Cyber shambles

Whenever a Minister in the current government states that a particular issue is a top priority and that the government is leading the way, you can almost guarantee that the opposite is the case.

Despite the occasional highly-publicised success in tackling cyber-crime, the harsh reality is that the vast majority of such crimes are not investigated, let alone brought to successful prosecution. Day-in, day-out, millions of people receive phishing e-mails and scam texts and learn that their data has been stolen or, even worse, heard that information about themselves that they had provided in confidence to a supplier of good or services had been sold to many others.

I predict that there are many more scandals to be revealed about global companies taking our data and records of our activities – without our permission – to be aggregated, profiled and sold for a wide variety of purposes. Targeted marketing may be the most innocuous of these. There is much more to be revealed about interference in elections and politics.

Of course, these cyber-security issues are those which mainly affect the individual. But there are big cyber issues which affect the security and defence of the state. Across the world, we have seen examples of hackers (whether state-sponsored or far-too-clever-for-their-own-good teenagers) taking control of, or disabling, key elements of infrastructure from power-plants to TV stations, from defence establishments to financial institutions.  Some defence analysts believe that we should drastically cut resources in traditional state security measures and invest those resources in cyber-security.

Last week, the government released its first progress report on its 2016-2021 National Cyber Security Strategy. This should have been the third annual report. Given the lack of progress, it’s no surprise that the government hasn’t wanted to be held accountable for it.

The report was an admission of failure by the government. It admits that 11 of its 12 strategic outcomes have not been met and are unlikely to be met by 2021. The Cabinet Office – the government department responsible for the strategy – has admitted that it has “low confidence” in the evidence used to assess progress against six of the strategic outcomes.

Also this week, the Public Accounts Committee has published its report on the cyber-security strategy. The facts speak for themselves:

  • Just nine percent of businesses are aware of the CyberEssentials programme, the government-backed scheme to protect against cyber-attacks;
  • Only 16% of FTSE 350 boards have a grasp of cyber threats;
  • Only 57% of FTSE 350 companies regularly test their cybersecurity incident response plans.
  • the proportion of UK firms reporting a cyber-attack has risen from 40 per cent to 55 per cent in the last year, and almost three quarters of firms were ranked as “novices” in terms of cyber-readiness
  • only 4% of businesses use government sources of information to protect themselves against cyber threats
  • a third (£169 million) of the Programme’s planned funding for the first two years was either transferred or loaned to support other government spending£69 million of this funding will not be returned to the Programme.

It’s little wonder that government ministers are divided and all over the place when it comes to making a decision about what, if any, place there should be for the Chinese company H in 5G UK telecoms infrastructure

This is despite the Huawei Cyber Security Evaluation Centre Oversight Board (HCSEC) finding critical cyber vulnerabilities that are not being adequately addressed and that Huawei’s approach to software development brought significantly increased risk to UK operators.

Does it fill you with confidence? No, me neither.

It’s a cyber-shambles.

Affording a home

I take no pleasure from having correctly predicted that every housebuilding promise made by Conservative and Liberal Democrat Housing Ministers since 2010 has been broken. Not one of the promises has come close to fulfilment and no apologies have ever been made.

So far as I was concerned, on an examination of the facts, those promises had as much credibility as claims that Brexit would deliver and extra £350m per week for the NHS and that, post-Brexit, securing advantageous trade deals across the world would be a doddle.

Boris Johnson now finds himself on the wrong end of a prosecution for his persistent repetition of the £350m per week claim.  His case is not helped by the revelation that he had been persistently told by the Office for National Statistics (ONS) that his assertion was simply untrue.

So, you will not be surprised that I tend to rely on ONS data to look at historical performance about housing, including housing affordability.

One of the biggest tragedies of the last decade is to have seen young individuals and families squeezed out of the market to buy a home of their own and then be forced to live in insecure privately rented homes with exorbitant rents, which disable them from saving sufficient for a deposit. A large proportion of this generation may be excluded from home ownership for the rest of their lives.

It is interesting to note that the government has not made a new housing promise. Instead, it has set a ‘target’ of delivering 300,000 new homes per year by mid-2020.

