Give regions tax powers say MPs

In a report published today, the Communities and Local Government Committee calls for business rates. stamp duty, council tax and some other smaller levies to be completely controlled by local authorities who should also have more freedoms to borrow.

It says that while agreements such as the growth deals signed this week - which saw hundreds of millions of pounds for economic growth handed over from Whitehall to Yorkshire - have devolved some control to English authorities they still have less power than the Scottish and Welsh administrations.

Committee chairman Clive Betts, the Sheffield South-East MP, said: “The Government should work with groups of local authorities, focused initially on England’s large cities, to break the log-jam stopping local areas from shaping their economic destiny.

“The public might well ask, when Scotland and Wales are being promised ever greater fiscal devolution, why not England? Devolving these powers is the next step on the path to genuine localism.”

The report has been published as the three major parties increasingly compete over the question of what powers and money will be handed to English regions.

George Osborne, Nick Clegg and Ed Miliband have all launched devolution-themed policies in recent weeks.

Leeds City Council chief executive Tom Riordan, who gave evidence to the committee, said: “There is a pattern there which is a testament to a lot of hard work we have done which led to the growth deal announced this week on the back of the Tour de France weekend.

“There’s a lot of momentum in Leeds and Yorkshire and it seems it is now a question of when, not if, in terms of devolution and the extent to which Whitehall will let go.

“This report is a real step change because it talks about devolving genuine tax powers.”

Today’s report from MPs argues that if devolution is limited to handing over money from London to the regions that will simply turn councils into Government agencies.

It says giving genuine control over tax raising and spending would help encourage growth outside the South East and produced a more balanced economy.

The report suggests that in the longer term there could be a case for giving areas a share of the income tax or VAT revenue to groups of local authorities.

It also recommends that the Government lift the cap on the amount councils can borrow for housing.

Sheffield City Council leader Julie Dore said: “There is now real momentum and pressure on Government to address the centralisation in the UK which is holding back economic growth and undermining the ability of public services to meet the local needs.

“It is an opportunity to unlock the latent economic capacity of our cities by empowering them to invest in their unique economic strengths; an opportunity to create more good jobs and get people into work; an opportunity to deliver the next generation of locally accountable public services that are focused on the specific needs of local people; and an opportunity to create a stronger UK economy where all the major cities punch their weight on an international scale.”

Clive Betts: Le Tour makes case for giving power to the regions