The government has announced a major transfer of funding and responsibility to regional mayors, including the ability to retain a share of income-tax and business-rates growth.
The argument for fiscal devolution
Local leaders often control transport, skills and regeneration programmes while depending on short-term grants from Whitehall. Retaining a portion of revenue growth could make investment more predictable and give communities a clearer stake in regional economic performance.
Where powers may be used
Existing examples include housing investment in West Yorkshire, transport reform in Liverpool City Region and skills programmes in the North East. The new approach is intended to extend similar tools to more places.
The accountability test
Greater power needs stronger scrutiny. Residents should be able to see how revenue forecasts are calculated, which projects are prioritised and whether benefits reach deprived neighbourhoods as well as successful city centres.
- Publish multi-year investment plans.
- Report outcomes, not only spending.
- Make mayoral decisions open to scrutiny.
- Protect essential services when growth falls short.
Fiscal incentives can encourage growth, but tax bases vary sharply. A fair system will still need national equalisation so poorer regions are not permanently disadvantaged.
