Powers to Grow: City Finance and Governance

The City Growth Commission argues that radical change for the better can be achieved, but only if all three parties are daring enough to take on the ground-breaking package of fiscal devolution we put forward.

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Over recent months, the importance of cities in driving growth and prosperity has been increasingly recognised, rising up the political agenda to the highest levels. Despite this, metros are still held back. At the mercy of the most centrally-controlled system of public finance of any major OECD country, leaders’ responses to the economic, social and environmental needs of their city are limited.Some cities are ready and able to take on the responsibility and risks of devolution and should be freed to drive investment, inclusive growth and public service reform as soon as is practical.

The Commission does not advocate that all metros should take this leap however. Devolution is a process and not a top-down blanket policy and should be treated as such – other metros will need to wait until their economic performance, potential and governance structures lend themselves to devolution. 

We therefore put forward a range of recommendations:

• Reform across the board, for both central government and metros: including tax and local government finance reform; constitutional and Whitehall reform; and demonstration of metro commitment to competence and capability.

• Further decentralisation for those ready to gain greater autonomy: including multi-year finance settlements; greater borrowing flexibilities; and the ability to retain the proceeds of growth through outcomes-focused finance models.

• Devolution for those metros deemed ready to take on genuine risk: including devolution of property taxes; ability to set new taxes; the power to convene public and quasi-public service bodies to integrate public service reform and economic growth; and a seat at the table in national policy-making to enable more informed, strategic national decision-making.