Boris win dents Labour recovery

Boris Johnson has been re-elected Mayor of London.

It's a remarkable achievement, given his Party's poll ratings and the fact that Labour out polled the Conservatives 41% to 32% in the GLA assembly vote.  Boris is a winner, an electoral asset and vastly more popular than his Party; characteristics that are no longer associated with David Cameron.

But what does a Boris victory mean?  For London, it means more of the same.  Why would he jettison his winning formula?  Despite the claims of some that Boris represents a more right-wing or authentic Conservatism, the reality is that he has governed as a moderate, pragmatic Tory.  Surrounded by a competent team of experienced advisers such as Edward Lister, and Simon Milton before him, the Boris machine has been risk adverse and made few mistakes.  There are rumours that he will now lose his respected PR adviser, Guto Harri, which will be a blow.

His victory will have a bigger impact on the the national political scene and the future direction of the Conservative Party.  Many Tory MPs now expect Boris to return to Parliament at the 2015 election, despite Boris ruling this out.  Boris is now a favourite to succeed Cameron.

The fact that people are even contemplating a local government figure as the next Prime Minister is the greatest endorsement of the mayoral model.  It is therefore disappointing that the majority of England's provincial cities rejected the mayoral system on the same day.

Outside London, Labour made major gains at the expense of both the Tories and Lib Dems.  This is part of the inevitable trend as voters use local elections to punish the Government of the day.  Over the course of the Coalition, Labour will become the dominant party in local government.  Independent and fringe parties also polled well.

The results will put more pressure on Cameron and Clegg.  Over the last 24 hours, maverick Tory and Lib Dem politicians have hit the TV studios demanding their leaders are more robust in coalition negotiations.  In fact, the Coalition parties didn't do that badly - Labour's poll rating on Thursday didn't even hit the figures achieved by Neil Kinnock, let alone Tony Blair.

Ed Miliband may have won the better newspaper headlines this weekend, but Labour are still a long way from a return to Government.

Business rates, a brave decision minister

The announcement by the Coalition Government to re-localise business rates – well at least to allow councils to retain the business rates from new commercial development – will be welcomed by the local government fraternity. 

It should also be welcomed by the development world.  There will now be a financial incentive for councils to approve commercial development, in the same way as the New Homes Bonus incentivises new house building.  And by preventing councils from increasing the business levy, there is a reassurance that there will be no return to the 1980s when socialist town halls piled up the tax burden onto the business owner.

But it is a bold and brave decision by the Coalition, particularly the Liberal Democrats.  The major beneficiaries will be those areas that attract new businesses, predominantly the more affluent south. 

The London Borough of Westminster collects 6% of the country’s entire business rates.  Every time a new Gherkin or Shard goes up, they will be cashing in.

A new political narrative is emerging that we have a Tory government, propped up by the Liberal Democrats, which is favouring the south over the north.  The Liberal Democrats paid a massive price for this at the recent local elections, suffering huge losses in the northern cities. 

Despite Nick Clegg’s assertion that the localisation of the business rates will be fair, it is difficult to see how any system can be implemented which won’t favour those areas which are already attractive for business to locate. 

What are your thoughts?  Do you think re-localisation will give councils more incentive to support commercial development?  Which areas will be the main beneficiaries?