Andy Burnham has made giving more power to regional and local government a centrepiece of his programme for national government. This has been welcomed by politicians, think tanks and business organisations alike.
Particular excitement has greeted the inclusion of “fiscal devolution” in the Prime Minister’s plans. They mean that local leaders will be able to retain a portion of the Income Tax and Business Rates raised in the areas they govern and use it as they see fit, rather than it all going into the vaults of the Treasury and parcelled out again as it sees fit in the form of grants with unwelcome strings attached.
City Hall already retains 37 per cent of Business Rates raised in Greater London and the Mayor can also raise funds through Council Tax, but greater fiscal devolution is something both Sir Sadiq Khan and his predecessor as Mayor of London, Boris Johnson, have argued for.
Mayor Khan has welcomed Burnham’s initiative, while adding that it must “work for London”. Detail is a bit sparse so far, but a white paper is expected in the autumn. The hope is that the changes will lead to better spending decisions being made across the country and provide incentives for regional Mayors and others to encourage economic growth
As Professor Tony Travers of the London School of Economics has explained to the BBC, the sharing of tax revenues between national government and City Hall, “won’t give London more money on day one”. Rather, London’s portion of tax revenues would be equal “pound for pound” to the amount it currently receives in grants.
The difference would be the greater amount of autonomy London government would have over how the money is spent. And if the economy grew faster as a result of that, tax revenues would grow faster too. The arrangement would also give City Hall greater scope for borrowing to spend on large projects.
There are no plans to give Khan – or any other Mayor or local authority leaders – the power to set his own levels for the slices of Income Tax and Business Rates that would be raised in the capital. And judging by a national poll conducted by Ipsos around the middle of last month, before the government made its end of July announcement, that might be just as well.
The poll found that only three per cent of Londoners would “strongly support” their Mayors having the power “to set a portion of your income tax” and only 21 per cent would “tend to support” it, compared with 26 per cent who would “strongly oppose” such a power and a further 25 per cent who would “tend to” oppose it. That picture of roughly twice as many people feeling negative about the idea as being supportive of it is replicated pretty much everywhere else in England.
The balance of views was different when Londoners were asked about Mayors being allowed to set a portion of taxes on businesses. In that case, seven per cent of poll respondents said they would “strongly support” the idea and 23 per cent said they would “tend to” compared to 12 per cent who “strongly oppose” and 23 per cent who said they would “tend to” oppose. In that case, overall opposition outweighed overall support by a pretty narrow five per cent, but still fell far short of wild enthusiasm.
Why the chilly response? The Ipsos findings provide a clue. It is that, nationally, a majority (53 per cent) think giving their local authorities or regional mayors more powers to raise taxes would mean their taxes going up. Only a tiny minority (eight per cent) think they would fall.
More encouragingly for advocates of fiscal devolution, a plurality (37 per cent) thought that “if taxes were set and collected locally” the money would be spent “more effectively” in their local areas. Twenty-six per cent took the opposite view to some degree. “Set and collected” locally isn’t the same as “retained and spend”, which is what the government has in mind, but even so. Very similar figures were generated in response to a question about local politicians being given “more power over taxes” leading to better local public service outcomes.
Perhaps the lesson to take from the poll is that the public is receptive to power over the spending of public money being brought closer to home, but maximising backing for it will mean making very plain that local and regional politicians are not going to be allowed to autonomously hike, in particular, people’s Income Tax rates.
Ipsos also asked its sample of getting on for 3,000 people a related question about how satisfied or otherwise they were with their neighbourhoods as places to live. Pleasingly, 73 per cent of Londoners said they were either very (25 per cent) or fairly (48 per cent) satisfied, far outstripping the 22 per cent who said they were dissatisfied (just four per cent of them “very”).
That was a very slightly lower net satisfaction score than found in other regions, but nonetheless serves as a pleasing antitoxin to all the Trump-Farage transatlantic anti-London propaganda.
Read all of the Ipsos poll findings via here.
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