renewal must be backed.

When the rates holiday comes to an end next year, we must continue to relieve the pressure on retailers. That is why I’m calling on the Government to introduce a permanent cut to business rates for retail. A 20 per cent reduction in the overall level of rates would make a huge difference to shop owners in towns like Barrow, Bury or Bolton. It would enable them to retain jobs, keep the doors open, and reduce the number of boarded up stores on our high streets.

Of all the low-hanging fruit available to the Government’s levelling up agenda, reducing business rates would be an easy win with an immediate positive impact.

Allie Renison: Sunak wants to link funding to viability. He’s right – but he must help to keep firms viable in the first place.

9 Oct

Allie Renison is Head of Trade and EU Policy at the Institute of Directors.

Emergency government intervention in the market should in principle seek to target endeavours that have fundamental viability – of that, most are agreed.

At the start of the crisis, this principle was rightly balanced against the need to get money out the door quick – every day of delay would have meant jobs lost. As the pandemic has worn on, it was inevitable that the idea of tying support to viability would come into sharper focus. But while the Chancellor is right to tack towards this principle, we need to make sure we are on same page as to what viability means in the current context.

We should not forget the central role the state is playing in curtailing the normal functioning of industries across the piece. From changing advice on working from home to the omnipresent one to two metre social distancing rules, a significant share of the UK economy is currently rendered far less sustainable than it would be in the absence of these changes. This is not about apportioning blame, but raising the longer-term future of the measures underpinning them.

If the rules and guidance are to shift to relax social distancing restrictions, then it is perfectly reasonable to question the viability of business thereafter. If the message is that these constraints are the permanent or long-term parameters through which we should gauge sustainability, then that message needs to be loud and clear. Either way, the basis on which fiscal and non-fiscal support is given to viable businesses should reflect the extent and horizons of government restrictions. As they change, so too should the flexibility and scope of assistance.

In Rishi Sunak’s endeavour to ensure the Government still carries out its “sacred responsibility to balance the books”, he shouldn’t overlook the part that supporting business will have for the economic recovery. Longer-term viability should not be sweepingly sacrificed at the altar of picking losers in the shorter term.

Alongside grappling with this issue of viability, the Chancellor should set out broad-based measures to give UK plc the shot in the arm it needs – particularly as many SMEs have fallen through the cracks of the initial support schemes. Options for these broadly fall into three categories of focus – protecting and creating jobs, supporting adjustment, and spurring investment. While the Treasury may be mulling tax rises in future, the immediate focus should be on minimising the burden on business for the here and now.

Encouraging firms to retain, (re)train and hire workers in the current climate as the furlough scheme winds down and restrictions continue is undoubtedly a challenge. Of the third of IoD members who still had staff on furlough in September, 60 per cent expected to be able to retain three quarters or more of their workers.

For some businesses, Sunak’s new top-up plans will be enough; but plenty of SMEs at the smaller end will find the price of keeping staff too much. Lowering the adapted Job Support Scheme’s employer contribution for non-worked hours could help in this regard, potentially being funded by removing the job retention bonus (less than one in five directors who had furloughed staff said the bonus would help them retain their employees).

Bold action to help as many firms possible not only hold onto but also create jobs is needed – and cutting the cost of employment is the right place to start. Reducing the burden of Employer NICs, either by boosting the Employment Allowance for smaller firms or lifting the threshold for payments, is one of the top three potential confidence-boosting measures among IoD members.

It is a two-for-one that would both support hiring and provide a one-off cash flow boost to business. Meanwhile, providing new tax incentives to help company investment in training – particularly lifelong learning – would also drive the adult re-skilling needed as firms move towards automation and new digital processes to drive productivity.

Facilitating adjustment will be critical to business confidence as the pandemic evolves – whether that’s returning to normal in a safe way, or exploring a new way of doing things.

Many of our members have said that the reason for their reduced office use was that working from home was proving more effective; expanding the scope of R&D tax credits could be an important tool to help more small firms maximise on the potential productivity gains. Tellingly, investment in digital infrastructure ranked as the top director priority for government to prioritise for spurring an economic recovery.

Lifelines such as government-backed loan schemes and tax deferrals are also crucial measures to extend in helping viable companies continue to weather the storm. Expanding local authorities’ discretionary grant finding will also help for a more appropriately targeted response to help temporarily impacted firms and sectors adjust to localised lockdowns.

