Derating
| Date | 01 March 1946 |
| Author | W. O. Atkinson,Arthur Abel,C. H. Pollard. |
| DOI | http://doi.org/10.1111/j.1467-9299.1946.tb03067.x |
| Published date | 01 March 1946 |
Reviews
Derating
By
ARTHUR
ABEL,
W.
0.
ATKINSON and
C.
H.
POLLARD.
(The Institute of
THE
authors of this study do not like derating; they would like, if they could, to
see the clock put back. From the point of view of local authorities
this
could
either
be
accomplished by the rerating of
“
productive industry,” freight trans-
port hereditaments and agricultural land, or by substituting for the present fixed
“compensation” for derating, a full compensation, based on current rateable
values and poundages.
On
the whole the authors would prefer the latter, which
would be more agreeable to industry, but less agreeable to the exchequer.
Taking the extravagant claims
of
the protagonists of the
1929
legislation at
their face value, the authors have little difficulty in showing
that
they have not
been fulfilled; the unprofitable industries were not made profitable, the depressed
areas prosperous, the. general level
of
rate poundages substantially lower, nor
the disparity between them substantially less, as a result of derating and the block
grant.
No
doubt there would be general agreement that the financial measures
of
1929,
like many others which have tried to
kill
two
birds with one stone,
in
fact fell between two stools; on the other hand few people would seriously expect
a
mouse to change the course
of
a steamroller.
Since
only
33
of
“
new money
”
was injected
into
the local
finance
system
by the Act
of
1929,
and since the reciismbutional effect
of
the Exchequer
con-
tribution
was
damped down by the fact that nearly
half
of
it represented
com-
pensation for derating, which was not intended to be redistributional, the net
effect on either the level of rate poundages or on their dispersion could not have
been great, even in the absence of the devastating depression which
hit
the
country in
1930,
and upset the equilibrium
of
the arrangement almost imme-
diately after its adoption.
In addition, the structure of the formula prevented the grant from being
more than mildly equalising, partly
on
account of the
“
rateable value ceiling,”
which ensured a substantial grant to wealthy local authorities, partly because of
the small weight given to the low rateable value and high unemployment factors-
the two decisive indicators of local pverty-in the formula. The most important
explanation of the renewed rise and dispersion in rate poundages after the reforms
must, however, be sought on the expenditure side.
The
depression not merely
hit the highly rated areas more heavily, and reduced their rate receipts more
severely than those
of
other areas,
it
also enormously increased their outlay on
Public Assistance, the item which above all others makes poor areas heavy
spenders. For the time the full effect
of
the new situation was masked by the
economy cuts in local expenditure begun
in
1931,
but as the
1930s
wore on,
and local expenditures returned
to
normal, it became increasingly apparent.
To
demonstrate that derating and the formula grant were not sufficient
to
re-establish industrial prosperity in the depression, or to cure the dispersion in
rate poundages,
is
not
to
prove that either measure was useless. The poorer
authorities were better
off
with a small grant distributed in a way
that
gave them
some help, than they would have been without it. They were also (as the authors
demonstrate) better
off
with their derating compensation than they would have
been with their unnarrowed rate basis., because their rateable value shrank,
while
60
Municipal Treasurers and Accountants.)
75
pp.
7s.
6d. net.
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