Northern Powerhouse needs proper fiscal devolution to match Scotland and Wales – IPPR North on Spending Review

On the Northern Powerhouse and infrastructure investment:

“The Chancellor’s further announcements about investment in Northern connectivity are welcome as are the multiple investments in business support, innovation, culture and the arts.

“Trans-Pennine and other Transport for the North improvements are long overdue but there is no additional capital commitment beyond the previously announced £13bn which will fall well short of forthcoming Transport for the North plans.

“It is also important to note that the £61bn new money committed to transport capital will only return transport investment to its levels in 2009/10.”

On local government finance and fiscal decentralisation:

“The devolution of business rates is welcome in principle but the devil will be in the detail. The local government rate support grant has been instrumental in supporting those more economically disadvantaged areas and so to phase it out in favour of business rates retention will give those areas great cause for concern. Some form of redistribution will still be necessary and many will fear these changes will simply continue the steady attrition of local government funding and services.

“In this context, protecting social care spending through giving councils the ability to raise a special precept to raise council tax by two per cent is some form of release valve. But councils will think twice before putting it to a public referendum. If ever there was a case for devolving the blame for cuts then this is it.

“In the case of the council tax precept and the proposed business rate precept, government is proposing they are ring-fenced for specific purposes, this again betrays any genuine commitment to proper fiscal devolution. If income tax devolution is good enough for Scotland and Wales then why not for the much bigger Northern Powerhouse?

“Greater local authority freedoms to benefit from the sale of assets will be an opportunity for some councils, but selling the family silver to fund rising revenue demands is not normally considered a prudent course of action.”

Contact
Danny Wright – d.wright@ippr.org 07887 422789