And finally, it’s important that measures target the regulatory side too. While the Government has extended some emergency insolvency relief provisions, it needs to do the same for suspension of ‘wrongful trading’ liability to allow firms to seek and access finance during the pandemic.

With new figures out from the IoD showing that the business investment outlook stalled in September after a significant rebound over the summer, it’s vital for the Government to bring forward plans to give industry a boost. In addition to broad-based tax reliefs to harness digital and adaptation technologies, the annual investment allowance cap should be extended beyond 2020.

Additionally, to support growth, a business rates holiday could be introduced on the additional charges firms face when improving or expanding or moving into commercial property. Meanwhile, to turbocharge entrepreneurial growth at a time it is desperately needed, the Treasury should ease restrictions for investing in start-ups and scale-ups by making schemes such as EIS and SEIS more accessible.

Business leaders know that tax incentives at a time of already increased public expenditure to support jobs and enterprise will eventually need to be paid for, but taking action now to stimulate the economic recovery will help lessen and spread the overall burden.

Enabling firms to adjust to a changing landscape of restrictions will help protect jobs, while facilitating business investment will help create new ones. It is this interconnection of priorities the Chancellor must now address and ensure business taxation goes in a productive, efficient direction to support viability, before he can start to focus on balancing the books.

Allie Renison: Sunak wants to link business support to viability. He’s right – but he must help to keep firms viable in the first place.

9 Oct

Allie Renison is Head of Trade and EU Policy at the Institute of Directors.

Emergency government intervention in the market should in principle seek to target endeavours that have fundamental viability – of that, most are agreed.

At the start of the crisis, this principle was rightly balanced against the need to get money out the door quick – every day of delay would have meant jobs lost. As the pandemic has worn on, it was inevitable that the idea of tying support to viability would come into sharper focus. But while the Chancellor is right to tack towards this principle, we need to make sure we are on same page as to what viability means in the current context.

We should not forget the central role the state is playing in curtailing the normal functioning of industries across the piece. From changing advice on working from home to the omnipresent one to two metre social distancing rules, a significant share of the UK economy is currently rendered far less sustainable than it would be in the absence of these changes. This is not about apportioning blame, but raising the longer-term future of the measures underpinning them.

If the rules and guidance are to shift to relax social distancing restrictions, then it is perfectly reasonable to question the viability of business thereafter. If the message is that these constraints are the permanent or long-term parameters through which we should gauge sustainability, then that message needs to be loud and clear. Either way, the basis on which fiscal and non-fiscal support is given to viable businesses should reflect the extent and horizons of government restrictions. As they change, so too should the flexibility and scope of assistance.

In Rishi Sunak’s endeavour to ensure the Government still carries out its “sacred responsibility to balance the books”, he shouldn’t overlook the part that supporting business will have for the economic recovery. Longer-term viability should not be sweepingly sacrificed at the altar of picking losers in the shorter term.

Alongside grappling with this issue of viability, the Chancellor should set out broad-based measures to give UK plc the shot in the arm it needs – particularly as many SMEs have fallen through the cracks of the initial support schemes. Options for these broadly fall into three categories of focus – protecting and creating jobs, supporting adjustment, and spurring investment. While the Treasury may be mulling tax rises in future, the immediate focus should be on minimising the burden on business for the here and now.

Encouraging firms to retain, (re)train and hire workers in the current climate as the furlough scheme winds down and restrictions continue is undoubtedly a challenge. Of the third of IoD members who still had staff on furlough in September, 60 per cent expected to be able to retain three quarters or more of their workers.

For some businesses, Sunak’s new top-up plans will be enough; but plenty of SMEs at the smaller end will find the price of keeping staff too much. Lowering the adapted Job Support Scheme’s employer contribution for non-worked hours could help in this regard, potentially being funded by removing the job retention bonus (less than one in five directors who had furloughed staff said the bonus would help them retain their employees).

Bold action to help as many firms possible not only hold onto but also create jobs is needed – and cutting the cost of employment is the right place to start. Reducing the burden of Employer NICs, either by boosting the Employment Allowance for smaller firms or lifting the threshold for payments, is one of the top three potential confidence-boosting measures among IoD members.

