The Chancellor's announcement on the 5th of October at the Conservative Party Conference in relation to business rate devolution took many by surprise and has since received considerable attention in the press over the last few weeks. This was then followed by John Swinney announcing at the SNP conference that local authorities in Scotland would also be given the power to cut business rates by the end of October 2015. The Chancellor of the Exchequer, has proclaimed that, no longer will local authorities, and the local areas they represent, have to march to Central Government with a begging bowl for handouts. Two dichotomous trends are prevalent in recent commentaries. The first is positive; some local authorities and pressure groups have generally welcomed the announcement as an opportunity for local authorities to stand on their own two feet and exploit their local wealth. The second is more circumspect, concerning the potential impact of the 2020 changes, in relation to equality between areas and the potential race to the bottom following the announcement that local authorities will be able to reduce the business rate multiplier at the local level.
Increasingly, local authorities are being asked to stand on their own two feet and fund welfare provision, economic development and urban regeneration themselves. Mirroring developments in Western Europe and North America, urban policy is increasingly fragmented, dispersed and financialised.
The opportunity for new financial powers and fiscal decentralisation has been welcomed by some civic leaders in the UK as an opportunity for territorial freedom, governance and power. What these leaders want is power and the roll back of centuries of centralised government, echoing the level of subsidiarity seen in most of Europe and North America.
However, findings from a research project I’ve undertaken with Paul Greenhalgh at R3intelligence, based at Northumbria University, suggest enhanced power for local authorities also brings with it certain risks in uncharted territory. This is because recent forays into fiscal decentralisation have coincided with unprecedented levels of austerity and local authority cuts.