Housing charity Shelter has estimated that more than 3 million new social homes (ie 150,000 pa) would need to be built over a 20 year period to address social housing need. However, the government’s target assumes that just 3% (ie 9000 pa) would be social homes built by local authorities. The gap is dramatically obvious.

In March, ONS produced its latest annual report on housing affordability in England and Wales1 .

Amongst other findings, ONS reported that:

  • On average, full-time workers could expect to pay an estimated 7.8 times their annual workplace-based earnings on purchasing a home in England and Wales in 2018.
  • This followed 5 consecutive years of decreasing affordability. [ie the gap between earnings and house prices got bigger each year.]
  • The London Borough of Kensington and Chelsea remained the least affordable local authority in 2018, with average house prices being 44.5 times workplace-based average annual earnings. [You will remember that Grenfell Tower is located there.]
  • There are 77 areas that became less affordable over the last five years -most were in London, the South East and the East of England
  • There was not a single area in England and Wales where affordability improved.
  • Despite all the Ministerial claims about the Help-to-Buy scheme helping young families on to the property ladder, newly-built dwellings were estimated to be significantly less affordable than existing dwellings.

Over the last decade, the construction of new social and affordable rented homes has stagnated. The number of new homes built in this sector has slowed to a trickle of a few thousand a year, while at the same time demand becomes greater and greater.

It is clear that social housing has been left to drift for too long and it appears that there are no coherent long-term strategies to put this right.

So, the House of Commons all-party Housing Communities and Local Government Committee, which I chair, has launched a new inquiry2to investigate the effectiveness of the Government’s current strategies to increase the numbers of social and affordable rented homes.

We will look at the adequacy of funding levels, as well as programmes and incentives for key stakeholders, such as local authorities and housing associations, to stimulate delivery. We will also look at the challenges facing different areas of the country and consider what lessons can be learnt from successful schemes in other countries.

For the next 6 weeks, we are inviting evidence for the inquiry.

If you have evidence or experiences or comments about these issues which you want us to consider, please submit it3 as soon as possible, and by 12th July at the latest.

1 Housing affordability in England and Wales: 2018

https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housingaffordabilityinenglandandwales/2018

2 Inquiry into long-term delivery of social and affordable rented housing.

https://www.parliament.uk/business/committees/committees-a-z/commons-select/housing-communities-and-local-government-committee/news/long-term-social-housing-inquiry-launch-17-19/

3 https://www.parliament.uk/business/committees/committees-a-z/commons-select/housing-communities-and-local-government-committee/inquiries/parliament-2017/social-housing-inquiry-17-19/commons-written-submission-form/

Taxing times

I take a very simple approach to taxes. You should pay them.

I have no time at all for those individuals who, and corporations which, indulge in artificial schemes designed to avoid what they should properly pay.

Despite all the warm words and promises, Conservative governments have consistently been reluctant to legislate to close down loopholes and to pursue tax avoiders.

A report1 this week from the Tax Justice Network confirms the extent of the issue. It found that the UK has “single-handedly” done the most to break down the global corporate tax system which loses nearly £400bn to avoidance. The amount dodged globally each year is more than three times the NHS budget or roughly equivalent to the entire Gross Domestic Product (GDP) of Belgium.

The UK is by far the world’s biggest enabler of corporate tax dodging, helping funnel hundreds of billions of pounds away from state coffers. Of the top 10 countries allowing multinationals to avoid paying billions in tax on their profits, four are British overseas’ territories. Tax haven territories linked to Britain are responsible for around a third of the world’s corporate tax avoidance risk – more than four times the next greatest contributor, the Netherlands.

At the top of the list are the British Virgin Islands, Bermuda and the Cayman Islands – all British overseas’ territories. Jersey, a Crown dependency, is seventh while the UK itself comes in thirteenth. Yet, this Conservative government is still failing to take the measures required to ensure transparency in the UK and in the overseas’ territories and dependencies.

However, it has decided to pursue workers who entered into schemes of disguised remuneration over the last decade. Disguised remuneration is an aggressive and contrived form of tax avoidance that involves a loan, which there is never any intention of repaying, being routed via a low or no-tax jurisdiction and then back to the United Kingdom, to avoid income tax and national insurance.

Unfortunately, many low-paid workers in service industries were required or conned into these schemes by ‘tax advisers’ and bogus umbrella companies. If something looks too good to be true, it almost certainly is!

