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Successful regional cities need "greater autonomy" to drive UK economy

RSA City Growth Commission

The Royal Society of Arts has called for central government to grant greater autonomy to regional administrations to underpin the role that they already play to support the UK economy.

It’s report, City Growth Comission report “Powers to Grow: City finance and governance” highlights the importance of cities in driving growth and prosperity but points out that regional cities are still “held back”. 

“Some cities are ready and able to take on the responsibility and risks of devolution and should be freed to drive investment, inclusive growth and public service reform as soon as is practical,” says the report. 

Radical change can be achieved, it argues, but only with cross party consensus around the need for a “daring package of fiscal devolution”. 

It recommendations include: 

  • Reform across the board, for both central government and metros: including tax and local government finance reform; constitutional and Whitehall reform; and demonstration of metro commitment to competence and capability.
  • Further decentralisation for those ready to gain greater autonomy: including multi-year finance settlements; greater borrowing flexibilities; and the ability to retain the proceeds of growth through outcomes-focused finance models.
  • Devolution for those metros deemed ready to take on genuine risk: including devolution of property taxes; ability to set new taxes; the power to convene public and quasi-public service bodies to integrate public service reform and economic growth; and a seat at the table in national policy-making to enable more informed, strategic national decision-making.

Key points from the RSA City Growth Commission report 

"The strength of UK institutions is one of our strongest attributes as a major global economy. Yet, despite cities being the drivers of UK growth, the configuration of our political economy is holding our metros back. Metros are at the mercy of central government, with tight restrictions on capital and resource funding – limiting the degree to which metro leaders can respond to the current and future economic, social and environmental needs of their city. 

While many of the City Growth Commission’s proposals have already gained traction across political spheres, the default mode of ‘Whitehall knows best’ still remains a significant hurdle to future economic prosperity. Radical change to overcome this can be achieved, but only if all three parties are daring enough to take on the ground-breaking package of fiscal devolution measures put forward in this report. 

Some cities are ready and able to take on the responsibility and associated risks of devolution – they have the leadership, financial management and accountability structures to administer a devolved city-region – and should be freed to drive investment, job creation, inclusive sustainable growth and public service reform as soon as is practical. Greater representation in national decision-making forums from these metros and associated collaboration with other metros will also serve to ensure – for the first time – our urban powerhouses can enhance the UK’s economic potential. 

The City Growth Commission does not advocate that all metros should take this leap. Devolution is a process and not a top-down blanket policy so should be treated as such – other metros will need to wait until their economic performance, potential and governance structures lend themselves to devolution. 

In the meantime, we advocate reforms across the board, for both central government and metros, including:

  • Tax and local government finance reform;
  • Constitutional and Whitehall reform; and
  • Demonstration of metro commitment to competence and capability

And further decentralisation for those ready to gain greater autonomy and move along the trajectory towards devolution, including:

  • Multi-year finance settlements;
  • Freedom to spend grants without ringfencing and greater borrowing flexibilities; and
  • The ability to retain the proceeds of growth through outcomes-focused finance models.

Of course central government will still continue to have a role; the Commission does not advocate full devolution.Central government will still be dominant in setting and administering taxes where there is a clear argument for national rates (e.g. income tax, corporation tax or VAT). 

Similarly local government finance will still be allocated from central coffers for places without the administrative capacity or economic basis for financial self-sustainability. Metros have proven their economic worth. Now is the time for the central government to follow suit and allow those that are ready to take forward greater metro autonomy for the good of their cities and the UK economy as a whole."

Full details and a copy of the report can be found here.