It is a two-for-one that would both support hiring and provide a one-off cash flow boost to business. Meanwhile, providing new tax incentives to help company investment in training – particularly lifelong learning – would also drive the adult re-skilling needed as firms move towards automation and new digital processes to drive productivity.

Facilitating adjustment will be critical to business confidence as the pandemic evolves – whether that’s returning to normal in a safe way, or exploring a new way of doing things.

Many of our members have said that the reason for their reduced office use was that working from home was proving more effective; expanding the scope of R&D tax credits could be an important tool to help more small firms maximise on the potential productivity gains. Tellingly, investment in digital infrastructure ranked as the top director priority for government to prioritise for spurring an economic recovery.

Lifelines such as government-backed loan schemes and tax deferrals are also crucial measures to extend in helping viable companies continue to weather the storm. Expanding local authorities’ discretionary grant finding will also help for a more appropriately targeted response to help temporarily impacted firms and sectors adjust to localised lockdowns.

And finally, it’s important that measures target the regulatory side too. While the Government has extended some emergency insolvency relief provisions, it needs to do the same for suspension of ‘wrongful trading’ liability to allow firms to seek and access finance during the pandemic.

With new figures out from the IoD showing that the business investment outlook stalled in September after a significant rebound over the summer, it’s vital for the Government to bring forward plans to give industry a boost. In addition to broad-based tax reliefs to harness digital and adaptation technologies, the annual investment allowance cap should be extended beyond 2020.

Additionally, to support growth, a business rates holiday could be introduced on the additional charges firms face when improving or expanding or moving into commercial property. Meanwhile, to turbocharge entrepreneurial growth at a time it is desperately needed, the Treasury should ease restrictions for investing in start-ups and scale-ups by making schemes such as EIS and SEIS more accessible.

Business leaders know that tax incentives at a time of already increased public expenditure to support jobs and enterprise will eventually need to be paid for, but taking action now to stimulate the economic recovery will help lessen and spread the overall burden.

Enabling firms to adjust to a changing landscape of restrictions will help protect jobs, while facilitating business investment will help create new ones. It is this interconnection of priorities the Chancellor must now address and ensure business taxation goes in a productive, efficient direction to support viability, before he can start to focus on balancing the books.

“This Government stood between the people and the danger and we always will.” Sunak’s Conference speech – full text.

5 Oct

Rishi Sunak MP, Chancellor of the Exchequer, speaking today at Conservative Party Virtual Conference

“Being appointed Chancellor in February this year was an immense honour.

Even though my first conference speech as Chancellor isn’t quite how I expected it to be, it remains a privilege to talk to you today.

And I am here today because of so many different people. My family, whose love sustains me. My colleagues in Government and in Parliament, whose backing has never wavered. My association in Richmond, North Yorkshire, who placed their trust in me, and gave me their loyalty, support and this opportunity to serve. And my party, whose members, councillors and activists worked tirelessly to deliver a Conservative government in December last year.

Politics is a team sport, and there is always a multitude of hardworking people behind any effort. So, I want to thank my ministerial team; Steve, Jessie, John, Kemi, Theo, Claire and James. I also want to thank my predecessors: George, Phillip and Sajid.

It is only because of ten years of sound Conservative management of our economy that this government has been able to act with the pace and scale we have in responding to Coronavirus. And I want to thank the Prime Minister, for entrusting me with this job and whose friendship has been invaluable.

I’ve seen up close the burden the Prime Minister carries. We all know he has an ability to connect with people in a way few politicians manage. It is a special and rare quality. But what the commentators don’t see, the thing I see, is the concern and care he feels, every day, for the wellbeing of the people of our country.

Yes, it’s been difficult, challenges are part of the job, but on the big calls, in the big moments, Boris Johnson has got it right and we need that leadership. Because we are only part way through this crisis.

What began in March as a health emergency has grown and now reaches deep into our economy and society. Not only does it endanger lives, but jobs and education. It separates friends and family.

This government has never been blind to the difficult trade-offs and decisions coronavirus has forced upon on us. If we had, we never would have deployed one of the most comprehensive and generous packages of support in the world. But more than the measures themselves, it is the values behind them that I want to impress upon you.

Conservatives believe in the importance of community and belonging. We believe in personal responsibility and pragmatism. We believe in the nobility of work and free enterprise. And we believe in the unbreakable bond of union that unites the four nations of our United Kingdom.

