A new report out today says that the Government should aim to empower local areas through fiscal devolution.
The report by the Northern Powerhouse Partnership describes the UK is one of the most centralised countries in the developed world, with Westminster setting all but a tiny fraction of our taxes.
It says that Fiscal devolution could reshape the entire British state and transform our economy.
It can says the report bring power and accountability closer to communities and local economies from shifting sands in Westminster.
Last week’s budget saw single pot multi-year settlements unveiled for Greater Manchester and the West Midlands.
The new ‘trailblazer’ devolution deals allow the mayors to retain 100 per cent of business rates, paving the way for other mayoralties to secure similar powers in the future.
Lord Jim O’Neill, vice-chair of the Northern Powerhouse Partnership, said: “It’s time for a new era in English devolution where we give local areas greater control over their own destiny.
“Proper fiscal autonomy would bring power and accountability closer to communities, while protecting local economies from shifting sands in Westminster and allowing us to focus on the fundamental barriers to productivity.
“A fairer and better balanced tax system between central and local government is the bedrock for a functional, productive, prosperous economy.
“While the changes we’re proposing will take many years to be felt in economic data, that should not put us off. These are deep-seated problems that have developed over decades and as such it will take decades to reverse them.”
John Stevenson MP, Chair of the Northern Research Group & MP for Carlisle said: “The important principle of devolving taxes such as business rates and council tax, as well as introducing a tourism levy which could be a huge win for Cumbria with the Lake District here, would be a significant step forward. What further reforms should be made to those taxes is a matter for further debate.
“We cannot continue to have local leaders unable to make the decisions about how they pay for their ideas and priorities. They must have responsibility passed to them, otherwise many of them here in the North are going to keep blaming government for not giving them enough funding.
“As a Conservative politician I want to see responsible tax competition but a much clearer link between taxes raised and expenditure. This balance will help drive investment and help deliver growth and higher productivity by attracting and retaining businesses whose private investment is in the end what creates wealth and sustains jobs.”
