Think Tank: Gradual Tax Powers for England’s Mayors to Boost Local Growth
By Andy Bruce
Report Recommends Phased Devolution of Tax Powers to English Mayors
MANCHESTER, England, Sept 23 (Reuters) - Regional mayors in England should gain control over local taxes in stages with the most capable city-regions getting more powers first, according to a report backed by economist Jim O'Neill, who has advised Prime Minister Andy Burnham.
Key Findings from the IPPR Report
The report by IPPR, a progressive think tank, said mayors should be able to keep 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.
Risks of Uniform Devolution
But the report, published on Wednesday, warned that handing every region the same powers at once would risk failure in places that lack the institutions to manage them.
Central Role of Devolution in Regional Growth
Devolution of tax and spending powers is central to Burnham's drive to reduce London's economic and political dominance and boost economic growth.
Criteria for Advanced City-Regions
IPPR and its northern arm IPPR North proposed that a tier of advanced city-regions, which are capable of proving they can handle money responsibly, should be allowed to retain and manage some tax revenues and borrow against them.
Safeguards Against Misuse
"Without these safeguards, the government could be one rogue mayor away from bringing England back to square one," the report said, pointing to the risk of over-spending or misuse of funds in areas unready for full control.
Potential First Beneficiaries
It said areas such as London and Greater Manchester were most likely to qualify first for the advanced status.
Alternative Proposals and Additional Recommendations
Last week another think tank, the Centre for Cities, said mayors should be allowed to keep 7% of local income tax and 2% of corporation tax to replace nearly £5 billion $6.7 billion) in Treasury grants.
IPPR put more weight on giving borrowing powers for local authorities as well as the phased handover tied to each region's readiness.
Expert Endorsement
"The recommendation for some 'advanced' areas to receive enhanced fiscal powers is especially something I would endorse," O'Neill said in the report's foreword.
Next Steps and Broader Context
The government is due to set out devolution plans ahead of finance minister John Healey's budget on October 28.
Comparison with Devolved Nations
Unlike English regions, Wales and Scotland have devolved parliaments and partial tax-raising powers.
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(Reporting by Andy BruceEditing by William SchombergEditing by William Schomberg)