Our values are old and true and have withstood tests of strife, of terror, and even war. They are timeless because they are a wisdom earned over generations. And they are universal, because they are rooted in the fundamental belief that individual freedom enables both the greatest achievement and the gentlest kindness.

People looked at us last December and saw this Conservative party. They saw a party whose values and priorities were aligned with those of the British people. They saw a party prepared to act at a scale commensurate with the challenges our country faces and they were not wrong.

The SELF-EMPLOYED SUPPORT SCHEME

EAT OUT TO HELP OUT

Our PLAN FOR JOBS

The JOB SUPPORT SCHEME

A VAT cut for the tourism and hospitality sectors

The PAY AS YOU GROW SCHEME

A STAMP DUTY holiday

A £2 billion GREEN HOMES GRANT programme

The £2 billion KICKSTART SCHEME

Nearly 1million BUSINESS GRANTS

A 12-month BUSINESS RATES HOLIDAY

£35bn of BOUNCE BACK LOANS to over 1million small businesses

Over 60,000 CORONAVIRUS BUSINESS INTERRUPTION LOANS

The FUTURE FUND TAX DEFERRALS

Support for our brilliant CHARITIES

Over £8 billion of extra funding to SUPPORT OUR MOST VULNERABLE

A SIX-MONTH MORTGAGE HOLIDAY

And yes, THE FURLOUGH SCHEME, a first of it’s kind intervention in UK political history, delivered at scale, devised in rapid time, that protected millions of British families at the most acute stage of this crisis.

I could go on… all these measures and more… delivered by a Conservative government as part of our plan to support jobs and livelihoods. And whilst we would not have wished for this burden, it has been for many, for the first time in their lives, a moment in which government ceased to be distant and abstract, but became real, and felt, and something of which people could be proud. Action met words.

This Conservative government stood between the people and the danger and we always will.

But we haven’t done it alone. You, the people, have been with us. Wherever I look, I see acts of decency and bravery.

Barbara and Richard Wilson in Cumbria who furloughed the staff from their butchers’ shop but topped up their wages, so they didn’t have any extra worries about bills.

Kevin Butler, who used the self-employed support scheme to help meet the cost of living whilst his partner worked so he could home school their daughter.

John, Norma and Richard King who run the Bull’s Head Inn in Shropshire, who did the right thing when we asked, made their pub Covid compliant, and re-opened using Eat Out to Help Out in August.

Thank you to all those business owners, large and small, who are making the right decisions for workers and customers.

We are now seeing our economy go through changes as a result of coronavirus that can’t be ignored.

I have always said I couldn’t protect every job or every business. No chancellor could. And even though I have said it, the pain of knowing it, only grows with each passing day.

So, I am committing myself to a single priority – to create, support and extend opportunity to as many people as I can. Because even if this moment is more difficult than any you have ever faced, even if it feels like there is no hope, I am telling you that there is, and that the overwhelming might of the British state will be placed at your service.

We will not let talent wither, or waste, we will help all who want it, find new opportunity and develop new skills.

Through more apprenticeships, more training and a lifetime skills guarantee.

Our Kickstart Scheme will help hundreds of thousands of young people into good quality work. And we will help small businesses adapt.

That’s why we have delivered Government backed loans, tax deferrals and tax cuts.

In a free market economy it is the entrepreneur, who is critical. And we will make it easier for those with the ambition and appetite to take risks and be bold, to do what they do best and create jobs and growth. And we will protect the public finances. Over the medium term getting our borrowing and debt back under control.

We have a sacred responsibility to future generations to leave the public finances strong, and through careful management of our economy, this Conservative government will always balance the books.

If instead we argue there is no limit on what we can spend, that we can simply borrow our way out of any hole, what is the point in us?

I have never pretended there is some easy cost-free answer.

Hard choices are everywhere.

I won’t stop trying to find ways to support people and businesses. I will always be pragmatic.

The Winter Economy Plan announced only two weeks ago is but the latest stage of our planned economic response.

I will keep listening, keep striving to be creative in response to the challenges our economy faces, and where I can, I will act. I will not give up, no matter how difficult it is.

The British people and British businesses won’t give up. I know this because of what I said at the beginning.

We share the same values. The Conservative party and the country. And these values are not devoid of meaning to people.

