Agent151: The ‘cathedral of complexity’ at the heart of devolution
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The best systems impress with their simplicity. I am sorry to say that there is no likelihood that this will be the case with devolved business rates.
The opportunity has already been irrevocably complicated by short-sighted policymaking on the part of the government and is being convoluted further by the conflicting demands of the local government community. These factors together have created the perfect environment in which the civil service’s predilection for the byzantine can be indulged to the full. We can expect a veritable cathedral of complexity.
The consultation process has already elicited cries of annoyance and frustration from local authority treasurers in all parts of the country. The list that follows is by no means a complete summation of the things that have set the veins ticking in our colleagues’ temples, but it should give you the general idea.
The existing devolution deals, announced with much trumpeting as the ground-breaking empowerment of disenfranchised and flagging corners of the country, are now being seen in their true colours: they are anomalous and hurried compromises. Quite how these can be brought in line with a new system in a way that is perceived as fair, without unpicking the substance of the local devolution agreement, is anyone’s guess.
There is very little in the way of information from the government, and the consequence of this is that everyone is making it up as they go along. Some meaningful modelling of the numbers, taking into consideration the existing devolution deals, would have focussed the conversation in a very helpful way. The pilots planned for London, Merseyside, Greater Manchester, West Midlands, and the Sheffield city region would be a very useful source of information, but regrettably do not start until April 2017.
No-one in local government has the capacity to devote enough time and expertise to the exercise. The government seems to have overlooked the fact that we are all still busy trying to balance budgets in a world in which resources continue to be cut, social care demand continues to grow, and our greatest hope is that we may get a few scraps from the Health Service fine dining table. There are many important points of business rates devolution detail that no-one has had time to address yet, and the clock is ticking.
There is a conflict of interests, real or imagined, between colleagues in different parts of the country concerning the distribution of resources. The best illustration of this is the controversy concerning the city-state line that London has taken, demanding to keep all of its business rates income and to take the power to control the multiplier, revaluation, and reliefs locally; albeit with additional responsibilities matched to the additional funding. Of course, the question of who should enjoy the benefits of London’s growth is the key point of disagreement
The debate about what new responsibilities local government as a whole should take on with the additional business rates to be devolved has also had its difficulties. Local authorities are working hard not to be cynical about whether new responsibilities will be fully funded, having been bitten so many times in the past that the scars are scars on scars. New responsibilities should offer some opportunity to advance the local authority agenda, which is why DWP’s offering of attendance allowance has been universally rejected. The LGA’s view that existing unfunded pressures, such as adult social care growth, should come first is spot on, but it won’t be well received in Whitehall.
Finally, the thorny question of what the redistribution mechanism should look like lies at the heart of the debate. Should we seize the opportunity to simplify this labyrinthine muddle? If we do, will we be sacrificing fairness, or at least a semblance of fairness?
We are doomed to enjoy the fruits of our collective labours in relation to business rates devolution for many years to come. Getting this right is a prize that is really worth having. If we fail to collaborate effectively, we will live with the consequences. Of course, a very likely consequence of getting it wrong will be ongoing tweaking of the system, creating even more layers of complexity. Which is where we came in. Welcome to the cathedral.
Agent151 is a senior local authority finance director and s151 officer.
