A tourism levy is welcome, but a fairer Yorkshire needs real fiscal power - Jason Bunting
The Chancellor’s decision to devolve powers for a tourism levy to Yorkshire’s Mayors in the Budget was greeted with understandable enthusiasm. York and North Yorkshire Mayor David Skaith hailed it as a “total gamechanger”, while West Yorkshire Mayor Tracy Brabin described it as a “major milestone in our region’s devolution journey” and South Yorkshire Mayor Oliver Coppard praised its potential to raise millions of pounds for the region.
It is, undeniably, a moment of genuine progress for devolution, accompanied by a new integrated settlement that finally combines over 30 fragmented central funding streams, along with initiatives such as the Leeds City Fund. After years of delay and tight central control, this momentum on devolution matters.
But if the ability to introduce a modest tourism levy still counts as a seismic breakthrough, then the central government’s ambition for devolution remains far too small.
After all, even with these new powers, the UK remains one of the most centralised countries in the developed world, raising only around 5 per cent of revenue locally.
What’s more, this hyper-centralisation is a root cause of the regional inequalities that still scar our economy. Research suggests that decades of tight central control have constrained regional growth and left too many communities dependent on decisions made hundreds of miles away in Whitehall.
As the Institute for Government notes, even with a tourism levy, “England remains a highly centralised economy, with mayoralties relying heavily on central funding”. This modest new power, though important, cannot begin to offset decades of decisions that have kept opportunities out of reach for too many people in Yorkshire.
Worryingly, the government’s flagship English Devolution & Community Empowerment Bill largely dodges the issue of fiscal devolution altogether.
Today, the Fairness Foundation publishes a report arguing for a far bolder, long-term vision to truly “rewire” the British state and devolve fiscal power.
We argue that progress requires short-term reforms, through stronger collaboration between different layers of government, better mechanisms for learning from the devolved nations, and deeper devolution expertise across Whitehall.
Crucially, we also argue that the UK needs a long-term plan for fiscal devolution. To that end, we propose a Tax Devolution Commission to review the tax code and assess which taxes - such as property taxes or a share of income tax - could sensibly be devolved.
Of course, maximal devolution also carries risks- not least that areas like Yorkshire might lose out from fiscal devolution without proper safeguards to protect funding for public services.
As Mark Drakeford told us in an interview for our paper: “the case for the UK is that it is a powerful engine for re-distribution”.
The government should therefore consider whether new legislation might be required to drive the equalisation of living standards between different regions, following the examples of Germany and others.
Combined with genuine political will to reshape the State, these measures could finally decentralise power, grow local economies and restore agency to communities that have felt left-behind by Westminster’s status quo.
Yorkshire’s potential new tourism levy is a welcome sign of progress in deepening devolution - but the government must go further.
Jason Bunting is advocacy manager at the Fairness Foundation.