North East Devolution and Levelling Up
Penshaw Monument

Devolution: think of a plan then double it – Osborne

Former Chancellor George Osborne, the man who launched devolution and levelling up in their current form in 2014, has urged the government to be bold in its forthcoming White Paper on Levelling Up, with more powers for mayors and more tax-raising powers – perhaps including local income tax – for local government.  

‘Every time you’re confronted with something which is, you know, “Oooh, should we trim a little, this is a little bit too radical, the Treasury’s got a problem with this,” I would go for the reverse’ he said in an interview with the conservativehome webside..

‘Whatever you’re doing in terms of devolution, double it. Whatever you’re doing in terms of local tax-raising powers, double it. Whatever you’re doing in terms of devolving the NHS, double or triple it. That is why we have ministers, and we have political leadership in government: to push the system where it doesn’t want to go’.

He added: “I’m optimistic about the White Paper because of who’s drafting it [Levelling Up Secretary Michael Gove and Parliamentary Under Secretary of State for Levelling Up Neil O’Brien], and I would only tell them, not that they need my advice, to trample over anyone who gets in the way.’

In Osborne’s view, the benefits of elected mayors should be spread from the cities to the English counties. He said: “I think you could give local authorities – I wouldn’t do it at an individual council level, I think it has to be at a metro level or a big county level – but I don’t see why you couldn’t give them their own proper business-rate raising powers. So it’s a choice an area would make: you could either cut your local taxes to encourage business, or you could raise your taxes and spend on infrastructure.

‘I think it’s worth looking at local income taxes as a supplement. I mean after all we have that arrangement in Scotland. I wouldn’t necessarily say you have to go that far in English devolution, but I was one of the architects as Chancellor of giving Scotland more tax-raising powers, and I think as a result, by the way, the SNP is being held much more to account for its own domestic performance, and they can’t keep saying we want more money from Westminster, because everyone goes hold on, you’ve got the power to raise taxes if you want to. So the public are not stupid’.

Osborne also said: ‘I think it’s a great shame that Transport for the North has been downgraded [a move reported on this website on November 22] – I would upgrade it with more powers, make it more like Transport for London. I would give the metro mayors more responsibility. For example, we devolved the NHS in Manchester, which was a really bold thing to do. It’s the only place in England where that’s the case. It integrates social care. There’s no reason why the Conservatives should be afraid of this.

‘Fundamentally, it should be in the Conservative DNA, if you go back to Edmund Burke etcetera, that they trust local communities’.

He added: ‘If you limit yourself to a couple of town-centre funds, which by the way the Cameron Government had, the Blair Government had, they’re not new, that’s not what’s needed. What’s needed is proper economic theory about creating big economic clusters in the north, bringing the cities closer together, connecting them to the towns that surround them, connecting them with real transport links that work, and attracting business, which cannot be done by the public sector alone, which is another classic mistake.

‘What it needs is proper intellectual underpinning. If you think it’s all just about planting some civic flowerbeds in northern towns then the Tories will be out on their ear. It’s got to have proper, serious economic thinking about it…

“You have to think big, you have to be ambitious, and you have to realise that government puts the kind of instruments in place, but then it’s the private sector and the business community, and not just the big corporates but every little small business, every entrepreneur that decides actually I’m not going to move out of Manchester, I’m going set my new web design business in Manchester rather than move to London. That is how progress is made’.

COMMENT

One concern that North East politicians, as well as potential taxpayers, are likely to have over Osborne’s comments is the suggestion that local or regional government be given extra tax-raising powers. It’s not that councils in the region have traditionally been unwilling to raise council tax, but leaders are worried that because the region’s tax base is so weak local taxation powers would leave them at an even greater disadvantage compared with other parts of the country than at present.

One North East Council leader told this author: ‘The North East of England needs to be very, very, very careful about fiscal devolution because on which tax would we benefit? Business rate? Put up a local tourist tax? There isn’t a single form of taxation where we don’t heavily depend on redistribution from central government.