Can someone please explain to me why my council tax, paid for the provision of local services, should contribute to the local services provided by a different council?

Most people don’t know that this happens at the moment and would be incandescant if they did know…

Stuart

It’s not.

Business rates are different from Council Tax. The only exception is in two tier areas (e.g County and District areas) where the Districts collect the Council tax for the County (and for the Fire and Police Authorities) but the County decided how to spend it County wide. But you still live in that County even if some of your money may subsidise another District in the County (or the other way round).

Can’t remember the exact details but the national collection of business rates and redistribution by formula was set in place under Thatcher.

It’s difficult to see how this can be anything other than a huge social engineering project, if implemented. While local service provision is not the only factor in people’s decisions on where to live, it is a significant enough one, and a collapse in service infrastructure e.g. education in places now subsidised from business rates (and that’s most councils) would surely lead to migration.

It seems to suggest that the much-maligned, by Cameron at the time, Cities Unlimited report from a couple of years ago, in which it was essentially suggested that many northern cities should be left to rot, may not be too far from current Tory thinking. There will of course be adaptations along the way, but even so……

That’s not to say I’m all against variable (and supplementary where appropriate) business rates, but the whole driver to this seems to be different. I’ll be looking at details carefully as they emerge, though I suspect that won’t be for a while; they’ll do the rhetoric of freedom and choice for a while before getting down to the data, as they’ve done with social housing tenure changes and now stuff around the ‘unfairness’ of Wokingham getting less per head in formula grant for local government than Manchester.

It possibly will.
On the other hand there probably are some towns in the UK which (less dramatically than eg Detroit) are now in irreversible decline.

http://www.steidlville.com/books/1050-The-Ruins-of-Detroit.html

Are they to be preserved in aspic at ever increasing expense?

Can someone please explain to me why my income tax, which I pay for the provision of services to myself and my family, should contribute to the services to other people? I mean, its ridiculous: some of them don’t even live in England, let alone the Home Counties.

Most people don’t know that this happens at the moment and would be incandescant if they did know…

@ 5

It gets worse, Disgusted. Sometimes my copy of Metro contains news about people who don’t even live on my street! Why the hell do they think I care about that?

“This would have the perverse outcome of allowing the City of London, with its huge number of large companies and virtually no social provision, to set a business rate close to zero.”

Gosh, that would be interesting.

For The City already (uniquely) has the right to vary the business rate. Which they do, with a surcharge.

Which is what they use to help pay for Hampstead Heath, Epping Forest and Hackney Woods (among myriad other things).

@ 7.

Tim,
It’s nice that the City pay to sweep up the leaves in autumn. But that is out of a revenue of several trillion pounds per years.
Somewhat inconsequential for them to be so chariatable with Hampstead and Epping Forest, don’t you think?

@1.
Stuart,
Most of your local services are paid through central government anyway. Council tax is massively less than expenditure. They have kept it low since the Poll Tax riots.

cjcjc

I do acknowedge that ultimately there may be points where it’s simply not cost-effective to bother any more, but I think 21st century technologies and infrastructure make 21st century St Kilda few and far between, other than by this kind of political choice.

Just as one example, as a young whippersnapper back from oveseas in the early 2000s, one of my first jobs was the economic impact assessment of the ten proposed Ebbw Valley railway, from Ebbw Vale down through all the old mining villages through to Newport and Cardiff. See http://en.wikipedia.org/wiki/Ebbw_Valley_Railway

It opened in 2008.

Some of my projections for future passenger use were met with hard stares back then, but use is now double my projections. This is used, and economuc activity from villages deep in the valley which some people said had simply had their day, and i do remember my first visit to Llanhilleth well; it was like stepping back into the 1930s as I walked down to the Miners Welfare Club for a meeting. But decent regeneration planning has made the line successful, and these places that the Policy Exchange report referred to were unsustainable have some hope now. I’m not claiming it perfect, and i’ve not been for a bit, but see http://www.bitc.org.uk/resources/case_studies/linccymru.html for example.

In general, the economic geography of this country makes this kind of stuff manageable, which is perhaps different from the States (and indeed France)

“It’s nice that the City pay to sweep up the leaves in autumn. But that is out of a revenue of several trillion pounds per years.”

Eh?

The City Corporation’s revenue (ie, the local council) is a couple of hundred million a year.

Even “The City’s” revenue is nowhere near a trillion, not even close. The entire revenue (GDP) of the whole country is only £1.4 trillion.

I think you’re confusing “turnover” with revenue, margin and profit.

10. Tim,
It’s still just sweeping up the leaves.

Vince Cable and the Lie Dems must be out of their minds to support this. Just another example of the rich elites abolishing more and more redistribution policies. The smell of office in their nostrils has driven sane lib Dems stark raving, bat shit insane. Lib Dems councils in the poor areas of the north must be so pleased with this idiocy.

Lord Tebbit was telling the good people of Wales to get on their bikes and head for the sunny south east if they want work. I do hope Tory councils and voters in the south east are looking forward to millions of people descending on them from the poorer regions with their Dick Wittington hats on.

Very interesting example. Thanks.

Blimey Sally.
What do you think has been happening in the SE in the last 10 years from all over the world?

@7 Tim Worstall: “For The City already (uniquely) has the right to vary the business rate. Which they do, with a surcharge.”

