The Government should devolve more powers to Northern cities in order to reduce the North-South economic divide, according to the director general of the Institute of Directors (IoD).
Simon Walker believes that businesses could benefit from lower taxes if cities like Leeds and Newcastle had greater control over their finances.
Mr Walker, who is due to visit Leeds today to open the IoD’s new regional headquarters in Old Broadcasting Place, is concerned about the unevenness of prosperity across the UK. His concerns are shared by many IoD members. Sixty seven per cent of IoD members who were polled in a recent survey said they would like to see tax and spending powers devolved to regional cities.
Mr Walker said yesterday: “What should not be done would be an attempt to drag London back down. That would harm everybody. To me, it would be a matter of empowering the regions and giving them more authority. You can’t decree from on high. I would like to see more tax and spending powers devolved to the regions. I would like to strengthen the LEPs and local economic capacity generally.
“The man in Whitehall doesn’t know best. If you empower local decision makers you will get better results. Business leaders will feel that they can work and thrive in other parts of the country.”
He added: “If you’re going to devolve tax and spending much more to the cities, they are going to be in a position where they can reduce taxes considerably. That would be a very sensible thing to do.”
Mr Walker said that investment in rail connections between the northern cities must be a “huge priority” for Government. Transport connections to airports like Leeds Bradford International Airport were also important, he added.
“Leeds-Bradford is my favourite airport in the UK. It’s a good efficient airport. Better connectivity would be great.”
Apart from transport, the IoD also supported long term investment in digital infrastructure and education to make the UK more competitive, he said.
Last year, the IoD called for HS2 to be scrapped, branding the £50bn high-speed rail project “a grand folly”.
“There are higher priorities than HS2,’’ Mr Walker added. “Our members didn’t trust the Government to stay within the budget it had forecast.”
He said the business community needed to address Britain’s productivity problem, and could learn lessons from overseas.
“Germany tends to invest in new equipment more readily than businesses do in this country,’’ he added.
He said that the Living Wage “was a valuable concept that businesses should aim at”.
The Living Wage is an independently-set hourly rate of pay, which is updated annually. It is set according to the cost of living in the UK. Unlike the National Minimum Wage, it is a voluntary scheme. The current rate outside London is £7.65 per hour, while the London rate is £8.80.
Although between 80 and 90 per cent of IoD members paid the Living Wage, Mr Walker acknowledged that some companies could not afford it.
He added: “The Government has done quite well on red tape, but too many departments are exempt from the red tape challenge.”
Mr Walker believes that businesses below a certain size should be exempt from virtually all red tape.
He said the UK benefited from the flow of labour into Britain, and he criticised the “fiction and hysteria” which surrounds some of the debate on immigration.
He added: “The cross flow of workers is of great benefit to the UK economy as a whole. Our members understand that Britain is a global hub and a great trading nation.”
Tonight Mr Walker is due to take part in a panel debate about the regional economy at Old Broadcasting Place in Leeds.