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Birmingham teams up with Boris and London councils to fight for devolution

Birmingham teams up with Boris and London councils to fight for devolution

🕔30.Sep 2013

Birmingham has joined forces with Boris Johnson and London councils to demand greater financial freedoms and devolved powers from the Government.

In a unique cross-party initiative, England’s Core Cities group – Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield – will work with the Mayor of London and the capital’s 32 borough councils as well as the City of London to make the case for fiscal devolution.

Taken together, the cities involved in the scheme account for half of England’s economy and population.

The ‘City Centred’ campaign follows the publication earlier this year of Professor Tony Travers’ London Finance Commission report, ‘Raising the Capital’, which recommended a comprehensive package of measures to give Londoners a more direct say over a greater proportion of taxes raised in their city.

The report outlined the benefits for London of devolving financial and fiscal control rather than relying on the current formula of majority Government grant. It also found that this was a formula applicable not only to support the growth of London but other large cities.

The aim of the London-core cities alliance is the devolution of property tax revenues streams – including council tax, stamp duty, land tax and business rates – with the ability to reform those taxes while retaining prudential rules for borrowing, similar to recent changes in Scotland.

Council leaders say this would provide stable and continuous funding to stimulate economic growth according to local needs, moving away from ad hoc financing for specific projects, allowing cities to raise sustained investment for vital infrastructure such as transport, schools, housing, energy supply and technology.

The campaign’s proposals would be cost-neutral at the point of devolution, with no additional money being sought from the national pot beyond that which the cities already receive. The reforms would give effect to the spirit of the Coalition Government’s agreement to promote ‘radical devolution’.

Key principles of the ‘City Centred’ campaign include:

*Giving cities the freedom to invest to drive the national. Existing centralised funding models are ineffective in supplying the investment cities need to maximise their growth potential;

*Empowering cities to be more competitive and giving them an incentive to grow faster.

*Allowing more tax raised locally to be spent locally. Only seven per cent of tax paid by London residents and businesses is redistributed directly by locally elected bodies. This contrasts with other world cities; only 31 per cent of New York’s budget comes from central grant, 25 per cent in Berlin, 17 per cent in Paris and eight per cent in Tokyo.

*Local leadership delivers better results – currently around 95 per cent of all taxes raised in a city go directly back to government coffers, with money coming back with strings attached. Greater control for cities of taxes raised locally would deliver more power to join up public services and plan for future needs, as city governments are best placed to create jobs and free up spending.

The Mayor of London, Boris Johnson, said: ‘That London’s government is joining with England’s largest cities to call for change is an historic and significant move. It’s a partial but positive and practical answer to the conundrum about English devolution and I believe it is good not just for the cities involved but for the country at large.

“My aim is for the capital to win fiscal reforms in line with those presented by Professor Tony Travers’ excellent London Finance Commission report, namely those that give residents and businesses a closer say over where their hard-earned taxes are spent.”

In a joint statement, the councils involved in City Centred said: “Control of public spending in England has been increasingly centralised over decades, eroding the ability of our great cities to act for the good of their residents and businesses, which would benefit the nation’s economy as a whole.

“Following devolution, the Scottish and Welsh governments now have significantly more freedoms and flexibilities than any elected English authority. With more power to join up public services, cities can reduce dependency and demand on services and free up spending, bringing people back into employment.

“We must therefore empower our cities to do more to grow the economy and become financially self-sustaining. The nation can only achieve economic success through its cities, and they must be able to compete in a global market place against cities that enjoy much greater local controls and freedom.

-“Cities need the freedom to invest in infrastructure to cater for future growth which will bring benefits to the whole of the UK. The reforms we are calling for through this campaign would strengthen accountability to our residents and businesses and allow for strategic planning and investment based on secure funding streams.

“The outcome will be increased economic growth and jobs and a more globally competitive UK PLC.”

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