Vince Cable has begun the political-fight back following his damaging “nuclear” remarks, by proving that he can be more right-wing than the Tories.
Today in the Guardian: “Free councils to keep bulk of cash raised through business rates. Richer boroughs will no longer see income from their businesses going to subsidise poorer parts of the country.”
A government minister said, “They will be free councils, and the idea is that they have a real incentive for the first time to encourage business in their locality.”
However this takes no account of the natural tendency for cities to develop separate business and residential areas, with workers commuting between the two. Banks in the City of London are not going to place themselves in Edmonton, nor are workers in Edmonton going to live in the City just because they work there. One area is for business, and the other area is for residence.
If financial responsibility for the vulnerable were borne only by the residential area, without a contribution from the business area, then the residential area would have to massively increase tax, or refuse to support the vulnerable.
If the policy was taken to the next logical stage, whereby no distribution existed between the rich and poor residential areas, then the residential area with large social provision would be plunged into further financial difficulties.
The result of this would be that the poor residential areas would have to increase taxes, which would cause the employed to move to an area with few vulnerable people and therefore lower taxes. This polarising effect would be the result of what the government calls “Localism”.
But the business secretary, Vince Cable, wanted to extend “localism” by allowing councils to vary the business rate. This would have the perverse outcome of allowing the City of London, with its huge number of large companies and virtually no social provision, to set a business rate close to zero.
Under Cameron, it’s always been about language. “Free” is the pre-cursor for schools (and now councils) to be released from all obligations to the wider community. “Localism” is a word that sounds like socialism but when applied by the Tory –led Government, it doesn’t have much to do with community.
Vince Cable was seriously damaged by his attitude towards the government he serves when he made remarks to a journalist describing his power over the coalition as “Nuclear”. It seems that he is now behaving himself by pushing forward policies that will be popular with the right-wing Tory leadership.
However, his new-found political positioning is more right-wing than many Tories. Margaret Thatcher introduced the redistributive element of Business rates because her government recognised that the business districts had an obligation to support the residential districts.
It seems that Cable is well on his way to becoming an important non-nuclear part of the government leadership. He may well prove himself useful as a cover for their right-wing instincts.
From now on, whatever he says should be followed extremely closely.