They are about protecting that which is meaningful to them. Their family, their home, their job, their ability to choose for themselves what is best for them and those they love.

To create second chances, to see potential met, and to extend the awesome power of opportunity to all who seek it. To answer questions of character with action not rhetoric. To put the people first, their hopes and their aspirations.

And above all, to be worthy of the great trust they have placed in us.”

Andrew Carter: Devolving responsibilities to our town halls must also mean devolving money

22 Sep

Andrew Carter is Chief Executive of Centre for Cities, who have published a new report Levelling Up Local Government in England

Last year, the Conservative election manifesto pledged to deliver a system of full English devolution and, as I understand it, the Government is now finalising these plans in a white paper due to be published this autumn.

Reform of England’s complicated local government structures is long overdue. There are currently 349 district, county, unitary, and combined authorities in England, as well as the Greater London Authority, many with overlapping responsibilities and competing interests.

Nottingham, for example, has nine separate councils, all with responsibilities for local planning and economic development in their part of the city. The seven district councils have responsibility for new housing, but then the two county councils are charged with delivering the transport infrastructure that new homes need. This bureaucratic arrangement makes joined-up long-term strategic decision making about Nottingham’s future much more difficult than it needs to be.

Additionally, many smaller district councils have neither the capacity nor the political will to deliver the large-scale housing and infrastructure projects needed to level up their areas, and the financial challenges of maintaining this patchwork system are increasing every year.

But the problems in English local government are about more than just function and finance. There is also a democratic deficit, with little public awareness or understanding of councils’ roles. Back in 2012, just eight per cent of people could name their local council leader, and I doubt this figure has improved much since then.

And a system in which a council leader is also a local ward councillor directly answerable to only to a tiny electorate makes it difficult for them to balance their voters’ priorities with their duty to the wider area. This means that hyper-local issues can crowd out the long-term planning and investment that an area needs.

The current system is the product of decades of political compromise and piecemeal reform, but it’s having a damaging effect on the places that the Prime Minister has promised to level up, many of which have been hit harder economically by the Covid-19 pandemic than more affluent areas. We can’t keep tinkering around the edges – only wholescale reform will work now.

First, England’s existing 349 councils should be reduced down to 69 new, larger unitary and combined authorities that mirror as much as possible the economic areas in which people live and work. This would make joined-up strategic decision-making far easier.

When I make this argument, people often stress the importance of ensuring that historic or cultural boundaries are reflected in local government. I have two points to make on this: First, civic identity is not determined by local authority boundaries; it is possible to celebrate civic identity while having council boundaries that reflect the area over which people live and work.  And second, as our proposals show, it is possible to create a new system that aligns political and economic geography whilst respecting existing historic county boundaries.

Second, the leader-and-cabinet model for local government should be scrapped and the 69 new authorities should be headed by a directly-elected political figure. In cities and large towns they should be called a mayor, in rural areas they could have a more appropriate name. But whatever they are called they should be given the mandate, powers, and resources to improve the lives of people living and in working in them.

Responsibility for key areas of the levelling up agenda such as housing delivery, infrastructure, management of public transport, and adult education provision should all be moved out of Whitehall and put in the hands of the new leaders and their authorities.  The relevant government departments – Business, Transport, Education – could then be shrunk to reflect their smaller roles and the Ministry for Housing, Communities and Local Government could be transformed into an England Office similar to the Scotland, Wales, and Northern Ireland Offices and, like in the devolved nations, be given responsibility for managing England’s devolution deals.

This simpler system, with a directly elected political leader, will begin to address the lack of public engagement in local politics. Though less than one in ten people nationally can name their council leader, in the Tees Valley, 40 per cent of people know the directly elected Conservative mayor, Ben Houchan, and they can name a policy achievement of his.

But it would be disingenuous to restructure local government and give it extra powers and responsibilities, without also providing it with the funding it needs to make good on these extra responsibilities. Devolving control over how local business rates, council tax, and charges are raised and spent, and giving greater discretion to councils on how they manage their budgets would give them the freedom and incentives they need to drive forward improvements in their areas – and would be a welcome relief after a decade of local government austerity.

