And how exactly is the city landed with a fiscal deficit meant to deliver a competitive offer, versus the government backed favourite that's been given all the spoils? Oh yes, one or two cities in particular will do very nicely from all this. Others will see decades of hard graft and regeneration ripped up in front of their faces and have their economic growth prospects crippled as competing locations take pole position. It's a spiral of economic despair for those locations.
Britain isn't Germany, by a long shot, not least of all in that Britain has a government which takes clear favourites. I suggest you also read the Wiki page about the tax you mentioned. It is criticised exactly for the reasons I mention - rich areas are able to lower their taxes and attract more business, poorer areas have to keep their taxes high no matter what, which drives business away. It's a recipe for someone making money, for sure, but not Britain.
I only mentioned the splitting up of the UK (well, what else do you call it when we no longer pay the same taxes into a shared pot and thus have one society but instead have areas aggressively competing against one another?), but it's funny you mention social disintegration too. Depending on how far they push it, you could well see that.
Catching up after some days away!
Firstly - about the
Gewerbesteuer in Germany. Some background is, I think, necessary as the structure of local government is not the same as in the UK. The basic unit is the
Gemeinde - I suppose the nearest equivalent would be a Parish Council, but on steroids. A possible translation in this context is municipality but outside the large cities (Berlin and Hamburg each count as one Gemeinde) they include a lot of countryside, villages and small towns. There are more than 10,000 across the country and they are responsible for all those things in their areas which are not specifically reserved for the individual regional states, the
Bundesländer. The Gemeinde are independent from the regional states, they manage themselves. The Gewerbesteuer, a local business tax on profits, is one of their few sources of income.
Although the Wikipedia article makes a theoretical point, in practice the effects are a lot less dire. A Gemeinde with a lot of countryside will generally have a lower tax rate than one in a more populated area - the advantages for a company to be in or near a city often outweigh the higher tax it has to pay and so does not significantly affect its choice of location. What the article does not mention is that because the Gewerbesteuer accrues to the Gemeinde, the Gemeinde has a vested interest in attracting business - so it has interest in designating areas of its patch for use as industry or business parks. Generally these are intended for expanding local businesses rather than attracting multi-nationals, so the type of industry is small scale - car repair firms, tyre suppliers, wood- and metal working companies, small supermarkets, local warehousing and distribution, speciality food processors and so on. The big advantage of all this is that some industry is retained in or near small towns and villages which helps reduce the de-population of the countryside and reduces the concentration of business in the large towns and cities so easing transport problems. The Gemeinde can build its own swimming pool, spa or village hall with the tax proceeds - and the presence of these facilities give fewer reasons for people to move away. A bigger criticism of the tax than that made in the Wiki article is that the tax is only payable by those with business premises - so the self-employed and sole traders working from home do not pay it which, as employment patterns change, means that more and more small businesses benefit without paying the tax.
I will be the first to agree that this model is not transferrable to the UK - at least not without a great deal of upheaval. What I cannot agree with, is your assertion that allowing local taxes to be varied is, de facto, bad because it leads to aggressive competition. The expression United Kingdom means what it says on the tin - it is the name for the Kingdoms of England and Scotland united as one state. It has nothing to do with tax levels. And, anyway, why is competition bad?
Secondly - the Northern Power House. It is clear that the existing arrangements have not served areas outside the South East at all well since the loss of the coal, steel and textile industries in Wales, The North West, The North East and Scotland and the de-population of the countryside with the increasing mechanisation and automation of agriculture. I maintain that one of the most important tasks in national politics at the moment is to reduce the gap in incomes between different areas of the country - and this can only be achieved by the levelling up of the poorer areas.
One of the prerequisites for growth are good transport links - road, rail, air and telecommunications - both within the area and its links to the outside world. The Government has now, for all sorts of reasons, made a start in trying to give more emphasis to local input to transport planning in an area centred around the largest populations in the North West. And then promptly runs into criticism that its all a plot and that some areas will be disadvantaged.
On the one hand governments of all hues are castigated that too much power is centred in London - and when an attempt is made to devolve some responsibility - that is wrong too! Railing against the Governments plans because it is perceived that some areas have already been selected as winners and therefore the others will necessarily be losers will help nobody. The ideas behind such criticism are just plain wrong - they are based on the old-fashioned, outmoded concept that the economic cake is fixed in size and A can only get richer if B gets poorer.
I have to declare my interest in these developments. In my time with a large US computer hardware company I spent a month or more each year in Silicon Valley - I have never seen so many Ferraris and Porsches in company car parks and I asked myself why?. Where are the UK equivalents of Microsoft, Oracle, Apple, Facebook, Google and Intel who employ hundreds of thousands
? This link <http://www.paulgraham.com/siliconvalley.html> is an interesting take on what is needed to re-create a Silicon Valley elsewhere. Could it happen in Hebden Bridge
?
But without better transport links, there will be no improvement. Grab the opportunity while you can - it can always be adapted later.