Taxing problems to iron out if devolution is to drive growth

Giving local leaders more control of taxation could help Andy Burnham unlock prosperity, but will it leave struggling areas further behind? It’s far from straightforward, Ben Zaranko explains

- Ben Zaranko

Could the devolution of tax and spending powers be the key to unlocking greater economic prosperity? Andy Burnham thinks so.

He argued in a speech last week that “the stark imbalance in resources between national government and local government is holding back growth”. He promised the “biggest rebalancing of power our country has seen” to deliver “good growth in every postcode”.

The fact he framed it this way is significant, because many arguments for more devolution have nothing to do with economic growth. JP Spencer, director of devolution policy at ThinkLabour and adviser to the Burnham camp, argued last week that English mayors should have greater control of services such as childcare, further education and policing, in order to inject greater democratic accountability into public services. A laudable objective – but it’s not about growth.

Another argument is that handing more control of spending to local leaders could allow for policies better tailored to their environment, informed by local insights, relationships and experiences. With more skin in the game, local governments may even be encouraged to spend more wisely than they would if simply following diktats from Whitehall. Sounds great – but, again, it’s not really about growth.