How do we pay for our cities?

I’m going to start this post with a story which points to many of the problems I want to briefly discuss. My swimming training takes place in the pool of a local school that my coaches hire out. Just before Christmas the boiler broke down so the pool was closed down. We rolled our eyes because if a swimming pool boiler breaks down then invariably it’s not easy to fix. When the kids returned to the school for their prelim exams in January the boiler was still not fixed. For two weeks kids sat freezing in classrooms, struggling to write their exams because their hands were so cold, and collapsing in class due to the fumes from the emergency gas heaters that had been dragged in. Eventually this lurid story hit the local press and the school was eventually closed, the boiler repaired (temporarily) and the school and pool reopened. During this enforced break from swimming I eventually lost patience and went to the Royal Commonwealth Pool for a swim. As I got out to get changed, I noticed the lockers had ESPC adverts on the end of them. I’ll be honest, as a subject of global neoliberalism, my immediate thought was “ooh, good idea. Why aren’t there more adverts around here to keep prices down and keep the place open? Rebranding it “The Speedo Royal Commonwealth Pool” would probably pay to keep it open for a couple of days”.

I know as a good left-winger I should have been shocked and appalled by this creeping privatisation of “public space” but I wasn’t really. But this concern – that we’re selling our cities to private companies – is becoming much more part of public debate in Edinburgh, and Scotland as a whole. The examples we are getting are not quite as egregious as some of the stories you hear from London, or the infamous cases of Liverpool One and Cabot’s Circus in Bristol, where entire city centre blocks have been sold to private developers, but we are getting smaller examples, such as "Edinburgh's Winter Festivals" (courtesy of Underbelly).

The stories seem to be particularly emerging in Edinburgh because the cut-and-thrust of this sort of capitalism rubs up against heritage, particularly in the New Town (never mind that the New Town was a speculatively built development, and when the banking crash of 1825-6 happened it was partly driven by this speculative development and stalled the Scottish economy for decades, as you can see on Claremont Street [thanks Eleanor!]). Local hyper-local the Broughton Spurtle has been doing it’s usually stirring raising quite a few concerns about how the Business Improvement District Essential Edinburgh have been using Saint Andrews Square and how the Council more broadly are using the city centre to lever in more resources – the latest being the proposal to wrap our shiny new trams in advertising. 

Now, much as I didn’t bat an eyelid about ESPC advertising to me in my swimming trunks, some of these changes do concern me – I’m not such a pragmatist that I’d be that right-wing. However, there’s two ways, as I see it, of unpacking this. Firstly, that this is just part of global trends of city competitiveness, and this quite rightly should be resisted. However, in the case of Edinburgh and most other cities in the UK, I do think we have to have an honest discussion about how we pay for our cities.

It’s easy to presume in Scotland that cuts to local government are something that England has to deal with – the Scottish Government has fully-funded the Council Tax freeze, hasn’t it? The reality is quite grim, as the Accounts Commission report into Edinburgh Council and reporting of recent cuts has made clear. The City of Edinburgh Council itself has to lose 1,500 staff. If you played around with the council's online budget calculator, the one thing you had to do was cut services somewhere and somehow. I have my differences with the Scottish Improvement Service for local government, but last week they posted this very impressive bit of work demonstrating how local authorities in Scotland are meeting the challenge of the “scissors of doom” – declining budgets and rising demand for services. But there's only so much of that sort of stuff local councils can do before services start to suffer.

If a local authority, like Edinburgh, has to cut over 10 per cent of its budget, while in real terms costs are increasing, then it needs to find some way of funding very expensive services like a city centres. Put simply, the grass in Saint Andrews’ Square is not going to mow itself (unless we invest in a city centre flock of sheep). This is related to the general mess of local government finance in Scotland and the fact that the Council Tax freeze has left local authorities completely powerless to do anything – on this I could not agree with Ken Gibb more. But it also raises a much simpler question – if the people of Edinburgh, or any other city, want a nice city centre, without private sector investment in the form of advertising and things, then we will have to pay for it through higher taxation. And, as with all tax/spend political debates, this is a debate we’re utterly unwilling to have. We’ll happily rail against the commercialisation of city centres without suggesting an alternative of how else the services that keep it going can be paid for. And unless we do consider coughing up more money in tax, then this creeping commercialisation will happen. Either that or our city centres will end up looking like the worst American downtown, and then we'll really be complaining. So, to go back to my swimming pool - what would I rather have, a closed broken pool, or some adverts?

As a concluding statement, I just want to reflect on who pays. One thing that concerns me at the moment is that even anti-austerians on the left don’t really push at who is paying tax. Increasingly the tax base is being shifted to labour; in the UK through income tax, national insurance and VAT. Tax on capital (particularly Corporation Tax) is falling. This is in a world where the returns to labour (wages) are falling, whereas the returns to capital (profits) are rising. This is why I’m against a basic income – capital deserves to pay labour a good return for its labour through wages, and a basic income paid for through taxes on labour completely fails to do this. How does this link to my city centre services? Well, if you thought Council Tax was a complete mess, don’t look at Business Rates, possibly the biggest example of an utterly disastrous tax in the UK.* The vast majority of it is paid to central government and then redistributed to local councils. This was done in the 1980s to stop Militant councils using increases in Business Rates to pay for improved services. So, if we were to increase Council Tax, or another local tax on labour, to pay for city centres then effectively it would be yet another redistribution of the profits of labour to capital. So, while the voluntary payment by businesses of improvements to city centres – through BIDs, sponsorship etc. – might not be ideal, at least it’s not a tax on labour.

* honestly, the more I hear about Business Rates, the more I just end up thinking "what?", "eh?", "really?", "why on Earth?" etc. etc.