Alarm bells ring on changes to business rates and tax credits

Did Health Secretary Jeremy Hunt let the cat out of the bag on Tax Credits?

Did Health Secretary Jeremy Hunt let the cat out of the bag on Tax Credits? - Credit: PA

Chancellor of the Exchequer George Osborne attracted all the headlines at the Tory party conference this week when he announced that councils would be able to set and spend business rates – instead of being a conduit for the government.

At present the government sets business rates, tells councils to collect them, and then decides what money councils get back from businesses.

On the face of it, the change announced this week is increasing local government accountability – and that’s certainly the line spun by the chancellor and his minions.

But there’s been no indication of how this will actually work – of how much the government will cut its total support to councils.

And crucially there’s been no indication of how the government will ease the pressure on poorer councils. The business rates in Westminster will be rather greater than those in Rotherham!


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Ipswich council leader David Ellesmere was probably right to bite his lip on the change in policy until some details are forthcoming.

Given that the chancellor used the word “devolution” and given the fact that the Department of Communities and Local Government is involved, I don’t expect there to be much clarity on the subject for a very long time!

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The other striking feature about the conference was Jeremy Hunt’s assertion that despite its claims to support “hard-working people,” the government isn’t really interested in “hard-working people” unless they earn a decent wage.

Mr Hunt – not normally seen as one of the more radical members of the cabinet – let the cat out of the bag when he revealed that the government was cutting in-work benefits because it wanted to encourage the low-paid to work harder like those in Asia and the USA.

I’m well aware that there are a huge number of millionaires in the USA, China, and other Asian countries – but there is also grinding poverty.

Most Asian countries are not as socially advanced as those in western Europe and I’m not sure most voters would want to lose the social nets that our society provides.

And there are millions living on the breadline in the US – living on trailer parks and reliant on charity. They don’t have the benefit of a health service to treat them if they get ill.

Many people on minimum wage or on the living wage in this country work very, very hard – yet need tax credits to allow them to enjoy a basic standard of living.

Suggesting to these hard-working people that it is best to remove the safety net is something of an insult – it suggests that the policy of cutting tax credits is about social engineering as much as it is about cutting the benefit bill.

Is that really government policy?

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