Balls is ‘open’ to case for local tax powers

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ED Balls has signalled he is ready to consider putting greater powers over taxes in local hands if Labour is returned to power next year.

The Shadow Chancellor said it would be damaging to have English regions competing with each other by setting different tax levels.

He added: “But within that, the more we can devolve sensibily the better.”

Leeds and Sheffield are among English cities who have argued that they could grow their economies more quickly if they could keep taxes such as business rates and stamp duty.

The current Government has agreed so-called ‘earnback’ deals - where areas are given a share of the increased tax revenues generated by higher growth - with Manchester and Cambridge.

The Leeds City Region has suggested a similar deal could fund its ambitious transport improvement plans.

Mr Balls said Labour peer Lord Adonis was looking at how those ideas could be developed further as part of a wider review of how regional economies can best be helped.

“I’m very happy to have all those things on the agenda.”

The Shadow Chancellor also suggested that the North needed to have a single voice on transport issues to match the influence of London Mayor Boris Johnson.

“Having good city regions doesn’t mean there isn’t a case for a strong voice for the North and for city regions getting together and working together on some of the big economic challenges, particularly around transport.

“The fact is London has a very big voice, an amalgamation with one mayor of very many local authorities and I think there is a case for the North having a big voice on some big economic issues.”

Mr Balls and Lord Adonis were in Leeds at the launch of a new report by Wentworth and Dearne MP John Healey and consultant Les Newby calling for a significant shift of powers over the economy to a local level.

The report, published by the left-leaning Smith Institute thinktank, warns against a wholesale change in the way local economic growth is supported.

Instead, it suggests the network of local enterprise partnerships set up by the Coalition - including four in Yorkshire - should largely be left in place although reduced in number from the current 39.

The report also suggests LEPs should be given more independence on the public money they spend through a “single pot” of funding rather than having to repeatedly submit bids to Whitehall for individual projects.

Yorkshire’s local enterprise partnerships are currently bidding for a share of the Government’s £10bn Local Growth Fund to support ambitious plans to create thousands of jobs.

The Coalition made the money available after a report by former Deputy Prime Minister Lord Heseltine said moving control over huge swathes of Government funding to local areas was the best way of growing the economy outside the South-East.

However, the Smith Institute report says the Fund is a “sham” because control of the money is still wielded by Government departments.

Mr Healey said: “Now that growth has finally returned, the central challenge is how to build a balanced and lasting recovery across the whole country.”