However, there were thousands of well-remunerated individuals who sought out these schemes. It is estimated that between 50,000 and 100,000 people were involved. Finally, HMRC woke up and, in 2016, the government decided to act on these unlawful schemes and require payment of the proper taxes and dues. More than £1bn has now been reclaimed – 85% of it from employers – but there is still a long way to go.

Generally, I support the approach that the government is now taking. However, I still have some concerns about how it is proceeding. There does need to be a differentiation between those people, mainly low-paid, who were conned into the schemes and gained little benefit from them – most of the benefit went to the agencies and employers – and those, mainly well-paid, who entered the arrangements in full knowledge of their gamble.

I have little time for those people who are now making a lot of noise because they are being told that they have to pay £500,000, £700,000 or even £900,000 that they avoided by their own actions.

1 https://www.corporatetaxhavenindex.org/

Be careful what you wish for

The people have spoken.

Well, more precisely, less than four out of ten UK electors voted in the elections for the European Parliament last Thursday. It’s difficult to be precise, but it appears that about half of those who came out to vote supported Brexit…and the other half supported Remain. Proportionately, it was more or less a repeat of the Referendum result.

The reality is that we have a nation which is dangerously divided and the prospects for reconciliation seem limited in the near future.

Since the Referendum, each and every day, our economic performance and prospects have been damaged. That is set to continue, irrespective of whether there is a negotiated or a no-deal Brexit.

Because Brexit has so dominated the political discourse, it has crowded out discussion and decision about domestic policy issues. I have given many examples of this before…adult social care, local government finance and funding, business rates and alternative taxes…

Last week we were given a sharp reminder of this when Philip Alston, the UN rapporteur on extreme poverty, said that, unless austerity ends, the UK’s poorest people face lives that are “solitary, poor, nasty, brutish, and short”. He then warned that the worse could be yet to come “for the most vulnerable, who face a major adverse impact” if Brexit proceeds.

This isn’t an isolated warning. According to the Institute for Fiscal Studies (IFS), the UK is now second only to the US in terms of inequality among major economies in North America and Europe. The IFS found that average CEO pay among FTSE 100 companies in the UK in 2017 was 145 times higher than the salary of the average worker, up from 47 times higher back in 1998.

The entire board of the Government’s own Social Mobility Commission resigned in 2017, citing the Government’s lack of action in tackling social justice. The Commission, which suffered a near year-long delay in appointing replacements, warned last month that “social mobility has been virtually stagnant for four years”.

A total of 14 million people in the UK were in poverty in 2017/18. This includes 4.1 children, a rise of 500,000 since 2010/11. Two million pensioners were in poverty in 2017/18, up by 400,000 compared with 2010/11.

According to the Joseph Rowntree Foundation, the key reasons for rises in poverty are

  • Cuts to social security
  • High housing costs – increasing numbers of people on low income are living in the private rented sector but housing benefit is failing to cover the cost of rents
  • People trapped in low-paid work

Health, education and housing inequality is at unacceptable levels. The gap in life expectancy between the poorest and wealthiest is getting wider. Healthy life expectancy at birth among the most deprived males in England is 51.9 years, compared with 70.4 years among the least deprived.

By eleven, (end of Key Stage 2), less than half (46%) of pupils entitled to free school meals reach the standards expected for reading, writing and mathematics, compared to 68% of all other pupils. Only 16% of those on free school meals attain at least two A levels compared to 39% of all other pupils.

Rough sleeping has more than doubled since 2010 according to Government figures, rising from 1,768 in 2010 to 4,677 in 2018. Over 120,000 children are recorded as homeless in temporary accommodation – an increase of 70% since 2010.

As the number of people working on zero-hours contracts rises each day, the number of working households living below the poverty line has increased. As social security cuts continue, food bank usage increases.

Wouldn’t you would think that these issues, rather than an ill-informed Brexit debate, should be at the forefront of our minds? Don’t bank on it.

Yesterday, Lucy Davies was elected as a Brexit Member of the European Parliament for Yorkshire and Humberside. Last year, in a TV interview1 , she confirmed that ‘leave voters’ like her wanted Brexit “at any cost”. She then admitted this could mean volunteering for “30 years of economic downturn”.

