Agent151: Settlement largesse
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You may think I am naïve in believing that the local tax level ought to be something local government is held to account for at the ballot box. This is what happens in other countries, and it is one of the things that makes local democracy matter. Of course, it is not what happens in the UK.
No, in the UK there are very tight central government controls on local taxation. For council tax, there is the clever mechanism of making councils have a referendum if they wish to put up the tax by more than an arbitrary central government limit.
Councils elected for a four-year term in a fair democratic process have to go back to the ballot box it they want to put up local taxes. It’s madness. It really is, you know.
For business rates, the rate is set nationally and there is little local discretion to make local adjustments.
No one has protested about any of this because they were long ago de-sensitised by the introduction of capping, which came about when the balance of power between central and local government was threatened by radical local politics.
Since then, no-one has believed that their vote in local elections counted for much anyway, and the steady centralisation of control over education, social care and housing has only served to reinforce this view.
Now we find ourselves in the extraordinary situation in which central government is allowing (yes, allowing) local authorities to put up the council tax by an extra 2% without a local referendum to deal with social care pressures.
Your spending power has gone up, it trumpets, as if it should be thanked for its largesse. By the way, it adds, don’t moan about those social care cost pressures any more because we’ve given you the answer.
To make matters worse, it is now including the assumption that councils will put up their tax in its grant calculations, whether they do or not.
Methodology bloodbath
There is an interesting twist to this. For the first time, the extent to which local authorities are able to raise tax locally is included in the calculation of grant. This new methodology has resulted in the usual bloodbath of winners and losers, but to everyone’s surprise, including David Cameron’s, a large proportion of councils worse off as a result of the new jiggery-pokery turned out to be Conservative-run councils out in the shires.
I am sure you were as unsurprised as I was when the final settlement, published on 8th February, contained some changes as a consequence.
The new methodology that caused all the rumpus did not change. You may wish to speculate, however, about whether its author was taken down to the Downing Street cellars and treated to a dose of perspective.
Instead, there was more central government largesse in the form of transitional grant of £150 million in both 16/17 and 17/18 for the councils most adversely affected by the change in revenue support grant. The threat of ‘negative grant’ – i.e. a downward adjustment to business rate tariff/top-up – was removed by further largesse of £2.3m in 17/18 and £22.8m in 18/19.
A further way of dulling the pain for the Conservative authorities that were threatening rebellion was found by adding an extra £60.5m to the Rural Services Delivery Grant in 16/17 and £30m in 17/18.
The total largesse announced amounts to £415.6m over the four-year period. That will be enough to get the government over the finishing line, which is when 100% business rates retention comes in.
However, don’t think for a moment that the devolution of business rates represents a handing over of power. We have already been told that councils won’t have the power to put the business rates up. That would be more largesse than this government would find comfortable.
