Has the British government abandoned its fiscal devolution plans?

Poor George. Image: Getty.

The recent Queen’s Speech made no mention of the Local Government Finance Bill. That suggests that the business rates reform has been put on ice, at least for the time being – and that the UK will continue to be one of the most centralised countries in the developed world.

This is a concern for a number of reasons. Firstly, business rates devolution could play a crucial role in supporting the development of local economies. It would enable local authorities to capture the fiscal benefits of economic growth within their area, therefore giving them a greater incentive to take the right decisions to improve their economy.

There is no such incentive under a full-grant system of funding, because local authorities generally receive an amount of money that corresponds to their needs, regardless of how well they perform. In other words, fiscal devolution rewards good policy practices by increasing local revenues. So far the move towards a 50 per cent retention structure, in place since 2011, has not been substantial enough to generate this incentive.

Secondly, business rates devolution would give local authorities more control over some of their revenues and how they spend them. This greater control is important from a policy point of view, as it means local authorities can develop more tailored policies, moving away from the one-size-fits-all model.

From a political perspective, it also results in stronger accountability for local government. Currently in the UK local taxation only represents 5 per cent of total tax revenues, compared to the OECD average of more than 10 per cent.


But this also comes with challenges, which may explain why the government has been relatively wary about moving towards more devolution.

One difficulty is making sure the system is well-designed to incentivise and reward good policy decisions to the largest number of places across the country. The system as it is currently constructed mainly rewards the building of more floor space – but this isn’t an appropriate solution everywhere because of the varying economic performance of places across the country. Another challenge is to make sure that the weakest economies will still be supported by this funding mechanism, without hindering too much the growth incentive in more successful places.

Of course, cities already possess a number of tools to increase their revenues – with or without business rates devolution – as the Centre for Cities’ latest report on public assets illustrates. By adopting a more entrepreneurial approach to using the assets at their disposal, cities can support economic growth, increase their tax base, and attract more businesses and jobs.

Nonetheless, business rates devolution would be a hugely important step towards reversing decades of centralisation in the British political system and giving cities more of the control they need to boost their economies. Scrapping these plans now would be a backwards step by the government.

It is unclear if the plan to devolve business rates has been dropped or simply postponed to later. But given how far discussions went – pilot areas to experiment the new system had been launched and are to be maintained – seeing the legislation reintroduced is a conceivable option.

Our upcoming work will reflect on those issues set above, and will focus on how business rates devolution can be designed so that every city and local authority across the country can get the most out of devolution. Watch this space for more details in the coming months.

Hugo Bessis is a researcher for the Centre for Cities, on whose blog this article originally appeared.

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Was the decline in Liverpool’s historic population really that unusual?

A view of Liverpool from Birkenhead. Image: Getty.

It is often reported that Liverpool’s population halved after the 1930s. But is this true? Or is it a myth?

Often, it’s simply assumed that it’s true. The end. Indeed, proud Londoner Lord Adonis – a leading proponent of the Liverpool-bypassing High Speed 2 railway, current chair of the National Infrastructure Commission, and generally a very influential person – stood on the stairs in Liverpool Town Hall in 2011 and said:

“The population of Liverpool has nearly halved in the last 50 years.”

This raises two questions. Firstly, did the population of the City of Liverpool really nearly halve in the 50 year period to 2011? That’s easy to check using this University of Portsmouth website – so I did just that (even though I knew he was wrong anyway). In 2011, the population of the City of Liverpool was 466,415. Fifty years earlier, in 1961, it was 737,637, which equates to a 37 per cent drop. Oops!

In fact, the City of Liverpool’s peak population was recorded in the 1931 Census as 846,302. Its lowest subsequent figure was recorded in the 2001 Census as 439,428 – which represents a 48 per cent decline from the peak population, over a 70 year period.

Compare this to the population figures for the similarly sized City of Manchester. Its peak population also recorded in the 1931 Census as 748,729, and its lowest subsequent figure was also recorded in the 2001 Census, as 392,830. This also represents a 48 per cent decline from the peak population, over the same 70 year period.

So, as can be seen here, Liverpool is not a special case at all. Which makes me wonder why it is often singled out or portrayed as exceptional in this regard, in the media and, indeed, by some badly briefed politicians. Even London has a similar story to tell, and it is told rather well in this recent article by a Londoner, for the Museum of London. (Editor’s note: It’s one of mine.)

