A cross-party forum for councillors, MPs and Peers has called for a new fiscal devolution framework that balances local shares of national taxes with strong equalisation safeguards.
The recommendation, the outcome of a major All-Party Parliamentary Group (APPG) on Local Government inquiry, follows the Chancellor's pledge to publish a fiscal devolution roadmap at the Autumn Budget and Andy Burnham's promise of the ‘biggest rebalancing of power’ the country has seen.
The inquiry drew on expert evidence examining how greater local control over taxation and revenue could drive economic growth, improve public services, strengthen accountability, and secure the long-term financial sustainability of councils and combined authorities.
Recommendations for the incoming Government
The APPG report sets out five priorities for the incoming Government. First, a new settlement giving places meaningful control over public finances which would include full devolution of taxes such as Landfill Tax and the Growth and Skills Levy or assigning a share of Income Tax and Stamp Duty Land Tax. This could unlock up to £79bn, according to analysis conducted for the APPG.
Second, matching fiscal powers with responsibility for public services and economic growth, including further devolution of employment, skills, transport and housing functions, alongside a review of councils' growing statutory duties.
Third, building the settlement on fairness, stability and accountability, underpinned by an independent equalisation system and stronger scrutiny.
Fourth, modernising local taxation through council tax revaluation, new bands for high-value properties, and greater business rates discretion.
Finally, publishing a long-term roadmap at the Autumn Budget giving every part of England a route into fiscal devolution, building on Treasury work to date.
Comment
Hon Clive Betts MP, chair of the APPG on Local Government, said: ‘We must seize this opportunity to deliver a genuine rebalancing of powers and responsibilities between central and local government.
‘Our view is that devolution should always be the default option. Unless there is a clear and compelling reason why a policy area should remain in Whitehall, it should be devolved. The Government should consider adopting the model for the devolved nations, where there is a list of reserved powers and all other powers are available for devolution.’
‘And devolution - whether it is fiscal devolution or of other powers - must extend well beyond combined authorities to encompass local government as a whole,’ he added.
Jonathan Carr-West, chief executive, Local Government Information Unit (LGIU), said: ‘There is no part of the current local government finance system that is not held together by a wish and a prayer. The sector has told successive governments over many years that wholesale reform is needed. The arguments for fiscal devolution are made and won – what today’s report does is offer practical recommendations for reform and a nuanced, grown-up examination of the opportunities and potential pitfalls.’
