‘No solution’ to fiscal devolution conundrum, says Benn

23 Sep 14
No solution has yet been found to the problem of how to introduce greater fiscal devolution in England while also maintaining elements of redistribution, shadow local government secretary Hilary Benn has told Labour’s annual conference.


By Richard Johnstone in Manchester | 23 September 2014

No solution has yet been found to the problem of how to introduce greater fiscal devolution in England while also maintaining elements of redistribution, shadow local government secretary Hilary Benn has told Labour’s annual conference.

Speaking at a fringe event hosted by the ResPublica think-tank and the Core Cities Group, Benn said that Labour planned to devolve of more control over services to localalities and increase the efficiency of spending in areas such as transport infrastructure and skills.

He said that the creation of combined authorities in cities, and early signs of closer working between counties and districts, was creating the ‘building blocks’ to which Westminster could then devolve.

‘There’s less money about, and we’ve really got to make best use of the cash we have got in Whitehall and that is available locally. At the moment too much of it is tied up in ways of doing things which are expensive, not necessarily the most efficient and don’t necessarily lead to the best outcomes.

‘We’re going to devolve to combined authorities and other groups of local authorities that come together. This is not just about cities this is just as important for the counties and the county regions. This English new deal has got to be an offer that is available to all parts of local government.’

Asked whether this would include devolution of taxes to local areas, Benn said this debate was important.

However, he added: ‘The question I would put to you – because I haven’t yet seen the answer – is how do you combine fiscal devolution on the one hand with on the other hand redistribution of revenue.

‘I’m taking about how you do it nationally. I’m not saying you can’t do it, I’m just saying to those that advocate it ­– and I get the message, believe you me – that we have to find a mechanism that works that is fair.’

He highlighted that the London Finance Commission had called for stamp duty to be devolved in full to the capital, with a corresponding reduction in grant to ensure the localisation is fiscally neutral at the outset.

However, Benn stated that although this worked at the moment of transfer, it was not proposed the grant reductions would increase in line with the likely growth in stamp duty over time.

‘You can see why there’s an issue there. If you said to local authorities in the Northeast you can have the proceeds of your stamp duty and London you can have the proceeds of yours, how are we going to deal with that [difference]?

‘I do believe in government having a role in redistribution, because the alternative is to say whatever you can raise, you raise it but then your on your own. That is why with business rates localisation there was concern on the part of some of local authorities about the impact that would have because they don’t have the same kind of resilience.’


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