It’s not the only example of tax raising difference in the UK. The Shetland Islands council negotiated very hard when the Sullom Voe terminal facility was proposed and thus have a healthy income, effectively a tax on North Sea oil.

Such a good post I’ll repeat it with the html fixed. Editor back please Sunny.

“Free” is the pre-cursor for schools (and now councils) to be released from all obligations to the wider community.

No. I think they mean “free” from the straight jacket applied to them by central government. The point is they should be directly accountable to the community. You know. The people that use them.

“Localism” is a word that sounds like socialism

And freedom is a word that sounds like serfdom.

But they mean different things…………

OP, Dan McCurry: “However this takes no account of the natural tendency for cities to develop separate business and residential areas, with workers commuting between the two.”

I really don’t like that sentence.

Cities do not have tendencies; their development is determined by workers choosing where to live and by businesses to set up shop, according to the varying whims of town planners.

In the early days of public transport and earlier, workers lived close to where they worked. Towns and cities were a mix of habitation, manufacture and trade.

Commuting is a 20th century phenomenon, initially associated with railways and ribbon development, then with cars and wider roads. In the early days, it meant that well paid workers (including blue collar) could move out of industrial centres to homes with gardens and travel to work in relative convenience. Acceptance of a long journey in an overcrowded train or queueing in traffic to go to work is a fairly modern concept.

Today, I can’t imagine how town planners think or even manage to do their jobs. New Labour proposed a bunch of “eco towns”, on the fringe of a big town or city. And they turned out to be ill-considered bollocks. Green belts are good in theory but they stifle modest developments that will not be obtrusive. Residential development in towns and cities is encouraged on brown field ground; what are the consequences for industrial developers who wish to build something in town?

—

“Free councils to keep bulk of cash raised through business rates”. OP interpreted Free as an adjective, not a verb. The article describes “a quick six-month inquiry into the future of local council funding”, not a White Paper, not a Bill.

The difficulty for all localists is that the majority of council funds come from a block grant. It is impossible for a council to act locally when only 20% (or less) of its income is generated locally.

Adjusting the revenue from business rates may allow some councils to act more locally. But genuine localism requires that we shred all existing tax laws; councils have to be able to raise funds independently which means tax; less central tax and more local tax. Vince Cable is not an idiot and localists should discuss his proposal in that spirit.

True localism would involve federalising to at least county level. It’s an interesting idea and I think it has a lot to recommend it, working out the details is going to be very difficult though.

OP, Dan McCurry: “If financial responsibility for the vulnerable were borne only by the residential area, without a contribution from the business area, then the residential area would have to massively increase tax, or refuse to support the vulnerable.”

We cannot presume anything. A bigger business district may mean more money in some places. Temporarily or long term.

We cannot guess how block grants might be adjusted *if* councils were permitted to adjust business rates. As per previous comments, on this thread and elsewhere, I despise block grants. But block grants ostensibly appear inevitable.

And we have to kick all of tax apart, to sensibly reconstruct local government in the UK if we wish to go anywhere. Tweaking this and that only exhibits our stupidity. I am guestimating, but 15% expenditure of government expenditure is on “central government”; 85% is spent by “others”. I want to know who the “others” are. And I am not associated with the Tax Payers’ Alliance.

Citizens who vote in a local election should be allowed to make a choice about spending money that is raised locally. Give them a choice between parties that spend their tax.

I really hate this sort of argument. Yes, devolving power will lead to inequalities between councils – no question. It’s the job of national government to facilitate income transfers to counteract that.

But giving local councils control of local taxes seems to me to be a requirement of a democracy. Equality doesn’t require the centralisation of taxes and spending just redistribution. Otherwise – why stop at national governments? Why not have one world state?

It looks like a simplistic solution for a complex problem. Cable doesn’t impress me particularly after making his ridiculous gaff to those journos. It could be he’s just trying to make good with Cameron.

@Charlierman

Some think that we’ve been commuting for 90 minutes since we started hunting and gathering.

@everybody else
Appreciate the humour, and yes I do live in the Home Counties South, but I didn’t say that I disapproved of income redistribution. I didn’t say that Income and other Crown taxes shouldn’t be spend on nationally shared services.

But please tell me what is the point of electing local Government without an element of devolution? No taxation without representation yada yada

@17. Charlie,

Transport links have contributed of course.
But cities do have a tendancy to act as I’ve said.
Economists call it the “Outward Economy of Scale”, the manner in which companies tend to cluster together.
This happens with the banks in the City and Canary Wharf, the media industry in Soho, the internet industry in Shoreditch. It means that companies service each other and skilled employees are eaier to find .
For different reasons it also happens with retail shops. People want to go to one place to do their shopping.
Town planners often try to fight this development. They want companies to base themselves in residential areas to improve the local economy and for environmental reasons; less transport.

Free councills , or anything free , is the point of liberal ideas surely , why have liberal in the title of the website , very stange , I have studied Mieses & Hayek , they were very very liberal , but all ideas here are completely different , am i missing something , or am i on the wrong site ? Thanks James

“am i missing something”

Read some more political philosophy, specifically contributions to the notion of ‘positive freedom’ and you’ll be more in tune with the history of liberalism, and its classic divide between positive and negative freedom.

24. james mackinshaw

” I have studied Mieses… am i missing something ”

Spelling lessons?