MPs have endorsed calls for London and other English cities to be given greater financial freedom from Whitehall by devolving responsibility for property taxes.
English authorities currently enjoy far less fiscal devolution than the devolved administrations in Scotland and Wales.
With all parties offering the Scottish government more powers if the country votes ‘no’ to independence, the gap between England and the UK’s other regions is likely to increase.
The Communities and Local Government committee says ministers should address this by giving English local authorities control of business rates, stamp duty and council tax.
It suggests that freeing councils and other bodies from the UK Government’s “fiscal grip” could help boost regional economies and enhance democracy by making local politicians more responsible for growth.
Today’s recommendations build on the work by the London Finance Commission which was established by Mayor Boris Johnson to make the case for greater financial devolution to City Hall and London’s councils.
The commission’s report has since been endorsed by Core Cities, a group representing the 8 biggest English cities outside the capital.
Clive Betts MP, Chair of the Communities and Local Government committee, said “fiscal devolution in England is an idea whose moment has arrived.”
He added: “The time has come for Government to join with local authorities to push this agenda forward. Together they should work to establish a devolutionary framework which, while addressing need, offers clear incentives and benefits to authorities that take more control of tax and spending.”
The committee’s recommendations have been welcomed by London politicians and those from the core cities.
Mayor of London, Boris Johnson, said: “I am delighted that this excellent report recognises the overwhelming case for granting greater financial powers to London and other English cities that want them.
“There is a conundrum at the moment in the British constitution which is that Scotland and Wales have had a very great deal of devolution, with more on the way, whereas all the attempts to have symmetry in England have come to nothing.
“There is a now growing and welcome cross party consensus that recognises the economic benefits of giving greater control of taxes raised in English cities back to those cities, which is very difficult for the Treasury to ignore.
“The modest reforms that I and others have been campaigning for and that are endorsed in this report, would provide England’s cities with the means, incentives and crucially the stability of funding to deliver much needed jobs, growth and infrastructure.”
Jules Pipe, chair of London Councils which represents all of the capital’s local boroughs, said: “Since 2010 we have already seen a reduction in core funding of 34 per cent in real terms and we are only broadly halfway through the cuts. London boroughs are meeting this challenge by developing new models of services delivery based on local integration and partnership.
“We need devolution of power and resources to tackle the very real challenges of providing enough school places, meeting the housing needs of the capital and caring for older Londoners. This initial report from the CLG Committee is very welcome in that it reinforces our existing messages and adds to the drumbeat growing across the UK for less centralised policy making and more targeted local services.”
Chair of the Cabinet of Core Cities and Leader of Manchester City Council, Cllr Sir Richard Leese, said: “I welcome this CLG Select Committee report which comes at a critical moment for the devolution and reform agenda.
“It follows on the back of announcements from the Chancellor and from the Leader of the Opposition who have both recently called for greater devolution and more investment for our cities. The major parties are not only making solid commitments to devolution, but appear to be competing in this policy area, which is good for our cities and good for the economy.
“The acid test however will be to ensure that solid action follows from these commitments into the next Parliament. We have welcomed City Deals and, on Monday, Growth Deals, but – as this excellent report suggests – we now need to move toward the repatriation of more power from Whitehall to cities by devolving tax receipts.”