Is that what you really wish for?

1 https://twitter.com/femi_sorry/status/1129454458159665152?s=21

Knotty issues

In the mid-nineteenth century, some horticulturalists thought that Fallopia Japonica, a fast-growing plant with bamboo-like stems, would be an excellent ornamental plant in parks and large gardens.

Since then, millions of households have discovered that Japanese Knotweed (JK) is one of the most problematic plant species in the UK. It has been estimated that 1-2% of all residential properties and development sites are affected, and many more are drawn into the problem simply by being adjacent to an affected site.

There is a common perception that JK can cause significant damage to buildings, although there is surprisingly little research on this. It has distinctive extensive rhizomes (underground structures that resemble roots) which are difficult to kill.  Because it is so challenging to eradicate – requiring multi-year treatment with herbicide or excavation – there are some strict controls.

It an offence to plant JK or cause it to grow in the wild. However,

  • it is not illegal to have JK on private land
  • individuals do not have a legal obligation to remove or control JK on private land, and
  • there is no requirement to report that JK is present on the land.

Nevertheless,

  • allowing contaminated soil or plant material from any waste transfer to spread into the wild could lead to a fine of up to £5,000 or a prison term of up to two years.
  • affected parties, such as landowners of adjacent properties, might also seek damages if JK is allowed to spread onto their property
  • it is classed as ‘controlled waste’ and as such must be disposed of safely at a licensed landfill site, and
  • it is an offence to deposit, treat, keep or dispose of controlled waste without a licence.

That is why some mortgage lenders have strict no-JK policies. There is a specific question on JK in the Seller’s Property Information Form. This has caused problems for house- sellers and prospective purchasers. Claims for damage caused by JK are usually excluded on buildings insurance policies.

Over the last year, the all-Party House of Commons Science and Technology Committee has conducted an inquiry into Japanese knotweed and the built environment. It has now published a report1 of its investigations with a series of recommendations, including

  • national data collection of the extent and nature of JK
  • targeted research about the actual JK impact on buildings
  • looking at why other countries don’t see JK as such a big issue
  • reviewing the nature and extent of declarations on Property Information Forms
  • asking the Royal Institute of Chartered Surveyors to review its risk assessment framework
  • proposing that mediation is better than litigation for resolving disputes relating to JK between landowners.

The recommendations seem eminently sensible. We need to see what the government, the professional bodies, mortgage lenders and eradication contractors do with them.

But, if you suspect you have a problem with JK, do not just dig it up and throw it in the neighbour’s garden! That could be very costly indeed.

1 Japanese knotweed and the built environment https://publications.parliament.uk/pa/cm201719/cmselect/cmsctech/1702/170202.htm?utm_source=House+of+Commons&utm_campaign=707260266f-EMAIL_CAMPAIGN_2019_05_17_03_31&utm_medium=email&utm_term=0_569847b89d-707260266f-97704763&mc_cid=707260266f&mc_eid=04f1d8f500

Tracking back

Today, it has been revealed that rail passenger time lost to delays and cancellations last year was the worst since records began.

Passengers, on about 80 trains a day, experienced significant delays. Eight million passengers were held up for a minimum of 29 minutes.

But, in some ways, they were the lucky ones.

What about the passengers, whose trains were simply cancelled – an average of 660 a day, the worst since comparable records began – left stranded?

These passengers have failed to get to work on time or arrive at important business meetings. They’ve missed flights and hospital appointments and concerts.

That’s why I’m backing a call for automatic compensation for rail passengers who experience delays and cancellations.

The campaign is being co-ordinated by Which? and is supported by nearly 100 MPs across all parties. We are also calling for simpler and easier compensation processes to be introduced across the rail network.

For passengers on the MidlandMainLine things have been worse.  Last year’s disastrous timetable chaos left the personal and professional lives of thousands of passengers in tatters. 

The government forced the implementation of a new timetable which lengthened journey times on peak services between London and Sheffield. Now we know that not only was the timetable worse but more of these slower trains actually arrived late.

As it happens, East Midlands Trains (with 0.8 per cent significantly late and 2.3 per cent cancelled) was one of the best performers. But TransPennine Express actually cancelled 10% of their services.

