Devo-max or devo-zero?
Fiscal devolution may not be a phrase that immediately catches your imagination, but bear with me: this is important. It’s a topic that’s gained more traction recently in British politics, with parties starting to vie with each other for giving more money and powers to local authorities. The coalition government passed the Localism Act 2011, allowing for certain powers to be transferred from ministers in Whitehall to local authorities but these have to be fought for: local authorities have to for them on a case-by-case basis. Greater Manchester Combined Authority won additional powers such as the earn-back model, giving it the ability to borrow to invest in its transport system and make repayments increased business rates revenue generated by the investment.
Why is this important now, you may ask? We’re currently seeing a strong campaign from north of the border for Scottish independence, seeking autonomy for Scotland. The major British parties are all against this, fighting for the Union whilst promising further significant devolution of powers to the Scottish parliament. There is a fundamental issue here: the devolved regions already have significantly more freedom to set their own local policies than areas of England do. Both Wales and Scotland are in the process of gaining more powers and these have been granted on the understanding that the devolved regions know best how to run their local economies. So, if it’s good for them, why not for England and, particularly, its cities?
A recent report by Core Cities confirms that cities are the powerhouses of the UK economy and are crucial for our future economic growth. Our political parties seem to understand this, but there remains little excitement for genuine devolution. Ed Miliband recently announced that a future Labour government would seek to make available a further £2 billion per year for devolution to city-regions that can show significant public and private sector collaboration but, again, this has to be bid for. His party correctly argued at the time of the Localism Act that devolving power to local authorities without devolving finance is meaningless, but this policy still leaves the money in the hands of Whitehall, releasing it only when it thinks best.
This is no way to allow our cities to power ahead. Central government must get out of the way and allow our cities to determine their own future. London is doing better in terms of autonomy, but even there more can be done, and the Chamber fully supports the results of the London Finance Commission in allowing it to keep more of the tax it raises itself, but this must be spread to other areas. Government, and particularly HM Treasury, is reticent about disconnecting its levers of power, but it must allow our cities to stand on their own two feet. A good start would be to allow them to keep tax raised in their areas for their own purpose and set out plans to allow them to raise their own money for investment in the future. Mr Miliband’s plans for Whitehall ministers for the regions are not good enough: each city should instead become its own Whitehall. Central government must learn to trust – like all the best businesses do – and empower its front line to deliver.
It sometimes feels like this is an issue that, like a boomerang, keeps coming back. There is good news on this front, though. George Osborne announced in December’s autumn statement that there is to be a full review into the Business Rates system. As part of the accredited British Chambers of Commerce network, we are leading on a project to present a white paper on reform of the system to the political parties at the autumn conferences and we’re keen to have your views. We’ll also be responding to the formal consultation that’s currently live on the same subject so, if you’ve any views on how the system should work, do send them to me at email@example.com.
There was some interesting data buried in the detail in the recent Labour Force Survey: finance and insurance is no longer the best paying sector in the UK. Excluding bonus payments, manufacturing now pays more, with construction not far behind. This is a key message which needs driving home in our schools to our young people. Long-term, well paid careers are available outside the square mile. Here’s an opportunity to not only build your own rooftop, but shout from it, too.
We have a bumper retail edition for you in this month's 53 Degrees with a Behind the Scenes at Manchester Arndale and a more detailed look at how Manchester city centre has thrived through the recession with its Business Improvement District. The death of the high street is not guaranteed, but its nature has changed. The question is how we embed success in all of our key centres, not just some.