Business chiefs have called for greater devolution to UK cities and regions as the next government focuses on Brexit negotiations.
In a joint letter to the political parties, the North West Business Leadership Team, representing national and international businesses with substantial commitments in the North West, London First, whose members include over 200 of the capital’s leading companies, and Centre for Cities, an independent think tank dedicated to improving UK city economies, have argued that greater control over the revenues generated by locally raised taxes – such as property and council taxes – would give local institutions greater incentive to drive investment and growth, and the means to fund it.
The letter from the organisations, which are committed to finding ways for London, the North West and cities and regions around the UK to work more closely together, states that:
- At a time when central government is focused on Brexit, devolved institutions should be given powers and resources to deliver economic growth
- Retaining local property tax revenue, for example, would give a strong incentive to support new development and the resources to manage the public costs
- Certainty of income streams would provide a foundation for prudential borrowing to deliver critical local investment
- Economic decision making would be improved
- Innovation and productivity gains would follow
Jasmine Whitbread, chief executive of London First, said: “The new government will be rightly focused on Brexit through the next parliament, but we can’t afford to take our eye off the ball when it comes to the economy. Speeding up devolution in England will help local government prioritise investments that will drive growth across the country – the so-called “devolution dividend” – and get the UK into the best possible shape ahead of 2019.
“In London, less than 10% of our income is directly managed by those people elected locally and closest to what our capital needs. To keep the economy growing, central government will have to loosen its grip on the purse strings.”
Juergen Maier, chair of the North West Business Leadership Team and CEO of Siemens UK, said: “The election of the new City Region Mayors is an opportunity for us to work much more closely together to develop the strong regions we need if we are to effectively deliver on the promises of the Government’s forthcoming Industrial Strategy. This matters not just to the North but to the future success of the entire UK economy.”
Andrew Carter, Chief Executive of Centre for Cities said, “In recent years we’ve seen important steps towards reversing decades of centralisation in the British political system, and the next Government should build on this progress by extending devolution across the country. That means working with the new metro mayors to make the most of the opportunities they face, and agreeing more devolution deals with other big cities like Leeds and Newcastle. It also means handing places more fiscal powers, to give them real incentives and measures to grow their local economies.”
The full letter reads:
“At a time when central government is rightly focused on the Brexit negotiations, there is a strong case for government to push the delivery of economic growth to devolved institutions, and to give these the powers and resources to build on their strengths and address their weaknesses.
“As devolution gathers pace, the regions must work more effectively together. Our goal is for the whole of the UK to become stronger to compete on a global stage. We all have to work harder post Brexit, another compelling reason to ensure the UK is the place to invest for international business. This means the North, the Midlands, London and the whole of the UK collaborating much more closely together, rather than seeking to compete.
“The creation of the new metro-mayors, the city-growth deals and the proposed localisation of business rates are all positive steps forward, but do not go far enough. Scotland, Wales and Northern Ireland all have much more substantial powers to drive local decision-making than exists in England.
“We ask you to commit to speeding up the process of devolution in England and, in particular, to give those parts of the country with suitable local institutions greater control over the revenues from locally raised taxes. The recent London Finance Commission called for the devolution of property tax revenue streams (stamp duty and business rates) to London government, replacing existing government grant pound for pound; similar packages should be put in place for other areas, reflecting their local characteristics.
“The benefits of such devolution include:
- local government would have a stronger incentive to drive local growth. For example retaining local property tax revenue gives a strong incentive to support new development and resources to manage the public costs flowing from that development; and
- the comparative certainty provided by these income streams provides a foundation for prudential borrowing to deliver critical local investment – driven by local priorities rather than the ability to secure ad-hoc central government funding.
“We believe that empowering the cities and regions will improve economic decision making and spur the innovation and productivity gains that will be critical to the UK’s future economic success.”
Jasmine Whitbread, Chief Executive of London First
Juergen Maier, Chair of the North West Business Leadership Team and CEO Siemens UK
Andrew Carter, Chief Executive of Centre for Cities