So, after a record year for disruption, and with passenger trust in our rail services at a new low, the case for making compensation automatic has never been clearer. Passengers lost almost four million hours to significantly delayed train journeys.

Currently passengers claim for only a third (34%) of journeys where money is owed for delays and cancellations, because the claims’ process is complex.

According to Which?’s annual rail passenger survey, around a third (36%) of journeys were not claimed for because passengers didn’t know how or where to claim, a third (32%) were not claimed for because it was too much effort, one in five went unclaimed (20%) because the compensation received would not have been very much and for one in seven (15%) it was because it would be too difficult or time consuming.

 For six in ten (59%) journeys, passengers were not informed of their right to claim compensation. And found train companies are making it a struggle for passengers to get compensation by demanding up to 24 separate pieces of information during the claim process

That is why we are calling for a simpler compensation process which ensures passengers get what they are owed. If the rail system is to start working for passengers, urgent action is needed to improve punctuality, reliability and compensation when things go wrong.  

Future prosperity

Over more than three decades, our area has received many millions of pounds (or euros!) to help our us to adjust to the major structural changes in our local economy, especially in relation to the decline in the coal industry and the changes in the global economy and in technology which so impacted our steel and engineering industries. The European funding element in the current programme alone has been worth £207m for the Sheffield City Region.

Existing resources have been used to support a wide range of initiatives to enable and support economic regeneration – for example in new transport, apprenticeship training, investment in 21st century research and innovation programmes, town centre regeneration schemes – and social programmes delivered through a number of voluntary organisations, as well as local businesses and authorities, which have supported some of the most vulnerable people locally.

There is, of course, some irony in the fact that, whereas we have been receiving additional resources from the EU in recognition of our economic, social and environmental need, since 2010, the Conservative/ Liberal Democrat Coalition and the successive Conservative governments have been busily moving resources from the most economically disadvantaged areas in England to those with the most prosperous and dynamic economies.

Recent research reports suggest that UK regions would have received €13 billion under the future EU cohesion programme. This would have seen an increase from €117 per head to more than €500 per head in South Yorkshire, reflecting the growing gap between the most and least prosperous areas in the country.

In the light of the outcome of the Brexit referendum, even this Conservative government has recognised that there will need to be a programme and resources to replace European regional funding after 2020 and, from 2021, to replace funds available through the local growth fund programme.

Local Labour MPs have been arguing very strongly that any future shared prosperity fund needs to replace the funds on the basis of what would have been received from EU funding after 2020.

The government has been making a lot of warm statements about devolution, of both powers and resources. Unfortunately, the positive initiatives to date have been far outweighed by the continuing redistribution of resources nationally, which has seen northern, urban local authorities the hardest hit.

We have been arguing strongly that the government should use this opportunity to take some bold decisions to devolve not just the decision-making but also the powers and the resources to back up those decisions.

Any new programme will have to be up and running soon to enable programmes to be developed and delivered by 2020. Like many other policy areas, the government is dithering and delaying about its proposals and consultations on future funding.

Ministers keep saying that “work is ongoing”, that “there will be announcements in due course” and it will be a central part of the Chancellor’s spending review. That’s all very well, except that the spending review and key decisions are being deferred because of the government’s incompetent and shambolic handling of Brexit.

Our Sheffield City Region Mayor, Dan Jarvis MP, initiated a parliamentary debate1 this week about the future resources and arrangements. It became clear that these concerns were shared across the political spectrum and throughout the affected areas, from Redcar to Redruth.

In the absence of any government initiative, Dan Jarvis proposed that any future arrangements for 2020 onwards should follow four principles:

First, the annual budget for the UK’s shared prosperity fund should be no less in real terms than both the EU and local growth funding streams it replaces. It must guarantee that regions will not be worse off because of Brexit, in the funding available for regional development beyond 2020. Moreover, that should be a baseline rather than a cap.

Secondly, there should be no competitive bidding element. Instead, an open and transparent process must be put in place that strikes a balance between targeting areas of need and rebalancing our economy and supporting economies that have the greatest potential to grow.

