The Chamberlain News

Osborne declares ‘devolution revolution’, but West Midlands is yet to seal a deal

George Osborne today announced a “devolution revolution”, which he said would result in the biggest transfer of power to local government in living memory.

He reserved his most radical ideas for cities and city regions prepared to strike a deal with the Government and move to system of being governed by an elected metro mayor.

At the moment, Greater Manchester and South Yorkshire qualify and under Mr Osborne’s plans will have the freedom to impose a supplementary business rate on firms to pay for new infrastructure.

The Chancellor stressed the additional levy would only be available to areas with a mayor.

Under devolution proposals drawn up by the seven West Midlands metropolitan councils a metro mayor will be able to increase business rates and will have the power to levy a supplementary council tax to raise money for economic regeneration.

But the plan has yet to be approved by the Chancellor and it remains unclear whether the West Midlands devolution proposals will feature in next month’s Autumn Statement, raising doubts that any changes can be put in place before 2018.

Speaking at the Conservative conference in Manchester the Chancellor unveiled plans to allow councils to keep the £26 billion in rates they collect from businesses, rather than sending the money to the Government to be redistributed across the country according to a formula drawn up in Whitehall.

The uniform business rate which sets the size of levy councils can impose will be abolished.

Instead, Mr Osborne said, every council will be free to attract new firms and create jobs through cutting business rates.

While councils will be able to keep all of the money they raise from business rates, the Government will phase out the grant payments it makes to local authorities altogether.

The loss of grant will sound alarm bells at councils in poorer parts of the country who fear they will be left worse off because they won’t be able to attract as many new firms as wealthier areas and won’t therefore cash in on extra income from business rates.

Mr Osborne said past governments had gone too far in taking powers away from local councils and promised to “throw everything I’ve got” at his Northern Powerhouse initiative which aims to transform transport and economic development across the north of England by devolving powers and budgets to metro mayors.

Over the decades, the wings of local government were clipped again and again by all parties, most especially ours. Almost everything, from the amount they could spend to the taxes they could keep to the work they undertook was determined in Whitehall.

The way this country is run is broken. People feel remote from decisions that affect them.

Initiative is suffocated. Our cities held back. There’s no incentive to promote local enterprise.

It’s time we fixed it. And I’ll work with anyone, from any political party, to make that happen.

That’s why the people of Greater Manchester will elect their first ever mayor, in just eighteen months’ time. That’s why just last Friday we reached agreement on a new elected mayor across the whole of South Yorkshire.

Mr Osborne continued:

Right now we have the merry go-round of clawing back local taxes into the Treasury and handing them out again in the form of a grant.

In my view, proud cities and counties should not be forced to come to national government with a begging bowl.

Today I am embarking on the biggest transfer of power to our local government in living memory. We’re going to allow local government to keep the rates they collect from business.

The plan meant that councils could generate more money if they attracted new businesses, he said.

Regenerate a high street, and you’ll reap the benefits. Grow your area, and you’ll grow your revenue too.

And to help local people do that I want to make another announcement today.

Any local area will be able to cut business rates as much as they like……to win new jobs and generate wealth. It’s up to them to judge whether they can afford it.

And for those big cities with elected mayors, like London, Manchester and now Sheffield, I will go even further.

Provided they have the support of the local business community, these mayors will be able to add a premium to the rates to pay for new infrastructure and build for their cities’ future.