January 2015



Today is Holocaust Memorial Day. This post would not seem to fit easily into the main business of HelpGov’s helpful blog but I have nowhere else to publish it. Our awareness of the holocaust is at least reflected in the many acts of commemoration of it by local authorities and government in the United Kingdom. 

In Krakow I met a student from the GDR.

‘You should go there,’ he said. ‘You know, work parties from the GDR helped to restore it. We had a crazy professor who took us to do that. At the end when the Poles gave a dinner to thank us he said how lucky they were to have this wonderful anti-fascist memorial.’

I had already decided to go.

By the standards of its day, the train from Krakow was modern, electrified and busy. I changed at a suburban station before Katowice. There was a silence, broken only by the wheeze of a small steam locomotive at a far platform, the branch line for Oświęcim. There were two, maybe three, wooden carriages, old enough to have separate compartments. I was alone in mine. A whistle blew and the engine groaned into action to the hiss of steam and sulphuric reek of coal smoke. The carriage creaked as it rocked gently sideways, the rails below sounding a slow clickety-click, clickety-click. A flat featureless plain passed slowly outside.

Oświęcim was the end of the line. No more than four or five locals got off the train, slamming carriage doors behind them. A small town with a modern concrete station, larger than such a sleepy place needed, anticipating visitors who were not here today. In the forecourt, an arrow helpfully directed me in Polish and German to ‘Oświęcim/Auschwitz.’

Even in 1970 photographs had made me familiar with the main entrance gate, the curved ironwork overhead spelling out the famous lie, ‘Arbeit macht frei.’ Rows of two-storey red brick barrack blocks receded beyond the gate, administrative buildings for an industrial operation – the efficient murder of millions of people.

Beyond them again lay the foundations of demolished huts, the cramped quarters of prisoners kept alive, at least for a time, until they could work no longer in adjoining factories.

And further over, the long railway sidings where other trains had arrived, victims offloaded from cattle trucks from all over Nazi-occupied Europe once the mass murder started. Some siphoned off for slave labour, some for the gas chambers.

Back in the barracks, whole floors had been arranged to show the brute scale of the operation. A room with a mountain of suitcases. Another with a hill of shoes. A tumbling glacier of spectacles. Prosthetic limbs piled high. On the long walls, thousands of photos of prisoners in rows, each with a simple black frame enclosing a blank-eyed man woman or child in striped uniform staring at the camera, a name and prisoner number underneath. Occasionally, maybe no more than every thousand photos, a small posy of dried flowers, a ribbon or note pushed between frame and wall. In a separate building a crematorium, steel ovens side by side as if in some hellish bakery, doors left open, each with a metal stretcher visible inside. No personal mementos here but large bouquets and wreaths of flowers and shiny green leaves, a brightly-coloured commemorative sash around each proclaiming which delegation, which fraternal group of socialist visitors, had left their temporary mark.

The whole place was silent. If there were other visitors I failed to see them in my introspection.

At the entrance there was a small shop, a limited range of books, most in Polish, some translated into other languages. I bought a small paperback – FROM THE HISTORY OF KL – AUSCHWITZ Vol. 1, published in Poland in 1967. For years I scarcely looked at it, eventually lending it to my daughters when they studied the history of Nazi Germany and themselves visited Auschwitz with their school. The book is in front of me now. Its flimsy pages and cramped text suggest meticulous research. It sets Auschwitz in the context of what it calls ‘Hitler’s programme of the extermination of the Nations.’ It lists ‘Poles, Russians, Czechs, Frenchmen,’ and many others. It details how Soviet army prisoners held in the camp were treated. ‘Prisoners in Auschwitz,’ it says, ‘belonged to various race groups … arrested regardless of religious denomination.’ It mentions Jewish prisoners but not the peculiar cruelty that attended the attempts of the Nazis to exterminate the Jews. It is as if there were no holocaust. It is a small reminder of how history can be written to tell lies and of the importance of remembering the truth.

