Hand mayors extra £4bn from income tax to boost mass transit schemes, report finds
West Yorkshire Mayor Tracy Brabin has bemoaned the slow pace of the mass transit project.
Mayors should be handed an additional £4bn from Whitehall through fiscal devolution to super charge projects like West Yorkshire’s mass transit network, a new report has found.
The influential think tanks IPPR (the Institute for Public Policy Research) and IPPR North are calling on Andy Burnham to hand over roughly 5 per cent of income tax revenues to the regions.
This would see an additional £3.8bn moved out of Westminster, roughly doubling mayoral budgets across England.
It comes after Mr Burnham continued Rachel Reeves’ policy of fiscal devolution, by announcing that mayors would get to retain business rates and a small proportion of income tax.
The idea is to give local leaders more flexibility to spend funding on their priorities. If this mirrored current budgets, it would see 2 per cent of income tax retained in West Yorkshire and 3 per cent in South Yorkshire.
However, IPPR and IPPR North call for Mr Burnham to go much further and allow mayors to keep around 5 per cent of their income tax.
Aditi Sriram, economist at IPPR and lead author of the report, said: “For too long, mayors have been expected to drive growth with one hand tied behind their backs, reliant on Whitehall for the money and permission to get things done.
“Fiscal devolution, as laid out in this report, would give mayors the freedom to plan for the long term, invest in the things that bring growth and share in the revenues that growth creates, all while ensuring they have the capacity to deliver it.
“But we’re at a defining moment; critics are loud, political trust is faltering, and the public want to see action, so the devolution agenda cannot afford to fail.”
In particular, the report says that the increased funding will benefit plans for mass transit networks across the country, such as those in West Yorkshire.
Mayor Tracy Brabin has staked her reputation on the £2.5bn plan to bring trams back to the streets of Leeds and Bradford.
The project has hit a few bumps, with the proposed completion date being pushed back to the late 2030s after Whitehall told the West Yorkshire Combined Authority to change its process.
WYCA is currently putting forward a business case for a tram and bus network to the Department for Transport, before officials decide on the most cost-effective method.
Ms Brabin is not the only person to decry the lengthy timescale, with Leeds United director Peter Lowy also urging the Government to act faster.
He has asked the DfT for the south Leeds line which will run past a redeveloped Elland Road - the most popular during the original route consultation - to be treated as a “discrete” initial project to the wider scheme, and called for the pace of the project to be speeded up.
The IPPR and IPPR North proposals should allow Ms Brabin to move faster, as she would have a substantial pot of funding to utilise.
However, the think tanks cautioned that the success of these plans depend on strong safeguards and accountability, saying a bad decision or mismanaged funding from any one authority risks turning public opinion against devolution and undoing progress everywhere.
The landmark report has been endorsed by Lord Jim O’Neill, the former Treasury minister who had been informally advising Mr Burnham.
He said: “The UK is a centralised outlier amongst its OECD (Organisation for Economic Co-operation and Development) peers.
“Without fiscal devolution, mayors and local leaders won't have the freedom to make real change happen.
“It is a simple mathematical fact that if the places with the biggest potential grow more strongly, the national economy will also grow to the benefit of all."