Think Tank Urges Phased Tax Powers for England's Regional Mayors
A new IPPR report proposes giving England's mayors tax and borrowing powers in stages, with capable city-regions like London and Greater Manchester qualifying first.
Regional mayors in England should be granted control over local taxes in stages, with the most capable city-regions receiving powers first, according to a report by the progressive think tank IPPR. The report is backed by economist Jim O'Neill, who has advised Prime Minister Andy Burnham.
The proposal would allow mayors to retain a share of locally raised income tax and borrow against that future revenue to fund transport, housing and industrial projects that central grants have left unbuilt. However, the report warns that granting every region identical powers simultaneously would risk failure in areas lacking the institutions to manage them.
"Without these safeguards, the government could be one rogue mayor away from bringing England back to square one," the report said, highlighting risks of over-spending or misuse of funds in areas unready for full control.
IPPR and its northern arm, IPPR North, proposed that a tier of advanced city-regions, capable of proving they can handle money responsibly, should be allowed to retain and manage some tax revenues and borrow against them. Areas such as London and Greater Manchester were identified as most likely to qualify first for advanced status.
The report places greater emphasis on giving borrowing powers to local authorities and a phased handover tied to each region's readiness. O'Neill endorsed the recommendation in the report's foreword, stating: "The recommendation for some 'advanced' areas to receive enhanced fiscal powers is especially something I would endorse."
The publication follows a separate proposal last week from another think tank, the Centre for Cities, which suggested mayors should keep 7% of local income tax and 2% of corporation tax to replace nearly £5 billion ($6.7 billion) in Treasury grants.
Devolution of tax and spending powers is central to Burnham's drive to reduce London's economic and political dominance and boost economic growth. The government is due to set out devolution plans ahead of finance minister John Healey's budget on October 28.
Unlike English regions, Wales and Scotland have devolved parliaments and partial tax-raising powers.