The deputy prime minister, Nick Clegg, promised that poor local councils will not lose out when the government presses ahead with radical proposals this autumn allowing councils to keep the proceeds of the business rate for the first time since 1988.
The changes are designed to free local councils from tight Whitehall spending controls and create incentives for council leaders to build their local economy. They will come into force in three years, before the general election, giving Clegg the chance to claim he delivered on a localism agenda that Labour failed to act on.
Speaking to the local government association in Birmingham, Clegg confirmed that the business rate will be localised, and said councils should be allowed to borrow against the income for capital spending.
He said: “No authority will receive less funding than they would have done previously. The new system will start on a level playing field – where you progress from there is up to you.”
Officials said councils would be expected to use the current redistribution of business rates between councils as a base. But if a council generates more business rate income in the future above that base, they will be able to retain the proceeds.
At present, all the proceeds from a council’s business rate are sent to Whitehall, which then redistributes the funds to local councils so that those with lower business rates income do not suffer unduly.
Westminster, for example, alone generates 6% of the entire business rate income raised in England. If it was not required to redistribute its business rate income, it would not need to raise any council tax from its residents.
More radical plans supported by the Liberal Democrats to allow councils to vary the level of the business rate have been rejected for now, but Clegg is still keen on the proposal.
Clegg said that the centralisation of business rates in 1988 was “a mistake”. Relocalising them would provide a “massive new initiative” for local authorities to boost economic growth, he added.
Clegg said that the move would “reverse decades of centralisation to make our communities masters of their own economic destinies”.
In practice it means local councils that are currently responsible for raising about 50% of their own revenue will see that rising to 80%.
A bill will be introduced in the late autumn, following a consultation paper due to be published shortly.
Clegg also said that the retention of business rates would lead to the introduction of tax increment financing for capital projects, allowing councils to borrow against future business rate income to pay for capital projects. Clegg announced this proposal at the Lib Dem party conference last September.
Clegg said the government has not abandoned the idea of Total Place or community budgets, that public service resources from different departments should be pooled locally to remove duplication.
He said two local authority areas and two neighbourhoods will be chosen to pilot “real” pooling of funding across their areas.
The department of communities and local government said” “Two areas will be selected to help co-design neighbourhood level community budgets, giving residents the opportunity to say what services they want, how they should work and whether they want to run them”.
In addition, “two areas will be selected to help co-design a community budget bringing all funding on local public services from the area into a single pot to test how to create the right local financial set up to deliver better services that people want”.
In practice it is unlikely that the DWP and education department will be involved in these projects limiting their impact.
Sir Merrick Cockell, the new LGA chairman, said: “It is encouraging that the deputy prime minister has acknowledged that the current system of local government funding is in need of reform.
The New Local Government Network thinktank said that move would provide local government with “more independence and a financial shot in the arm”.
This post taken from the live News Blog may go some way to providing an answer – a heartfelt posting from a commenter whom I hope won’t mind me repeating here but is one well worth reading……
29 June 2011 7:34PM
Hallo from Greece.
Please forgive my really poor English,but you must read this one.
I know that a lot of you,believe,that all of our debt,is real,and Greek people spend all of these money for a luxury life.
Please you must understand that people who complain, are not the rich Greeks, but the poor, who will become poorer, even though, they’re always correct with their obligations!
NO WE DO NOT WANT to TAKE YOUR MONEY!
YOUR money,are not taken by the Greek people!
All these 110 billions,and maybe more this September,will be given to lenders,German and franch banks and others,and not a single eyro for the people!
Well a few things to understand the situation.
Since 1985 Greek Goverment get lawns to pay interests!
80 % went to interests!Now that’s over 100%!!!!
My country has paid 618 millions euros for interest from 1985-2011!!
we still owe 350!!Do you think is that normal?
Most money from the capital we borrowed, went to arms purchases, from Germany, France,
Also a lot of investment for major projects, was given to European Union countries
So the capital we borrowed,return to our lenders.
THE HISTORY OF GREEK debt, is very old, and starts in 1821 when Greece, took a loan from your country, also France, to start the revolution, against the Ottoman Empire!
The terms of loans was very hard.for 1000000 million pounds, Greece take about 600000!
But ofcource we do not forget the contribution of your country, and also France and Russia with a powerful navy, which broke up the Turkish fleet in 1826, and helped to release us.