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This post may seem ironic to people working in local government in England where both their functions and the funding they receive from central government to provide them have been and are being so drastically cut. The actual circumstances I set out apply directly to Scotland (I pick up the political aspects of those circumstances in my other blog). But the arithmetic and the issues are relevant anywhere a higher level of government helps fund a lower level.

People don’t like paying taxes. They especially don’t like paying them when it’s very obvious (unlike, say, VAT) and when a bill for them arrives, literally, through the door. And they don’t like paying more taxes in times of inflation or when they feel hard pressed.

Local government, throughout the UK, has for a long time received most of its funding directly from central government. How much they get and why is a complex story. But crudely speaking, about 70% of council funding has come from central government. Some of the rest comes from income (parking fines, housing rents and so on) but much of this is, to use the jargon, ring-fenced for specific purposes. So, also crudely speaking, we can say that councils have received about 30% of their income from local taxes – once upon a time domestic rates, briefly and notoriously the poll tax, and now council tax.

Because of its visibility, people are very conscious of increases in council tax levels. They don’t like it. They moan to their elected representatives at all levels and the government comes under pressure to ‘do something’ about it.’ The ‘something’ they’re sometimes tempted to do is institute a council tax freeze, paid for by them in exchange for certain commitments by councils (I examine the Scottish example in my other blog).

There are two unintended consequences of a council tax freeze of this sort.

First, over time central government funds a greater and greater percentage of council spending. The following table illustrates this.

If

  1. a council service costs £100 in year 1 and annual inflation is 3%
  2. and it is funded 70% by the government, 30% by council tax
  3. and the government agrees to pay for the maintenance of that service at existing levels providing the council agrees not to increase council tax

this is what happens.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
TOTAL COST 100.0 103.0 106.1 109.3 112.6 116.0 119.5
Government pays 70.0 73.0 76.1 79.3 82.6 86.0 89.5
Council tax pays 30.0 30.0 30.0 30.0 30.0 30.0 30.0
% paid by government 70.0 70.8 71.7 72.6 73.4 74.1 74.9

So in seven years, in this simplified example, central government funding increases from 70% of a council’s spending to virtually 75% (three-quarters) and the longer the freeze continues, the higher that percentage will creep.

I spell out some of the detailed consequences of this in Scotland in my other blog that I’ve already mentioned. But the general point, as the old saying has it, is that he who pays the piper calls the tune. And the more he pays, the more he calls the tune.

The second unintended consequence is that wealthy people benefit more from a council tax freeze than poor people.

This can be illustrated by the situation where I live, in Aberdeen. There are seven council tax bands based (historically) on the value of your house or flat. Each band is set as a percentage of the middle Band, D, a sort of rough average.

The table below shows what the council tax is in 2014/15 for the lowest, ‘average’ and highest property bands in Aberdeen. If the council tax freeze were to continue for seven years, council tax would stay at those levels – £820.26, £1230.39 and £2460.78 respectively. The table shows what council tax would be if inflation continued throughout at 3% per year and there were no freeze.

2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
Band A 820.26 844.87 870.22 896.33 923.22 950.92 979.45
Band D 1230.39 1267.30 1305.32 1344.48 1384.81 1426.35 1469.14
Band H 2460.78 2534.60 2610.64 2688.96 2769.63 2852.72 2938.30

From this information it is easy to calculate what people in each band would save with a freeze (the difference between 2014/15 and 2015/16 + 2014/15 and 2016/17 etc)

Band A 543.45
Band D 815.06
Band H 1692.54

So the taxpayers in the highest council tax band save £1149.09 more than those in the lowest band.

You may object to this on the basis that the council tax is based on housing prices not incomes. What about the little old lady with a small income who lives in a large house inherited from her parents? What about the self-made millionaire who never moved out of his council house? Of course extreme cases like this exist. But on balance we can be sure with some confidence that in most cases the value of the property that people live in reflects their wealth and income. So a council tax freeze tends to benefit the better off more than the poor.

My contention is that both this and the increasing reliance of council funding on central government are unintended consequences of a council tax freeze. To keep the technical and more overtly political aspects of this separate I look at some of the wider implications in my The Nation says No Thanks! blog.