Where the Money Goes

The Financial Reality of the British State: From Westminster to the Town Hall

Part Six: A Local Prescription

Everything in this series so far has been diagnosis. This piece is different in kind, not just in tone: every proposal here has to trace back to a specific piece of evidence already built across the previous five pieces, or it doesn’t belong. This is not a manifesto for every government department. It is what follows, specifically at the local level, from what the numbers have already shown.

Does London ever see the places it decides for?

The people who write, edit, and broadcast the national conversation about “the left behind” mostly live in a small number of London postcodes, and mostly always have. The places being described and the place doing the describing rarely meet. This isn’t a claim that Londoners are indifferent — it’s a structural observation about where the describing happens, and it cuts both ways: a Kensington executive has probably never set foot in Sandwell for any reason, and a Sandwell family has probably experienced London only as a place other people’s decisions come from. Any proposal drafted from inside one bubble about the other starts with a legitimacy problem worth naming before it starts.

The organising principle: predistribution over redistribution

This series has already had the redistribution argument — how much the top pays in tax, how much the bottom receives in benefits — and shown why that argument, however loudly made on either side, is measuring a symptom rather than a cause. Part Five’s most important sentence is worth repeating here: “original income” already reflects decades of prior state choices about education, planning, and regional investment. The, admittedly partial, proposals below are aimed at the cause. Not “tax the rich more” — that argument belongs elsewhere, and has already been made elsewhere. This is about fixing where the money gets made, and who controls it, in the first place.

1. Fiscal devolution — the shape of a new settlement

Councils controlled and retained business rates outright until a single Act of Parliament in 1988 took that power away. Restoring it isn’t radical. It’s dateable.

Part A: decouple nationally-mandated costs from general local funding, and pay for them in full, centrally. SEND entitlements and social care eligibility are set in law by Westminster, not by councils — a council cannot say no to a legally entitled child’s plan. The £2.4bn deficit heading to £5.9bn, and the “statutory override” now propping up the whole system until 2028, are the predictable result of Westminster setting the mandate and not fully funding it. Whoever sets the entitlement pays for the entitlement. This isn’t new spending — the money is already being spent, through deficits and accounting deferrals. It’s attributing the cost correctly.

Part B: genuine local revenue-raising power for what’s actually local. Restore local rate-setting on business rates, or a meaningful local supplement within bounds. Revalue council tax — last done in 1991 — and add proper higher bands; a £150,000 flat and a £15 million house currently sit only a few bands apart. Give councils full retention of business rates growth they helped generate, rather than the current partial share.

The scale, honestly. Local government’s core spending power remains roughly 9% below its 2010/11 level in real terms even now — a genuine gap, though a smaller one than the headline grant-cut figure implies, since council tax rises have clawed back much of the difference. The High Value Council Tax Surcharge, launching 2028/29, is projected to raise £430m a year — and its own geography, 6,057 qualifying London sales against 15 in the North East, proves this series’ spine almost by accident. That revenue currently flows to central government “to support local government services” in general terms. It should be explicitly earmarked and legislated to flow into the reallocation in Part A— a small, specific, winnable change to a policy that already exists, and one that answers the fair objection that a wealth tax “just disappears into the Treasury.”

A smaller, complementary tool worth building alongside this: Community Municipal Investments — council-issued bonds sold directly to the public, already piloted in West Berkshire and Warrington, already wrappable inside a tax-free Innovative Finance ISA. The vehicle exists and works; it has simply never been distributed anywhere near the audience it needs. Housed inside a genuinely trusted, mainstream brand — NS&I, or a visible “local allocation” option inside the major retail ISA providers — rather than a niche fintech platform, this gives ordinary savers a real, tax-advantaged alternative to defaulting into a global tracker fund, and gives local civic bodies (see Section 3) something concrete to direct.

2. Anchor institutions and visible improvement

A taxi driver in Wakefield, giving a lift to the Hepworth, put half of this section better than any statistic could: the city’s old legacy industries are gone and everyone still measures the place against them; the Hepworth itself is a genuine asset that, in his view, should draw more visitors than it does; and Leeds University closing its Wakefield campus was a real, felt loss — though not one his friends all agreed on. Every part of that is checkable. Bretton Hall, a teacher-training college that became a performing arts campus, merged with the University of Leeds in 2001 and closed in 2007, its activities moved to the main Leeds site, the university’s own council citing financial pressure.

Universities matter most exactly where they’re least visible in the national picture. London and the South East see the largest absolute jobs impact from higher education, but the relative impact is highest in the places this series has already found struggling: over 5% of all local jobs in Plymouth, Middlesbrough, Stoke and Swansea are tied to the local university; in the North East, more people work in higher education than in car manufacturing, a reversal of the region’s own industrial self-image. Average salaries at the University of Sunderland run over a third above the city average.

And this anchor is currently under real financial strain — frozen fees, falling international student numbers, serious enough that Kent and Greenwich are merging into what’s being called the UK’s first “super-university,” a move already being described as a template others may follow. Protecting these institutions where they matter most, rather than treating university funding as a single national number, is a direct, evidenced proposal — not a generic call to “invest in education.”

The wider point, worth stating in the taxi driver’s own terms rather than dressing it up: the prescription here isn’t just money, it’s visible, credible signs that a place is not simply managing decline — new industry, a properly resourced cultural asset, a university that didn’t close. Restoring hope has to be seen, not modelled.

3. Civic voice

Fiscal devolution and anchor-institution investment both raise the same question: who decides what a place actually needs? A central formula, however well-redesigned, cannot answer that as well as the place itself can. A locally-convened citizens’ panel — chosen by lot, in the sortition tradition this project has argued for elsewhere — deciding which projects get opened to the investment vehicles described in Section 1, is the missing democratic layer in an otherwise proven financial mechanism. This deserves its own full treatment against a real place, which is precisely why it’s held for the Ashfield piece that closes this series, rather than argued in the abstract here.

4. Education as intergenerational investment — deliberately narrow

Not a full education policy. Specifically: the Apprenticeship Levy has left roughly £1bn a year unspent, because its rigid rules didn’t match how businesses actually wanted to train people — a real design failure now being corrected through the Growth and Skills Levy from April 2026, worth building on rather than repeating. Further education funding per student remains around 8% below its 2010/11 level even after recent recovery, the deepest and slowest-recovering cut in the whole education system. Fixing both is not an abstract equity argument. It’s the direct, mechanical link between a young person in a place like Wakefield and whether the third generation inherits the same lost hope as the first two, or something different.

Where this doesn’t go

No department-by-department policy programme. No health policy, no welfare reform beyond what Part Five already covered, no foreign policy, no defence. If a proposal here doesn’t trace to a chart or a dataset built earlier in this series, it isn’t included — that discipline is the only thing standing between this piece and an unbounded manifesto.

Back to where this started

Pig Iron argued, at length and in theory, that the regulating mechanisms of capitalism are constructed, not inevitable, and that dignity requires actively rebuilding what’s been dismantled. Everything in this piece is that argument made concrete: business rates were locally controlled until one Act took that away — constructed, not inevitable, reversible. A council’s fiscal precarity is not a natural law — it is the direct result of Westminster setting entitlements it doesn’t fully fund. Two generations of a place’s hope draining away is not an economic inevitability — it is the compounding effect of specific, nameable decisions, most of them made after 1988, several of them now, quietly, being reversed. The manifesto’s radicalism and this series’ arithmetic were always making the same argument, from two different directions. This is where they meet.

Last in this series: Ashfield — a real place, tested against everything this series has built.