Cities need more control over the money that is spent in their area.
The differences between the parties’ approaches to balancing the books and managing the nation’s finances have been, and remain, at the forefront of debate in this election. The party leaders have been at pains to demonstrate that they are the best placed to take charge on the economy and reduce the deficit (albeit at different rates).
All of the major parties’ have promised to deliver national economic growth and deliver the same, if not improved, public services, while also introducing additional cuts to public spending. But beyond finicky discussions of whether crackdowns on tax avoidance (Conservatives) or taxing bankers’ bonuses (Labour) will fund specific policies, the manifestos do not successfully square the circle of how to grow the economy and deliver services with fewer resources.
This is particularly true when we think about boosting growth at a local level. When it comes to how cities will be funded and incentivised to deliver programmes capable of creating the jobs, building the homes and delivering the transport improvements that the political parties headline commitments depend upon, detailed proposals are thin on the ground.
Some policies put forward would make some small changes to encourage places to prioritise growth. Labour, for example, would allow city and county regions to retain 100 per cent of additional business rates growth above expected levels. The Lib Dems make a general commitment to a process of devolving more financial responsibility. And the Conservatives confirm the commitment made to reviewing the business rates system – this week George Osborne has also said that metro mayors could receive the power to raise business rates.
But these changes, although welcome, remain relatively small scale, and if not accompanied by more fundamental reforms to local taxation, are unlikely to significantly influence politicians and policymakers to take difficult decisions on boosting growth and delivering reform at the city level.
Ultimately, cities need more control over the money that is spent in their area, financial systems that incentivise smart investment in infrastructure, housing and transport, and additional freedoms to shape local taxation.
More control over budgets would incentivise cities to integrate across service silos and local authority boundaries, delivering efficiency savings and better services. These are issues that may be judged to sound too technical and distant to voters in the build up to a General Election, but with outcomes that will make a real difference to people’s lives, as well as the national economy and public finances.
To find out more about what the different parties have pledged on tax and finance, read our General Election 2015 Manifestos Briefing here.
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