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The Taxing Subject of Localism

The Taxing Subject of Localism

🕔01.Sep 2014

Chris Game, from the Institute of Local Government Studies at Birmingham University, tackles the taxing subject of localism following last week’s YouGov survey.

“Public mood swings behind localism” was the headline over Paul Dale’s report last week of a YouGov survey of people’s attitudes to decentralisation.

However, the more one read of Paul’s summary and particularly of the YouGov report itself –  – the more this mood swing seemed to resemble that of a pendulum. It swings one way, but immediately swings back the other. Indeed, in some instances it challenges the Newtonian laws of motion and swings back a greater distance.

Some of the survey findings did seem, at first glance, encouragingly localist. 46% of respondents wanted ministers to have less power over local services, including hospitals and policing, and local government to have more. 47% favoured the direct election of officials to run public services.

YouGov’s polling was conducted back in June, so let’s charitably assume that virtually all the West Midlanders among that 47% were away on holiday for the recent Police and Crime Commissioner by-election.

Even the 46%, though, hardly represents unbridled localist passion. Put another way, more than half DON’T feel that local government should have more power over even LOCAL services – a sentiment that is both directly and indirectly confirmed elsewhere in the survey.

Asked whether they thought local councillors and officials would be up to the job, if they were to have greater power over local services, only 24% of respondents were confident that they would be, while 36% weren’t.

At the very least, we seem ambivalent about the role we want central government and ministers to play in public service provision even at a local level.

58% of respondents agreed that, whatever ministers say about the independence of organisations they set up, in reality they will interfere with the day to day activities of these organisations.

YouGov probably intended that statement to seem a criticism of ministers, but the other part of reality is that we want them to interfere. 65% of those same respondents also agreed that, “when a public service goes wrong” – even locally provided services in our local area, like health and care services, schools, the police – “it is ultimately elected ministers’ responsibility”.

Whenever the media profess to be shocked that local government services aren’t completely uniform in every part of the country, and denounce the variation not as the natural outcome of decisions of democratically elected and accountable local councils, but as “a postcode lottery”, we lap it up and agree that it is indeed shocking.

YouGov asked their respondents directly whether they thought a range of services “should be the same across the whole country or whether the different parts of the UK should be able to decide for themselves?”

In every case large majorities thought they should be the same, regardless of any and all local considerations: punishment of young offenders (85%), payment for care of vulnerable old people (74%), public transport (62%).

Over two-thirds (68%) thought even the service most widely associated with local government – refuse bin collection and recycling – should be identical in Birmingham, Barnsley, Bromley and Babergh.

Of course, ministers – those in the present government like Communities Secretary Eric Pickles, and those in any future governments, of whatever party – and their civil servants, know these public views. They know too that they can use them as justifications for not devolving any more powers or financial discretions than they absolutely have to.

Which is why, whatever localist assertions and assurances appear in all the parties’ manifestos next May, those with the smart money would warn: don’t hold your breath.

We’ve had one minor but illuminating illustration over the past few weeks of just how extreme and entrenched central government’s hold over local government is in this country, prompted by the possibility of a so-called Tesco tax.

Derby City Council, backed by numerous others, recently proposed that local authorities be given the power to introduce a levy of 8.5% of rateable value on large retail outlets – instantly labelled by the media a supermarket or Tesco tax – and to use the proceeds to promote local economic activities and services, as the relevant legislation would require.

Derby’s proposal was submitted under the 2007 Sustainable Communities Act, which gives councils the opportunity to ask central government to remove legislative barriers currently preventing them optimising the economic, social and environmental wellbeing of their area.

It was one of the few unambiguously localist Acts produced under the Blair/Brown Governments, and the 200 proposals initially submitted were inherited in 2010 by the Coalition. The nearly two-thirds judged broadly consistent with Coalition policy were grouped into Action Areas and implemented wholly or in part, and the remainder rejected.

This latter group, importantly for the eventual fate of Derby’s supermarket levy, included all tax-related proposals, from chewing gum to plastic bags, on the grounds that tax decisions are the Chancellor’s responsibility and therefore made as part of the overall annual budget process.

Most of Birmingham’s proposals, however, were deemed less threatening, and have contributed, for example, to the introduction of Accelerated Development Zones to fund new infrastructure investment, extended financial incentives to promote renewable energy generation, the revision of legislation to enable councils to provide more allotments and community gardens, and the discretionary power to regulate vehicles parking on and damaging grass verges.

Which all sounds, for maybe three seconds, very chummy and localist – until you wonder why on earth one of the largest local authorities in Europe should be grovelling to ministers to allow it to spend our money on providing allotments and protecting grass verges.

And so, back to the Tesco tax, which, however much it’s described as a rateable value-based levy, is to ministers going to look, swim and quack like a tax – and a tax they’ll undoubtedly claim will threaten investment, push up food prices, and hit the ‘hard-working families’ on low incomes that they’re electorally anxious to be seen protecting.

Personally, I’m really not sure, either about the desirability of the Derby levy or its likely effectiveness. Business opinion is overwhelmingly hostile, but several big councils are also opposed – Manchester and Kirklees, for example, arguing that supermarkets can provide much needed regeneration, and should be encouraged not attacked.

Scotland’s similar Health Levy on ‘big shops selling alcohol and tobacco’ (otherwise known as supermarkets), has become so bitterly unpopular that its axing next year has already been announced.

Scotland, though, has something else, something much more fundamental, to contribute on this topic – namely, the final report of its Commission on Strengthening Local Democracy, set up to consider “how we do democracy here in Scotland”, whatever the outcome of the independence referendum.

It defined its task as turning around 50 years of centralisation, and its many radical recommendations include tripling Scotland’s current 32 councils to around 100 of a more genuinely local, Scandinavian-style, size, with the freedom to raise more than 50% (instead of just 18%) of their income locally.

To do so, they would have full local control of the whole range of local taxes – council tax, business rates, land and property transaction tax, and, if there were one, a supermarket levy.

And that, I suggest, is what English local authorities, like many of their much smaller European counterparts, should have: full control over a range of local taxes, and therefore the choice to tax, or NOT to tax, their own local supermarkets, without having to kowtow for, and be refused, ministerial permission.

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