Seismic shift in devolved power to the people? Look to Japan...
I’VE had an interesting week. I was half-hosting a Japanese academic colleague and his wife – regular UK visitors, but this being their first post-Covid overseas trip anywhere.
It started in London. I’d booked National Theatre tickets for a well-reviewed modern-day play, Romeo and Julie, loosely based on one of Shakespeare’s.
One-sentence synopsis: Julie – a bright, Cambridge University-bound, aspiring astrophysicist – is emotionally torn between uni and her affection for young single dad, Romeo, effectively sole carer for his baby daughter afflicted with Poonami.
No, the Poonami doesn’t feature in Shakespeare’s version, but, researcher that I am, I’d discovered it’s a real medical thing, meaning some babies’ sudden, massive, uncontrollable bowel movements.
Better still, that etymologically Poonami derives directly from the Japanese tsunami – a sudden, volcanic, unstoppable wave. My guests were delighted – and the play too was excellent.
But then came last Wednesday’s Budget, followed by my visitors’ trip to Birmingham, which I just knew – given the Post’s excited coverage of our region’s “monumental day” and the “seismic shift in power” for our Mayor Andy Street – would produce some amused but tricky questions from first-hand experts on mayoral governance.
It was the national news headlines, though, that they attacked first, about the UK’s “unsustainable tax burden” – set to hit its highest level since WW2, and characterised by Chancellor of the Exchequer Jeremy Hunt as something horrendous and to be avoided, certainly by a Conservative Government, at almost any costs.
We’re not Basil Fawltys, but my Japanese friends and I tend not to mention the War much.
Anyway, it wasn’t the timescale they were questioning, but that highest-level tax forecast of 37.7% of Gross Domestic Product (GDP) – and yes, we do make life harder by invariably labelling it a “tax burden”,
rather than, say, the “quality-of-life price” that the tax helps pay for.
What my guests wanted to know was: why the excitement over 37.7% of GDP?
And why the Chancellor’s apparent horror, given that that percentage is almost exactly the same as Japan’s and, moreover, puts both countries proverbially miles away from the high-tax end of so-called ‘advanced economies’ – indeed, down in the low-tax third?
Yes, ours is indeed a higher ‘burden’ than, say, America’s or Switzerland’s. But at 37.7% of GDP we’re way BELOW not only most sizeable West European countries, but below a fair chunk of Eastern Europe too.
It’s interesting. Pollsters never ask us if we prefer NOT being an ‘advanced economy’ – you know, one with fully staffed and functioning
health and social services, decently funded schools, reliable public transport, etc.?
And I’m not sure how collectively we’d answer. Clearly, these things do cost money, yet we obviously like visiting these higher-taxed places for our holidays. Not perhaps Denmark – top, with its 47% tax ‘burden’ – but France, Austria, Italy, Scandinavia, Greece, Spain, Portugal, etc.
It’s presumably these places’ ‘quality of life’ (QoL) that attracts us – which, unsurprisingly, correlates broadly with ‘tax burden’.
There are several such QoL
indexes, one being Numbeo’s, with measures including purchasing power, safety, health care, cost of living, and pollution. Netherlands, Denmark and Switzerland are top, scoring nearly 200
QoL points. Then the usual suspects – Finland,
Iceland, Austria, Australia, New Zealand, etc. – down to No.21 – UK 166.4, just ahead of Croatia. The underlying, systemic problem, obviously not mentioned by Chancellor Hunt, is precisely his Department: His Majesty’s Treasury and its overbearing central funding control, currently exercised politically and communicated by him.
And formerly by, among others, one George Osborne – which is where the irony starts. When Chancellor of the Exchequer, Osborne launched, and currently chairs, the Northern Powerhouse Partnership (NPP) – self-described as “the leading voice of business and civic leaders across the North”.
A very shouty voice. For, within days of Hunt’s Budget pronouncements, along came Osborne with his NPP ‘wrecking ball’.
The Treasury, he and his Powerhouse chums now reckon – and as local government has complained for years – far from being the provider of solutions, is itself the problem.
Its voice is the overwhelmingly dominant one in what he now sees as a damagingly over-centralised fiscal system. Just like when he was boss.
Now, however, he and the NPP reckon that the “most unfair” council tax – with its outdated property values – stamp duty (paid on purchasing residential property), and business rates should all go.
To be replaced, at least eventually, by a devolved land value tax – as part of a radical overhaul of the whole local government funding system that would not just reduce the Treasury’s all-powerful role, but eliminate it altogether.
Yep – that’s radical, but there’s more – like the localised hotel tax that numerous other countries already have, which NPP reckons could raise an annual £5.5 million for the Lake District alone.
But I digress – from what my visitors really wanted to talk about: that “seismic shift” in devolution to the West Midlands region and particularly Mayor Andy Street.
Not to gloat – I was exaggerating; it’s just that Japanese local government really is a different world.
Starting from its written constitution, with a local government chapter guaranteeing its role and “the principle of local autonomy”, it is, at least by comparison, the proverbial “localist’s paradise”.
The national state does currency, diplomacy and defence, with everything else left to the 47 prefectures and 1,700 or so municipalities. And heading those municipalities: directly elected mayors. However, as they departed, my guests promised to monitor our seismic devolutionary shift with interest.
The national state does currency, diplomacy and defence, with everything else left to the 47 prefectures and 1,700 or so municipalities.