Weekly Briefing: Power to the people?
Plus: is the grid on the brink of collapse, who'd want to be a British millionaire and does anyone own the Moon?
My pick of the week goes to the Mayor of the Tees Valley Ben Houchen, who criticised Andy Burnham’s devolution announcement and warned it risked becoming ‘theatre’ by restricting how mayors can use the tax revenue they’ll be given. You can read his argument in full below.
A mayor who can only spend money the Treasury’s way isn’t a mayor to begin with
Elsewhere, Tim Worstall made the case that Burnham’s proposed National Care Service repeats the NHS’s founding mistake – and that talk of shutting out private providers is the opposite of what’s needed. Mark Field, the former MP for the Cities of London and Westminster, looked at the £43 billion it would cost to nationalise Thames Water, and why the whole country would end up paying for it. And Ted Newson reported on leaked documents showing the grid came far closer to blackout during June’s heatwave than ministers admitted.
James Price imagined the Britain we could have had if politicians spent less time punishing wealth, and contrasted it to the evidence of the Adam Smith Institute’s Millionaire Tracker, which shows the country now has fewer millionaires than at any time since 2008. LFG’s Tom Willerton-Gartside attacked the second staircase rule about to come into force on tall buildings. It’s stricter than almost anywhere else in Europe, adds £22,500 to the cost of a flat and is already helping price a generation out of our cities. And Nils Knoben warned that Burnham’s enthusiasm for German-style federalism borrows a model Germany itself is now trying to escape.
This week on The Capitalist, I sat down with historian and sociologist Rainer Zitelmann, to discuss how SpaceX cut launch costs by 95%, why the space shuttle was such a fiasco – and if anyone actually owns the Moon. Listen here.
Marc Sidwell
Editor, CapX
I want power, not pocket money
Ben Houchen
Let me give Andy Burnham his due. For the best part of a decade he was the most persuasive voice in the country for letting go – for the plain truth that a decision taken in Whitehall about a town no official has ever visited tends to be worse than the one the people who live there would make for themselves. He said it in opposition, as Mayor of Greater Manchester and to anyone who’d sit still long enough to listen. I agreed with him then and I agree with him now. Which is exactly what makes his first fortnight in Number 10 so dispiriting.
The man who spent 10 years telling Whitehall to loosen its grip has walked into Downing Street and gripped tighter than any minister I ever dealt with.
If a share of the income tax and business rates raised on Teesside lands in my budget, I’ll use it to launch a rebate scheme
Here’s what he’s offered. From 2027, mayors keep a share of the business rates raised in their areas. From 2028, a share of the locally generated income tax too. The ring-fenced grants that fund our work today fall away, and this retained revenue takes their place. On paper, it’s a serious shift – more of the money raised in a place staying in that place, exactly as he always argued it should.
But read the small print. We’re allowed to keep a slice of the money. We’re not allowed to touch the rate, and we’re not allowed to hand any of it back to the people who earned it. Westminster still sets the conditions and still reconciles the lot through an equalisation formula drawn up in the Treasury. We need power, not an allowance. Hand a teenager pocket money and a list of approved purchases and you haven’t trusted him with anything.
Devolution exists to move decisions closer to the people they affect. That’s the case Burnham has made for a decade. But he doesn’t go far enough. A tax cut isn’t a betrayal of devolution: there is no smaller unit to devolve to than a household deciding how to spend its own money.
So here is what I’d do. If a share of the income tax and business rates raised on Teesside lands in my budget, I’ll use it to launch a rebate scheme: business-rates relief for the small firms holding our high streets together, and help for families struggling with the cost of living. The hairdresser in Redcar and the steel fabricator in Hartlepool understand their own lives better than any growth board ever will. Thousands of people spending freely will grow a place faster than one mayor spending cleverly, every time.
If I’m honest, I’d rather ministers skipped the apparatus altogether and simply lowered taxes on a national level – no growth boards, equalisation formulas, sign-off processes or a new tier of officials to run them. Every structure you build to redistribute money is a structure that skims it and slows it first. But if Burnham is set on doing it his way, he has to accept the logic that follows. If the receipts land in my budget, handing them back is a choice I’m entitled to make on my constituents’ behalf.
And if local people want to elect a mayor on the promise of a tax cut, that is their right. That is the entire idea. Take it away and the whole thing is just theatre: I open the envelope from the Exchequer and pass the contents to the payees Whitehall has already chosen. You could abolish my office, wire the money directly and Teesside would notice no difference beyond the saving on my salary. A mayor who can only spend money the Treasury’s way isn’t a mayor to begin with.
Give me the money and you give me nowhere to hide. Suppose I’m wrong and Teesside, Darlington and Hartlepool would rather I built something than give their money back. Then they can find a candidate who promises exactly that and vote me out. I lose my job; someone with a better read on this place takes it. That’s real devolution. Everything else is pocket money with strings attached.
And if you want more…
– Nimby Watch: Belgravia’s water pressure revolt (James Ball)
– Splitting track and train wasn’t a Tory idea (Joshua Bowden & Len Shackleton)
– Property rights can save British fishing (James Hodgkinson)
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We’ll be back on Monday.