Monday, 28 December 2015

Just the Business!

I have been thinking about the shift away from central government funding for councils – which is a good change as it will remove the historic tendency of certain-flavour governments in particular to manipulate the funding formula (along with 'tweaks' and suchlike) to favour those councils their party runs – and how it will affect us here in Medway, Kent.

The change to retention by councils of Business Rates in their entirety, instead of a large chunk of those funds going to central government for re-distribution, as has been the case for decades, makes local government much more truly 'local' and less susceptible to (largely-hidden from public view) control from Westminster and Whitehall.

It will, however, necessitate sufficient business rates income to make up the difference, and perhaps could even exceed the original overall council income including Council Tax revenues. Not all communities or council areas as a whole have the same level of local businesses as, say, a typical London borough or other notably commercial area.

Here in Medway, we do have a lot of business, from retail (two shopping centres, dozens of shopping parades, several standalone shops & stores, plus a few retail parks) via offices to a good chunk of commercial and industrial businesses.

Apart from all the industrial and similar enterprises on the Hoo Peninsula, especially at Grain and by Hoo St Werburgh, we also have Gillingham Business Park, Medway City Estate, Rochester Airport Industrial Estate, Second & Third Avenues in Luton, and the Knight Road area of Strood.

We also have a considerable tourism sector, primarily but not exclusively in Rochester.
Overall we should be set fair to pull our own weight, and once we are settled in to the new arrangements we might well find we are much happier in this regard than we have been for many years, ever since the Blair government really started manipulating the grant funding they controlled back then, which was the largest chunk of income that council's received.
Readers might not be aware that, for example, the very similar to us (in council terms and needs) Brighton & Hove received over £50 million more than Medway in central government grant every year. They, of course, were a Labour-run council.
Such gerrymandering will not be possible from 2020, so expect Labour to find ways to complain about this change being 'unfair', 'discriminatory', or one of their other favourite labels for things they don't like. In this case, it will be because the councils they run will have to perform much better than many of them have tended to endemically, and they will no longer be bailed out.
Interestingly we saw an example of that here in Medway when Labour ran our council's finances some 16 or 17 years ago. The council was bailed out by the then Labour government because their local bods messed up hugely – even delaying paying bills until after the end of the financial year – and needed several million Pounds.
Their replacements have consistently produced balanced budgets ever since (though it wasn't easy with that gerrymandered funding I mentioned above) so it could have been done by a competent council administration – and that is what will, over time, come out once these new funding arrangements are fully in place.
A lot of Labour-run councils are going to come under the spotlight, and their profligacy and incompetence will become very public. They will have to either shape up or in all probability be voted out of control of those councils. Thus much of the rot within local councils will be excised, along with its subsidy by the rest of us – and that will be good for everybody in the long term, also in restoring confidence in local government.

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