Since becoming Chancellor of the Exchequer in 2010, George Osborne has developed a habit of pulling rabbits out of the hat during his annual speech to the Conservative party conference.

And this year he produced perhaps the biggest bunny yet with his announcement that local authorities would be permitted to retain all the revenue raised in business rates within their particular municipal boundaries.

This will be a complete reversal of what has become accepted practice whereby the government has taken half of the money raised from business rates and the Treasury has then redistributed the dosh among the various councils, on the basis that ‘nanny knows best’

Among those who expressed messages of support for the Osborne plan was COSLA, the Convention of Scottish Local Authorities, which very quickly called on our Holyrood finance secretary, John Swinney — business rates being a devolved matter — to follow suit.

And Mr Swinney must have been listening because he used his own party conference in Aberdeen to make an announcement that largely mirrored that of Mr Osborne.

So what might be the advantages to be gained from such a move, from a business perspective?

For a start, it could engender a revival in the numbers of business owners standing for election to local councils.

It is surely no coincidence that over several decades. the decline in councillors with business experience has gone hand in hand with the creeping centralised control of local government finances on the basis that being elected made little difference when they had so little control of the purse strings.

Nowadays, elected members in Scottish councils, particularly the central belt, tend to have a public sector background – with public sector attitudes to boot.

Used wisely, the new financial powers could particularly boost our cities, given that they boast a substantial variety of commercial premises within a relatively small area.

Think Aberdeen with the huge range of oil-related businesses within its boundary; think Edinburgh’s financial centre, The Exchange, and the many blue-chip companies operating from Edinburgh Park on the western fringes; think Glasgow’s thriving central business district with its several million square feet of grade A office space and a retail portfolio that is frequently claimed to offer the most extensive shopping facilities in the UK outside London.

The last time Glasgow was in a much freer position to spend its own money the ‘corporation’ (as the city council was then called) was mostly made up of business persons.

Lefty sociologists have tended to deride such individuals as ‘butchers, bakers and candlestick-makers’ but, boy, did they get things done.

They turned Loch Katrine into a giant reservoir for the city, ensuring an ongoing supply of fresh, clean water, which in itself helped greatly in the fight against disease among slum-dwellers. They built gas and electricity stations to power factories and other commercial premises and light streets and homes.

They constructed swimming baths and laid out parks and gardens. They developed what was arguably the biggest and best tramway system in the world for a city of similar size. And they also started building public housing (in Saltmarket) as early as 1871.

Implicit in the Osborne proposals is not to give local authorities additional money per se but to encourage fiscal responsibility by making a more direct correlation between raising and spending local taxes.

Conversely this also means there is a danger that Scottish councils (especially central belt ones) will simply blow the cash on further extending their bureaucracies and social services empires or spend it on vanity projects (e.g. Edinburgh Trams) – or, in the particular case of Glasgow, use it to underwrite the city council’s unenviable reputation for ‘municipal cronyism’.

But should wiser heads prevail and the money used to drive economic improvement then our cities could be looking towards a new era of prosperity to match that of the late Victorian/Edwardian heyday when civic pride was at its zenith.
A consequence of rates reform of the type referred to above might even bring to a conclusion an issue that has niggled at the edges Glasgow for decades.

Just over a century ago, In 1912, an expansionist-minded Glasgow Corporation managed to annexe the adjacent independent burghs of Partick and Govan (the latter being the sixth most populous town in Scotland at the time), a move which realised a long-held ambition among councillors of bringing the population of the city to over one million.

After World War One, Glasgow expanded further although this time mostly on green field land purchased from neighbouring counties, which was then earmarked for a massive programme of municipal housing.

As a result parallel private housing development tended to take place on virgin sites beyond the city boundary although it was initially presumed that those communities that emerged would eventually become part of Glasgow proper, just as Partick and Govan had done in the early part of the century.

The problem for Glasgow was that many of the new home-owners were aspirational Glaswegians and these growing suburbs became increasingly self-sufficient.

This was complicated by the development of a a socio/economic rift based on the fact that the suburbs were small ‘c’ conservative while the city was regarded as socialist with a small ‘s’.

Therefore it was largely to ward off any threat of annexation, that two of the suburban communities – first Bearsden, then Bishopbriggs – voted in local referendums to become burghs.

Despite this, in 1973 proposals related to forthcoming local government reform recommended that Bearsden, Bishopbriggs and Milngavie to the north, plus similar residential areas to the south, become part of a Metropolitan Glasgow.

This, inevitably, led to howls of anguish and knowing that they were up against an articulate, vote-savvy, middle-class electorate, the Scottish Office – encouraged by various politicians – quickly backed down.

Similarly, on further reorganisation in 1996, the boundaries of the new all-purpose councils were drawn to ensure that these communities were kept out of Glasgow.

Indeed, the population and acreage of the city was actually diminished with the transfer of Rutherglen, Burnside and Cambuslang to South Lanarkshire.

Apart from taking the view that ‘small is beautiful’ one of the justifications made by the peripheral communities for remaining independent has been fears about the cost of local taxation.

However, presuming Glasgow City Council will be permitted to retain all the revenue from business rates, and if it uses the money in a diligent manner – admittedly a big ‘if’ – this will, by implication, give the city a financial advantage over neighbouring councils which are largely residential in nature.

Consequently, this could lead to a scenario whereby ‘Milngavie Man’, having fought for decades to stay out of Glasgow, might actually start clamouring to be allowed in?

Twitter: @PropPRMan

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