Handing greater powers to cities such as Sunderland is the key to boosting economic growth, says a new report.
The Missing Multipliers: Devolution to Britain’s Mid-sized Cities was launched at the Conservative party autumn conference on the back of Chancellor George Osborne’s speech, which revealed plans to let councils keep more of the money they raise from business rates.
Its findings were backed by Secretary of State for Communities and Local Government, Greg Clark, and Sunderland City Council leader Coun Paul Watson.
The report was commissioned by Key Cities – an organisation which brings together 26 mid-sized local authorities including Sunderland, Coventry and Derby – from think tank ResPublica, and makes the case for granting them much greater control over both raising and spending public cash.
It suggests letting cities keep more of the tax they raise will make it easier for them to stimulate growth, attract new businesses and deliver better services.
“This is an exciting time, and I very much welcome this valuable contribution to the devolution debate,” said Greg Clark. “The role of Key Cities is critical to the UK’s economic growth.
“I am pleased so many of them are playing a central role in shaping the devolution proposals currently being negotiated with the Government.
“I would encourage them all, individually and collectively, to ensure that they continue to influence these negotiations, to ensure they deliver the powers and flexibilities they need to maximise their future economic growth.”
The report says greater powers over raising and spending money would make councils more accountable to voters – at the moment, the vast majority of local authority cash comes from Whitehall, with money raised through Council Tax only accounting for about a quarter of funding.
Devolving greater powers would free councils to come up with new ways of attracting business, such as tax incentives.
Sunderland City Council wants to see the new Cities and Local Government Devolution Bill devolve as much control over funding and other issues as possible to local authorities.
It is calling on the Government to reach five-year funding agreements with the Key Cities councils, including devolved funding for employment, skills, business support, housing and transport.
Coun Watson said: “Given the spending cuts that are coming down the line, the Government has a responsibility to do all it can to help cities manage them.
“A devolution settlement without fiscal devolution is incomplete and may put at risk the whole strategy.
“We want to play our part in growing the British economy but we need to be freed up to do it.”