Thirdly, the fund must be fully devolved to those areas that have in place robust, democratically accountable governance models, including devolved Administrations, combined authorities and mayoralties. It must be up to local areas how best to invest this money, be it on skills, helping the most vulnerable and disadvantaged, infrastructure investment, employment or support and education.

Fourthly, the funding must be stretched over multiple years, beyond the vagaries of spending reviews and parliamentary cycles.

That seems to me a very helpful starting point.

It’s time that the government got the consultation underway.

1 https://www.theyworkforyou.com/whall/?id=2019-05-14a.54.0&s=speaker%3A10045#g55.2

Universally discredited

No-one has ever questioned the principle behind proposals for Universal Credit, which would bring many income support measures together for an individual or a family. Clearly such a scheme, successfully implemented, would bring significant benefits (sic) to both recipient and taxpayer.

However, successful implementation of the government’s current proposals is simply impossible for a number of reasons.

The first reason, of course, is that the government is determined to cut the overall expenditure on benefits. It can only do this by cutting the income of the majority of recipients, who are already on low incomes.

The second reason is that, despite piloting and rolling out the implementation – supposedly so that it can learn the lessons necessary to improve future roll-outs – it is determined to stick to a timetable which actually prevents it from learning the lessons and changing the future implementation plans.

Thirdly, the government keeps ignoring the law and tries to plough roughshod through any suggestions that it might be acting unlawfully. Just ten days ago – and not for the first time – the High Court determined that some of the government’s proposals were unlawful. This time, it related to people who receive a Severe Disability Premium – precisely because of the additional costs incurred in trying to live a normal life – and were going to be £180 p month worse off, because they had been forced on to Universal Credit, than people with similar disabilities who would transfer to Universal Credit during managed migration.

Universal Credit claimants are still experiencing hardship as a result of the 5 week wait for a first payment. The government’s own survey (by the Department of Work and Pensions, DWP) of claimants showed that 40% of claimants were still experiencing financial difficulties even 9 months in to their claim. Many claimants struggle to make and manage their claim online, as they are required to under Universal Credit, and the funding for support provided by DWP is inadequate.

The Trussell Trust’s latest statistics on food banks show that, in 2018-19, the Trust distributed nearly 1.6 million emergency food parcels. 578,000 of these went to children, a near 20% increase on the previous year. The Trust highlighted that almost half (49%) of food bank referrals were made due to a delay in benefits being paid were linked to Universal Credit.

It is clear that the government should halt the roll out of Universal Credit. It is causing severe hardship for many people because of the major flaws in its design and the way it has been rolled out.

It is universally discredited.

It’s a High Street low

Take a walk down nearly any High Street in any small or large, inland or seaside, village, town and city in the country and you know there is an economic challenge. Of course, there are a small number of places which seem to have escaped. But, at the other end of the scale, there are town centres where shop units alternate between charity and betting shops and struggling retailers and empty units.

In February this year, the all-party Select Committee, which I chair, published a report on the High Street in 20301 . Our inquiry had taken place over a turbulent 6 months for the high street. Barely a week had gone by without headlines pronouncing the ‘death of the high street’ or a major retailer announcing a restructuring or a fall in profits.  And nothing has changed this year.

An enormous change has taken place in retail in recent years. The traditional pattern of making purchases in physical stores, both in and out-of-town, has been profoundly disrupted by the growth of online shopping.

The Committee was united in concluding that unless urgent action was taken, we feared that further deterioration, loss of visitors and dereliction may lead to some high streets and town centres disappearing altogether. We said that High streets and town centres needed urgently to adapt, transform and find a new focus in order to survive.

We were convinced that high streets and town centres will survive, and thrive, in 2030 if they adapt, becoming activity-based community gathering places where retail is a smaller part of a wider range of uses and activities. Green space, leisure, arts and culture and health and social care services must combine with housing to create a space that is the “intersection of human life and activity” based primarily on social interactions rather than financial transactions. Individual areas will need to identify the mix that best suits their specific characteristics, local strengths, culture and heritage. Fundamentally, community must be at the heart of all high streets and town centres in 2030.

Achieving the large-scale structural change needed for our high streets and town centres to survive will require interventions led by local councils, using all their powers and backed by government funding and private investment. The Committee made a whole range of recommendations as to how these initiatives could and should be implemented.

