Any other business

A truly radical review of business rates is worth more than all the Budget spin

19 March 2015

3:00 PM

19 March 2015

3:00 PM

Of all the measures talked up ahead of the Budget, the reannouncement of a ‘radical’ review of the business rates was the least concrete in content but the most important in potential impact on the domestic economy, and especially on business investment. This column has banged on for years about the iniquity of a system that imposes the highest local taxes on businesses of any EU country, based on pre-crash rental assessments and bearing no relation to the value of diminishing local authority services. It’s a system that, on top of other economic woes, has brought devastation to town centres — and gets away with all this because it has no democratic accountability, since businesses have no votes.

Quite how the next government might right those wrongs in a ‘fiscally neutral’ way — that is, in a way which continues to raise at least £26 billion for the Exchequer — remains to be seen. All we have so far is a list of questions, and an alternative promise from Ed Miliband to ‘freeze business rates for 1.5 million small businesses’.

A truly radical review would start from the proposition that local levies on business are not taxes at all, but charges for local amenities, infrastructure and policing which can be accurately costed. Firms whose owners and managers pay full UK taxes should simply pay an allocation of these local costs — but those who avoid taxes by offshore routes should pay more locally. Are HMRC and local government joined up enough to make that work? Almost certainly not, but it would be far fairer than the currentbusiness-rate rip-off.

Not forgotten

We’ll mark the centenary of Gallipoli in April, the 70th anniversary of VE day in May, and the bicentenary of Waterloo in June: by common accord, wartime sacrifice should never be forgotten. So why should the darker side of war ever be forgiven? Because if not — say the wise — we would never achieve ‘closure’, and harmony with former enemies. Even so, I find myself perversely in tune with Nikos Paraskevopoulos, justice minister of the Syriza regime in Greece with which I otherwise have no sympathy at all, in his call for Germany to pay belated compensation for the 1944 Distomo massacre, when 218 villagers were killed by Nazi troops in a bloodbath to match anything committed by Isis in Syria or Iraq.

The total of war reparations suddenly demanded, at €341 billion, is absurd, and is of course a squib to deflect continuing international criticism of Syriza’s failure to deliver reforms under the terms of Greece’s €240 billion bailout. But as what one German spokesman called ‘moral blackmail’, it’s still a card worth playing.

This story resonates for me because I was on a bus tour to Delphi and Mount Parnassus two years ago when our young tour guide pointed out that we were passing through the nondescript village of Distomo — and launched into a passionate tirade about Germany’s failure to acknowledge that its own prosperity is the fruit of the rest of Europe’s willingness to forgive. I had a feeling I would hear that case made again and again, and so it has been.

The past is never an excuse for mismanaging the future, and Greece and its government urgently need to brace up: but what Germans did to Greece within living memory is not forgotten. Finance minister Yanis Varoufakis may or may not have given Germany the finger on television, but his compatriots will continue to do so in spirit — and history will be an indelible factor in the coming breakdown of the bailout.

More hellfire please

To the Guildhall, for the banquet of the Worshipful Company of International Bankers. ‘Worshipful?’ I hear you ask, ‘Doesn’t that mean “worthy of special esteem”?’ Well, yes it does, when applied to mayors and guilds, and no they probably aren’t — but the Bankers are trying hard to live up to their adjective, not least by promulgating the ‘Lord George Principles’ (drafted by the late Eddie George, former governor of the Bank of England) of ‘trust, honesty and integrity’ that members must swear to uphold. ‘Humility’ doesn’t really need adding to that list, since the Bankers rank in permanent 106th place in the order of precedence among City livery companies, far below fishmongers and barbers and only just ahead of tax advisers.

My neighbour at dinner exemplified the qualities the company seeks to promote — and it’s only a pity our conversation was off the record. She was Lady (Susan) Rice, an American academic in the field of medical research who married a Scottish historian, changed career at 40, and rose to be the most worshipful banker in Scotland — other leading contenders for that title having eliminated themselves — as chief executive of Lloyds TSB Scotland and economic adviser to Alex Salmond. A speech by her might have been more stimulating than the one we heard from the Archbishop of Canterbury, Justin Welby — who pleased his audience by showing knowledge acquired in his first career as a corporate treasurer, and latterly on the parliamentary commission on banking standards, but seemed to pull his punches when he came to the moral message.

It didn’t help that the presiding Master, ex-Credit Suisse First Boston banker Mark Seligman, began by saying he had ‘known Justin since we were 12’ — an allusion to the fact that they were contemporaries at Eton. And it made an uncomfortable contrast to the barnstorming Archbishop Sentamu of York at the same dinner in 2008, who ranted about ‘bank robbers and asset strippers’ operating in ‘a market system which seems to have taken its rules of trade from Alice in Wonderland’. This year’s other speaker, Lord Mayor Alan Yarrow, put up a feisty defence against the way bankers are daily condemned for past mistakes without benefit of the presumption of innocence — but if they are to find the path of righteousness and stick to it, I think they still need occasional hellfire sermons more than they need pats on the back.

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