MPs call for English devolution

8 Jul 14

The next government must seize the opportunity to devolve financial powers to city regions in England, the Commons’ local government select committee has recommended.

In a report looking at whether devolution was needed in England, MPs said combined authorities – being established to cover economic areas – should be given control of business rates, stamp duty, council tax and levy other taxes and charges.

Communities and local government committee chair Clive Betts said ‘fiscal devolution in England is an idea whose moment has arrived’.

He added: ‘The starting point was the London Finance Commission report, backed by the support of the eight core cities.

‘Now the Chancellor George Osborne is arguing forcefully about the need to decentralise power to boost economic growth, while Lord Adonis’ review makes a powerful case for the devolution of more powers to local government.’

Government should work with local authorities to push forward localisation, he said, by establishing a devolutionary framework that offers clear incentives and benefits to authorities that take more control of tax and spending.

This should include allowing the business rate multiplier to be set to match local circumstances, and the ability to increase council tax without needing to hold a local referendum, the Devolution in England: the case for local government report stated.

The MPs concluded that it was likely ‘a cautious Treasury’ would consider giving significant fiscal powers only a few areas to begin with, therefore they recommended initial steps should be taken through ‘recognisable economic areas’ such as combined authorities. However the ‘framework for localisation’ should also include increasing control over local public services handed to all councils.

‘With a wider range of revenue streams at their disposal, they would be able to invest in infrastructure and projects that mattered locally – without having to rely on or wait for handouts from central government,’ Betts added.

‘Local people would then reap the rewards through increased tax take, which could be reinvested in their areas. In the same vein, if local politicians failed to deliver, they wouldn’t be able to hide behind Whitehall and [Local Government Secretary] Eric Pickles.’

However commenting on the report, local government minister Brandon Lewis said it called for ‘higher council tax, higher parking charges, higher business rates and new hotel taxes’.

He added: ‘There is no public appetite for a barrage of new stealth taxes on hard-working people and local firms, which would force up the cost of living and destroy jobs.

‘This government has devolved down funding and powers down to local communities, from housing finance to business rates, whilst avoiding higher taxes. Contrary to this report’s blinkered view in concentrating power in the most distant and unaccountable tiers of municipal authority, we believe in devolving power down to the lowest appropriate – to councils, neighbourhoods and most importantly, direct to local taxpayers.’

CIFPA chief executive Rob Whiteman said the committee’s report was the latest to set out the need to address the growing democratic deficit in England.

‘All have concluded that there is a pressing need for greater devolution of financial powers and more freedom for local authorities to deliver for their communities,’ he said.

‘Yet despite all of these reports there remains too much central control of local government. This is why CIPFA and the LGA have set up their commission into local government finance to provide practical and effective recommendations on a way forward for government and authorities. We need to stop talking about the problem and start to provide solutions and a way forward which the commission will provide when it reports.’

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