Opponents of what I’m proposing will tell you that, despite its flaws, the current system works; and perhaps on a purely functional day-to-day level it does. But we should be asking ourselves what we want from local government in the future, particularly in light of the Covid-19 crisis.  Should it just be emptying bins and collecting library fines? Or should it be applying its deep understanding of England’s cities, towns, and counties to deliver the levelling up agenda? I would argue it’s the latter, and I hope that ministers writing the devolution white paper, agree with me.

Gareth Lyon: In defence of district councils

3 Sep

Gareth Lyon is a former councillor in Rushmoor and the Chairman of the Aldershot and North Hants Conservative Association.

We are now approaching the inevitable and tragic culmination of efforts to undermine District Councils.

At this stage, to have the opportunity to extol the good that borough and district councils do, feels more like being given the opportunity to bury, rather than to praise them.

It is increasingly regarded as an open secret that the Government sees the future of local government as lying in massive county-wide unitary councils, possibly supplemented by a patchwork of parish councils.

This outcome will come as no surprise to those of us who have followed closely the treatment of district and borough councils over recent decades.

Whist there surely has not been a deliberate strategy to systematically undermine district councils and prevent them from functioning as effectively as they can, it is sometimes hard to discern how such a strategy would manifest itself differently from the effects of the cruel and negligent treatment of this tier of councils by successive Governments.

By way of context, the UK is already something of an outlier in Europe in terms of the average size of the lowest tier of local government, its funding and its powers. France, Spain and Germany in particular, entrust far more responsibility to bodies equal to, or smaller, in size than English district and borough councils.

Yet district and borough councils are a very prominent feature of local political life in the UK, and almost always the arrangement of responsibilities means that they are on a hiding to nothing.

Taking Council Tax as an example. Being a tax which must specifically be paid as opposed to being deducted automatically like PAYE or NI it is consistently amongst the most noticed and most hated taxes in the country.

It is well known that your local council will arrange collection of this (and other understandably unpopular taxes like business rates); what is less well understood is how little of this tax is actually collected for the district/borough itself to use.

Indeed, many districts and boroughs I know are obliged to hand over more than 90 per cent of what they collect to other less local and less accessible authorities, such as the county council, fire service, or Police and Crime Commissioner.

This may seem like a small point but it should not be underestimated how much responsibility people will ascribe to the authority whose headed notepaper they receive their tax demand on.

In many cases, district and borough councils have managed to freeze or reduce their Council Tax charge without this even being noticed by their electorate as it is more than cancelled out by substantial increases from other authorities.

This leaves districts and boroughs as the unloved collectors of money due to others while having no say in its spend.

The situation is, if anything, even wore on Business Rates. This absurd tax is divided between the various tiers of Government, with councils facing tax revenues being “clawed back” by central Government if they succeed in fostering local businesses, boosting economic activity, and ultimately receipts by too much… yet facing the full force of economic headwinds if substantial local businesses get into trouble, relocate, or downsize.

This awkward position, of being consistently in the frame for decisions which are made elsewhere and imposed locally – with districts and borough as the most accessible and identifiable local representation taking the blame is now established in almost every area of council activity.

In key competencies such as planning and development and licensing, councils room for manoeuvre has been strictly limited for some time – with central Government and an army of unaccountable and remote inspectors being able to overrule decisions at the drop of a hat.

Over recent years though this has extended into many new areas by the back door – local councils are responsible for attracting and fostering local businesses, except that all the decisions about key infrastructure to support businesses are made at a regional or national level.

Local councils usually have responsibility for parking, except that county councils have the ability to use the trump card of responsibility for highways to effectively dictate policy – along of course with the Government’s green agenda balancing the scales further against car users.

Councils have responsibility for recycling and numerous environmental matters – but the heavy hand of central Government is starting to fall here too – often with no appreciation for local factors or demographics.

With these and dozens of other wounds being administered to the body of district and borough councils it could be argued that the Government may be considering the right thing in handing everything over to vast unitary authorities – even if they may have been a party to the assassination.

Yet this is to ignore the fact that it is much easier for most people to get to know their local councillor and to raise issues with them. It is to ignore the fact that there are massive differences between Aldershot at one end of Hampshire and the New Forest on the other – and that local identities matter in politics.

Ultimately there is a risk that the Government ignores the wishes of local people to have the power to make more of the political decisions which affect their lives.

One could even argue that it is time for those driving such thinking to get out London and meet some people who are not centralising special advisors…