But after liberation from the Turks, the country devastated, I could not pay interest, and in 1843, we had the first bankruptcy!
Also the same happened in 1898 and 1932.
Greece, gave everything that was valuable, the people go hungry, to repay the debt, but nevertheless the debt was not reduced, because of interest!
Our country has always been on the side of Britain and the First World War, and the mission against the communists of Lenin in 1918, and the Second World War,and the struggle against the Communists 1946-49, but despite the total destruction of my country, with at least 350000 dead from starvation, and warfare against the Germans, who had stolen the gold in Greece, with a fake contract because of mandatory military victory against Greece.
But unfortunately, Germany did not pay the debt of the theft of gold, and war compensation, estimated at 550 billion euros now!
But your country, like other lenders, France, Belgium, Asked the plenary before the war loan,all interest, and additional 70%, for reasons of mental pain, because the damaged Greece, was slow to pay!Τhat was in 1964!
So, my country, after the military dictatorship of 1967-1974, had to borrow to pay interest!
The second problem is that Greek politicians, never inform the Greek people, what happens, leaving us to believe that all this progress,was based on success of good policy development, and capitalism!
Many Greeks lived beyond a reasonable limit, whithout pay any taxes, but most, especially the poorest pay taxes,without living in luxury!
But now, the new government, having promised the people that “there are MONEY”,and they will be given to the poor people,Suddenly he began to speak of a crisis, bankruptcy,etc. and while they promise the contrary,finally requested financial assistance from the ΙΜF,and European community!
But the conditions were unbearable for the poor Greeks, and nothing to hurt the wealthy, who never pay taxes.
Even today, they are not disturbed, no bill, despite the crisis!
All products become dearer, all services, water, electricity became more expensive, no salary increase for the last 2 years, and still more taxes
Ιmagine,that I personally paid with 1350 euros per month, of these only the 1050, go into my pocket, the 300 is for taxes and social security!
Now they increase taxes, allowing employers to cut wages.
Generally, I will lose 2 montly payments from all this, and I have to deal with increases in petrol, food, basic services, to pay the rent
In Greece the rent of a house 50 square meters is 350 euros, a 1.6 liter petrol COST euro, a pound of bread 1.2, 1.3 a liter of milk, and good over 2!
That’s why we protest!
NO WE DO NOT WANT TAKE YOUR MONEY!
YOUR money,are not taken by the Greek people!
All these 110 billions,and maybe more this September,will be given to lenders,German and franch banks,and not a single eyro for the people!
Steve Bell on the riots in Athens after the austerity bill was passed by a narrow margin in the Greek parliament
“The government should state this ambition and energy companies should be on the hook to deliver these emissions reductions,” said David Kennedy, the CCC’s chief executive. The coalition’s government’s “green deal” proposals to overhaul ageing and leaky homes and reduce consumer energy bills could be a major part of the UK’s action against global warming, says Kennedy, but must have firm targets to be effective. The committee’s recommendations are often accepted by ministers.
In the UK, 10m (43%) of all lofts remain unlagged and 8m houses with cavity walls (42%) have yet to be insulated.
Kennedy made his call as the CCC launched its legally requiredannual report on progress in cutting greenhouse gases. It found that people were buying less-polluting cars, but the required improvements in environmentally friendly driving had not materialised. Furthermore, delays in building the first carbon capture and storage demonstration plants and boosting use of public transport were damaging efforts to meet the UK’s legally binding carbon targets, the toughest in the world.
Christine McGourty, director of Energy UK, which represents the gas and electricity industry, said: “Energy companies have already made a substantial contribution to improving people’s leaky homes. In the past few years, companies have insulated more than 1.5m cavity walls and more than 2m lofts, helping consumers save up to £260 a year on their bills.”
According to the CCC report, the number of professional installations of loft and cavity wall insulation fell by 30% between 2009 and 2010. Kennedy blamed this on a “perverse incentive” in the existing scheme for energy companies to help their customers stop heat leaking from their homes, which meant activity stopped when a certain number had been treated. Electricity and gas providers are currently under fire from regulators and consumer groups, who criticise the scores of confusing price tariffs and recent large price rises.
Kennedy acknowledged the risk in asking the companies that sell energy to enable their customers to use less. But he said that risk could be overcome if the scheme was carefully designed. “It is very important that someone is on the hook,” he said. “The experience over four decades is that the free market does not deliver home energy-efficiency measures.”