This leads me onto the second question: where have all those people gone: London? The Moon? Mars?

Well, it turns out that the answer is bit boring and obvious actually: after World War 2, lots of people moved to the suburbs. You know: cars, commuter trains, slum clearance, the Blitz, all that stuff. In other words, Liverpool is just like many other places: after the war, this country experienced a depopulation bonanza.


So what form did this movement to the suburbs take, as far as Liverpool was concerned? Well, people moved and were moved to the suburbs of Greater Liverpool, in what are now the outer boroughs of the city region: Halton, Knowsley, St Helens, Sefton, Wirral. Others moved further, to Cheshire West & Chester, West Lancashire, Warrington, even nearby North Wales, as previously discussed here.

In common with many cities, indeed, Liverpool City Council actually built and owned large several ‘New Town’ council estates, to which they moved tens of thousands of people to from Liverpool’s inner districts: Winsford in Cheshire West (where comedian John Bishop grew up), Runcorn in Halton (where comedian John Bishop also grew up), Skelmersdale in West Lancashire, Kirkby in Knowsley. There is nothing unique or sinister here about Liverpool (apart from comedian John Bishop). This was common practice across the country – Indeed, it was central government policy – and resulted in about 160,000 people being ‘removed’ from the Liverpool local authority area.

Many other people also moved to the nearby suburbs of Greater Liverpool to private housing – another trend reflected across the country. It’s worth acknowledging, however, that cities across the world are subject to a level of ‘churn’ in population, whereby many people move out and many people move in, over time, too.

So how did those prominent images of derelict streets in the inner-city part of the City of Liverpool local authority area come about? For that, you have to blame the last Labour government’s over-zealous ‘Housing Market Renewal Initiative’ (HMRI) disaster – and the over enthusiastic participation of the then-Lib Dem controlled city council. On the promise of ‘free’ money from central government, the latter removed hundreds of people from their homes with a view to demolishing the Victorian terraces, and building new replacements. Many of these houses, in truth, were already fully modernised, owner-occupied houses within viable and longstanding communities, as can be seen here in Voelas Street, one of the famous Welsh Streets of Liverpool:

Voelas Street before HMRI implementation. Image: WelshStreets.co.uk.

The same picture after HMRI implementation Image: WelshStreets.co.uk. 

Nonetheless: the council bought the houses and ‘tinned them up’ ready for demolition. Then the coalition Conservative/Lib Dem government, elected in 2010, pulled the plug on the scheme. 

Fast forward to 2017 and many of the condemned houses have been renovated, in a process which is still ongoing. These are over-subscribed when they come to market, suggesting that the idea was never appropriate for Liverpool on that scale. 

At any rate, it turns out that the Liverpool metropolitan population is pretty much the same as it was at its peak in 1931 (depending where the local borough boundaries are arbitrarily drawn). It just begs the question: why are well educated and supposedly clever people misrepresenting the Liverpool metropolis, in particular, in this way so often? Surely they aren’t stupid are they?


And why are some people so determined to always isolate the City of Liverpool from its hinterland, while London is always described in terms of its whole urban area? It just confuses and undermines what would otherwise often be worthwhile comparisons and discussions. Or, to put it another way: “never, ever, compare apples with larger urban zones”.

In a recent Channel 4 documentary, for example, the well-known and respected journalist Michael Burke directly compared the forecast population growths, by 2039, of the City of Liverpool single local authority area against that of the combined 33 local authority areas of Greater London: 42,722 versus 2.187,708. I mean, what bizarre point is such an inappropriate comparison even trying to make? It is like comparing the projected growth of a normal sized-person’s head with the projected growth of the whole of an obese person, over a protracted period.

Having said all that, there is an important sensible conversation to be had as to why the populations of the Greater Liverpool metropolis and others haven’t grown as fast as maybe should have been the case, whilst, in recent times, the Greater London population has been burgeoning. But constantly pitching it as some sort of rare local apocalypse helps no one.

Dave Mail has declared himself CityMetric’s Liverpool City Region correspondent. He will be updating us on the brave new world of Liverpool City Region, mostly monthly, in ‘E-mail from Liverpool City Region’ and he is on twitter @davemail2017.