The chancellor announced new ‘British Wealth Funds’ to get council pension schemes to invest in infrastructure, along with powers for local government to control business tax rates.
Addressing the Conservative Party conference in Manchester today (October), George Osborne announced that more power will be going back to individual regions.
He pointed out that there are currently 89 different local government defined benefit pension schemes, with separate sets of fees and costs.
“I can tell you today we’re going to work with councils to create instead half a dozen British Wealth Funds spread across the country.
“It will save hundreds of millions in costs, and crucially they’ll invest billions in the infrastructure of their regions.”
On devolution to local councils, Mr Osborne criticised the existing “merry go-round of clawing back local taxes into the Treasury and handing them out again in the form of a grant” and instead announced “the biggest transfer of power to our local government in living memory”.
Councils will now be allowed to keep the rates they collect from businesses, abolishing the uniform business rate entirely.
“That’s the single, national tax rate we impose on every council. Any local area will be able to cut business rates as much as they like, to win new jobs and generate wealth. It’s up to them to judge whether they can afford it.”
The Treasury explained that since 1990, local business rates have been set by central government at a uniform national rate. Since 2013, local councils have been able to retain 50 per cent of the proceeds of rates, with these latest reforms moving to 100 per cent retention of the full stock of business rates by 2020.
Moving to housing, he again pledged to build more homes to buy, directing the housing budget towards new homes for sale, by sweeping away planning regulations and making brownfield sites available.
He said: “We’ll give housing association tenants the right to buy. We’ve had enough of people who own their own home lecturing others why they can’t own one too.”
Attacking the new Labour leader’s plan to consider more quantitative easing in the face of the budgetary deficit, he said “it’s not monetarism, it’s magic money-tree-ism”.
He warned: “Let me tell you messing around with the independence of the Bank of England and letting inflation destroy savings is a massive risk to the economic security of every working family.
“Mind you, I’d better be careful not to disagree with Jeremy Corbyn about absolutely everything or else he’ll invite me to join his shadow cabinet.”
He also mentioned the plans announced earlier today to sell a further £2bn of the government’s holdings in Lloyds, arguing that where Labour let the banks go bust “we’re fixing them” and where they let debts soar “we’re going to bring it down”.
“Labour have now turned their back on opportunity and aspiration - we’re going to build the share owning democracy this party has always believed in,” concluded Mr Osborne.
peter.walker@ft.com
