Labour’s Spectacular U Turn over Business rates

Yesterday at the LGA Conference Nick Clegg, the Deputy Prime Minister, made one of the most important announcements for local government that has been made in the last 20 years. He announced the return of the business rate to local government with an important qualification that no council would lose out when the changes from the current system are made.

This will mean that councils will collect and be responsible for some 40% of their budget on average rather than the 20% which is the current position. Nowhere near enough, in the minds of Lib Dems, but nevertheless an important step forward. He coupled this with further details of the TIF scheme and gave us a time table for the legislation for both which will mean the completion of the legislative process in the middle of next year in time for introduction for the tax year 2013/14. It will also mean that there will be a much closer relationship between councils and local businesses as used to be the case until Tories broke the link more than 2 decades ago.

The relocation of the business rates to councils has been LGA policy unanimously supported by all parties for as long as I can remember. Yet yesterday some, but not all, Labour councillors went straight into whinge mode to complain about the changes which they had been demanding for years. There are three possible explanations for this:

  1. That they did not know what their policy had been. (Always a possibility with Labour!)
  2. They couldn’t bring themselves to support anything that Nick Clegg announces. (Always a possibility with Labour!); or
  3. They don’t really want more power. (Always possible with Labour!)

Their concern is that their councils will lose out eventually under the proposals because they will be unable to stimulate their economies with not only this but all the other new powers that councils will have when the Localism and other Bills are passed. What a vote of no confidence in their own abilities. Nick always takes the precaution of asking a simple question when he is looking at things relating to local government. What would the effect be on Liverpool? If this system had been introduced 10 years ago Liverpool would have got more money in its coffers because of the growth engineered by the council than it did in uplifts in formula grant from the Labour government.

Liverpool and the Wirral, in particular, have great proposals for growth in partnership with Peel Holdings, to name but one developer. Yet the Leader of Wirral council was one of the first in whinge mode.

I then saw the national Labour press release from Caroline Flint. Unfortunately I saw it minutes after I left the table where I had eaten dinner with her. It was the same whinge. My question to her and to Ed Milliband is simple. In 1997 the Labour manifesto pledged to reform local council income. Yet nothing happened. Well I am exaggerating. It established the Lyons Review to look first at the structure of local government and then extended its life for more than 6 months at a cost of £500,000 to specifically look at local government finance. In the last 3 years of the Labour Government’s life it did not even respond to the Lyons Review never mind do anything about it.

The facts are dead simple. Labour councils would prefer to rely on a system of hand outs from Whitehall than take responsibility for their own fund raising. They know that as localism comes into practice including the financial reforms they will be less able to whinge about the government and be forced much more to account for their own actions.

Many of them will be cruelly exposed for what they are. Bumbling incompetents with little vision; little direction, few ideas about growing their economies and providing jobs.

That’s why they don’t like what Nick said yesterday. They’re frit!



About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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