|
> Home
> News cuttings >
Morton
Local Government
Chronicle - 15 October 2007
It’s difficult to warm to Henry VII. He seized the throne in 1485 when Warwick the Kingmaker turned coat on the battlefield of Bosworth to defeat Richard III (much maligned by that Elizabethan master of political spin William Shakespeare). Notoriously tight-fisted, he devoted his energies to accumulating money: his invasion of France was called off in return for a hefty donation to Henry’s favourite charity- the royal exchequer.
Henry had a particularly effective way of extracting money from the nobility. Cardinal Morton, the chancellor, devised the helpful formula that if a noble family looked rich it was rich and if it didn’t it was hiding its wealth. He applied Morton’s fork to extract the required levy from both categories.
Morton’s Fork puts me in mind of the supplementary business rate. The business community’s bout of collective apoplexy makes me wonder just how many Cardinal Morton’s are lurking in the dowdy passages of the nation’s town halls. Even Sir Michael Lyons from whose report this proposal is scooped is a pretty poor candidate for the purple! If the supplementary business rate is a bone thrown to local government to ease the pain of the kicking it has received on funding it is a bone which non-metropolitan councils will find disappointingly short of meat or marrow.
The supplementary limit of 2p on the business rate (set at 44p nationally); the exclusion of businesses with a rateable value below £50,000; above all the limiting of the power to upper tier authorities (which in London means the GLA and in two-tier areas the county council) mean that many councils will conclude that the game is just not worth the candle.
I suspect the Mets will be more enthusiastic although perhaps disappointed by the 2p maximum rate. The real interest may lie in the extent to which the revenue flow from the supplementary rate applied over a number of years will finance borrowing for infrastructure and regeneration. A 1p business rate in Leeds, for example, yields about £6.5m when levied on all businesses so a 2p rate even with the £50,000 cut-off might well support borrowing of £100m or more.
Business is clearly not prepared to read across from Business Improvement Districts to supplementary rates – and it is easy to see why. BIDS are also funded by a supplementary levy on business rates but they promote specific, time-limited projects like city centre improvements or security on an industrial estate. They also require a ballot of companies. I suspect companies fear that the SBR will simply become a form of permanent business surtax. Equally, the ability of councils to retain a portion of the increases in business rate revenue brought by new investment is a far cry from the funding attractions of a general levy. The best hope is that the smaller measures will serve as confidence builders for both councils and companies.
But the truth is that if business and local government have not achieved at least a measure of confidence in each other’s integrity after two decades of partnership in regeneration it is going to be pretty difficult to deliver the consent, whether achieved by consultation (a minefield for judicial review!) or the ballot which will be mandatory if the business contribution to a scheme exceeds one third of total cost. Business has become pretty brassed off with the costs it claims government has heaped upon it in recent years says is eroding its international competitiveness – the Darling proposals on capital gains tax are the latest cause of rupture- so it is not a good moment for councils to come looking for more money. Advocates of the return of business rates to local government had better prepare for a long wait.
Of course Cardinal Morton had a way of dealing with little local difficulties. Not that it did the Exchequer a great deal of good in the long term - Henry VIII blew his father’s savings in pretty short order. How else did he finance the Field of the Cloth of Gold?
© Local Government Chronicle
|
previous page