Friends of the Earth campaigner Dave Timms agreed the government’s policies “don’t go far enough or fast enough” to meet carbon targets, adding: “For too long energy firms have made huge profits selling ever-increasing amounts of energy while some people freeze in poorly insulated homes. Forcing energy companies to carry out all the necessary energy efficiency improvements is an attractive idea.”
A CCC spokesperson added: “Safeguards are needed to ensure energy companies do not pass through excessive costs. Also, compensatory measures may be needed for fuel-poor households.”
The CCC report analyses the changes in the UK’s carbon emissions and found that, when the effects of the recent cold winter and the recession were accounted for, the trend was flat. “We are below the level of the 2008-12 budget because of the very big emissions reduction in 2009 due to the recession, not because we had begun to do things fundamentally differently, and we should not be deceived by that,” said Kennedy. A return to business as usual in the economy would mean the UK would exceed its future carbon targets, because they required a 3% cut every year.
Changes to car emissions were rated as “good” in the CCC report, with the average pollution by new vehicles down from 160g of CO2/km in 2008 to 144g in 2010. But counteracting that was a slight rise in speeding and the prospect of the speed limit being raised to 80mph, which the CCC said would result in 3.5m extra tonnes of CO2 being emitted each year.
The European Union‘s executive has proposed a new tax on bank transactions as the centrepiece of the EU’s first €1trn budget, triggering a row with Downing Street, which dismissed the proposal as “completely unrealistic”.
Unveiling his blueprint for the budget for the seven years from 2014, José Manuel Barroso, president of the European Commission, demanded a bigger share of its spending supplied from “own resources” – taxes paid to Brussels supplanting contributions from EU member states.
He attacked the “prejudices and Pavlovian reactions” of EU governments, led by Britain, who have been quick to denounce his proposals as a non-starter.
“We are proposing an ambitious and, at the same time, responsible budget,” said Barroso. “It is a realistic proposal.” The proposed budget for 2014-2020 amounts to €971.5bn (£872bn) in payments and €1,025bn in commitments. “It’s a trillion euro budget,” said a Brussels official.
Backed by Germany, France, the Netherlands and Finland, David Cameron has called for a budget freeze at 2013 levels, rising only in line with inflation.
According to British Treasury estimates, the Barroso blueprint would add €100bn to EU spending over the seven-year period. “The budget increase proposed is unrealistic,” said a Downing Street spokesman. “Britain and the EU’s other largest payers made clear that the budget should be frozen, and we will stick to that. The EU has to take the same tough measures as national governments are taking across Europe to tackle public deficits.”
Barroso rejected the criticism as neither serious nor credible, while conceding that he did not expect national governments to rush to his side.
In a swipe at Downing Street, he said: “Some are saying no before they’ve studied the proposal which was only finalised a few hours ago … That doesn’t fit with seriousness and credibility.”
Last night’s blueprint was the opening gambit in what will be a gruelling 18 months of haggling between national governments, the commission and the European parliament.
Cameron has opted to make the budget the key battleground for his EU policy, heading a group of wealthier countries determined to cut spending and to take an axe to the perks, pensions, and employment practices of the eurocrats.
Under UK demands, the EU budget for the years ahead would amount to about 0.92% of aggregated EU gross national income. Last night’s commission proposal was for between 1% and 1.11% of GNI, depending on how the figures are interpreted.
The announcement came after lengthy negotiations within the executive. The EU’s foreign policy chief, Lady Ashton, who also sits as Britain’s commissioner, was said to have used an 11-hour session this week to win early agreement on the sanctity of Britain’s perennially contested rebate, currently worth £3bn a year. The commission said that it wanted to simplify the rebate system through a new practice of annual lump-sum reductions.
Ashton also argued that a EU tax on financial transactions, which is strongly opposed by the British government, would not work unless also levied internationally.
The government fears that a financial transactions tax – a Tobin or “Robin Hood” tax – would disproportionately penalise the City of London, with traders and banks probably just moving to New York or the far east. “We would lose jobs and revenue,” said an official.
But Germany and France support such a move which also enjoys popular backing. A recent Eurobarometer opinion poll showed 61% support for a tax on financial transactions across the EU, including two-thirds of Britons. David Hillman, of the Robin Hood Tax campaign, said: “The British government should wake up and smell the coffee. Other governments are moving ahead with a bank tax, while we are letting our financial sector off the hook.”