However, it was also clear that, given the rapid changing retail environment, there needed to be action on business rates, not just to re-introduce some tax fairness between on-line and high street retailing, but also because business rates form such a large part of the government’s plans for local government finance in the future.

The government claimed that it undertook a fundamental review of the business rates system in 2015–16, concluding that business rates should remain. This was a classic example of sticking your head in the sand, hoping that, by the time you take it out, the problem will have gone away. It hasn’t.  That’s why the all-party Treasury Select Committee has launched its own inquiry into the business rates system and its impact on businesses2 .

Today, the government has published its response3 to our High Street report.

Let me call it ‘disappointing’ – a profound under-statement!

It appears that the government is simply unwilling to make the radical change required that reflects the realities of modern commerce and gives shops on the high street a fighting chance It is absolutely clear that the current taxation system places an unfair burden on high street businesses compared to those that conduct their businesses wholly or substantially online.

On this, I am completely at one with, John Allan – the President of the CBI and Chairman of TESCO – who today called for a reform of the business rates claiming the system is now “unsustainable”. He complained that the Government had only “tweaked” the system in recent years, adding: “The more sticking plaster we add, the greater the signal that the system is broken and in need of a fundamental rethink.”

We need a system that spreads the tax burden fairly and is responsive to market changes. Rather than examining the range of radical options to the taxation system that we proposed in order to save the high street, which it simply dismisses as too challenging, the government has decided to stick to the status quo.

It’s the latest example of a government which has become totally paralysed by Brexit, unwilling to take the tough, but necessary, decisions on the domestic policy agenda to secure local communities where people want to live, work and play. The government is fiddling while our town centres are burning.

It’s a High Street low.

1 https://publications.parliament.uk/pa/cm201719/cmselect/cmcomloc/1010/report-summary.html

2 https://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/inquiries1/parliament-2017/inquiry3/

3 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/800101/Gov_response_select_committee_high_streets_and_town.pdf

Political cowardice stops government acting

Last year, English councils spent about £45bn. More than £25bn of that was spent on adult social care and children’s social care – about 56% of total spending.

Councils received about £26bn from council tax and £18bn from a combination of local business rates (NNDR) and government grants. Local fees and charges made up the difference.

At its simplest, therefore, you might say that all of your council tax has been used to pay for children’s and adult social care, whilst business rates and grants have been used to pay for all other council services (waste collection and disposal, parks, libraries, fire services, highway maintenance and street lighting etc.)

Since 2010, the Coalition and then the Conservative governments have made big cuts each and every year in government grants to local councils. The government plans to phase out Revenue Support Grant – easily the biggest grant – altogether in the coming years.

Effectively, council spending has been nationalised by the government. It determines the level and income from business rates, it decides government grants to each and every council. It effectively sets the level of council tax for each and every council as it both determines a cap and then has ‘forced’ councils and police authorities to demand precepts towards the funding of adult social care and police services respectively to fill some of the gap left by government cuts.

Since 2010, local authorities have seen their overall spending power to pay for all local government activities – including adult social care and children’s services – reduce by nearly 30%. Actually, for the councils in the wealthiest areas, the cuts have been less than 10%, whilst the cuts for councils in the poorest areas (typically urban and northern) have been about 40%.

Over this same period, demands for social care have increased for both adults and children.

Despite our ageing and growing population, the number of adults receiving care services – to help them continue living in their own homes – has fallen by more than half-a-million since 2010. Many more people have had their services cut and/or their charges increased way beyond inflation.
Similarly, demand for children’s services has risen. There has been a significant increase in the number of ‘looked-after children’ – a 27% increase over the last decade – and care for these children accounts for about half of all expenditure on children’s services.

Councils have had to try to respond to these increasing demands within their government-determined spending power by switching resources from other services like libraries, parks and highway maintenance. But this is completely unsustainable.

The government is paralysed by Brexit. It has just announced the sixth cancellation of proposals to address adult social care. It keeps making short-term funding announcements to prevent adult and children’s care services collapsing.

Mrs May simply daren’t suggest longer-term proposals to address these issues as that would inevitably produce more splits in the Conservative Party, when it is already completely split over Brexit.
This political cowardice is damaging the lives of millions of individuals – young and old – and their families.