Regional political leaders in the North and Midlands will have to be given powers to raise local taxes in future, Michael Gove has said.
The Levelling-Up Secretary said that politics was moving in the ‘direction’ of devolving greater financial powers to places like Manchester and the West Midlands to reverse an ‘erosion’ of local government since the 1980s.
He made the remarks in an interview conducted for an research paper released today which attacks a ‘persistent bias’ in public spending towards affluent London and the South East.
It comes as Rishi Sunak finds himself facing calls for tax cuts rather than more taxes, after two scorching by-election defeats for the Tories. They lost Tamworth and Mid Befordshire to Labour on Thursday, in the case of the latter for the first time ever.
Speaking to academics at King’s College London and Harvard’s Kennedy School Mr Gove said tax raising powers were ‘a necessary part of the success, or eventual success’ of regional mayors.
Praising Tory leaders Andy Street and Lord Houchen, and Labour’s Andy Burnham and Steve Rotherham, he said: ‘We will have to move further in that direction.
‘There has been, during the 1980s, everything from rate capping through to the poll tax, an erosion of the tax base of local government.
‘Then there’s the straightforward tension between equity and a further devolution, though it can be resolved in some cases, and also the institutional resistance of the Treasury.
‘Those need to be overcome. That is the direction but … it will take some time to get there.’
The interview was conducted in July 2022, while Boris Johnson was still prime minister. It was one of 93 carried out by academics with current and former politicians and civil servants including Mr Gove, Sir Tony Blair, George Osborne, Gordon Brown and Sir John Major.
The paper, whose authors include former Treasury minister Ed Balls, noted that all efforts to reduce regional inequality since the 1970s have failed. It warns that ‘as the UK’s political parties prepare their manifestos for the next parliament, a plan to address regional inequalities is now a cross-party policy imperative’.
Based on the interviews it found that ‘past policies to grow the UK’s regional economies were geographically biased and insufficiently ambitious – to the regret of those responsible’
Mr Street told the academics that directly elected mayors could be given similar powers to Scotland without increasing the overall tax burden.
‘You know exactly how much comes from here – in airport passenger duty, vehicle excise duty… the list goes on – which have been given to Scotland that could be given to us without charging a citizen a single extra penny,’ he said.
‘The deal would then be ”You have that cash, you live within it. If you spend it in a way in which your citizens don’t want, you’re responsible.” It’s that notion of accountability, that we are up for that.’