North West Devolution – will the pound signs blind politicians to the pitfalls?
Well, George Osborne is certainly milking the business rates review announcement isn't he – three times now the Government has unveiled the review and it doesn't get any more high profile than in the Spring Budget.
Perhaps more interesting for us North Westerners is Osborne's announcement that Greater Manchester and Cheshire East Council will be allowed to retain 100% of growth in business rates it raises, all wrapped up in his Northern Powerhouse rhetoric.
Under current arrangements 50% of business rates growth income goes to central government, but the latest move diverts all income to the Greater Manchester. "We have been working across party lines with councils in the North," said Osbourne. As well as listing a host of initiatives that will devolve powers to Northern leaders he also claimed that the agreement with Greater Manchester on an elected mayor "is the most exciting development in civic leadership for a generation."
"With the devolution of power, skills, transport and now health I can now announce we have reached provisional agreement to allow Greater Manchester to keep 100% of the additional growth in local business rates as we build up the Northern Powerhouse. For where cities grow their economies through local initiatives, we will support and reward them." he added for good measure.
Local leaders have broadly welcomed the news and Lord Peter Smith, chair of Greater Manchester Combined Authority, said they had been making a case for "fiscal devolution" for Greater Manchester for some time where "it will be a virtuous circle and we can only gain and not lose funding through this new arrangement.
Cheshire East Council leader Cllr Michael Jones also welcome the news calling it "fantastic".
It is certainly going to be an interesting experiment but I think the local politicians should be careful what they wish for. At this stage they could be blinded by the pounds signs in their eyes from a Business Rates bonanza but ultimately they will be held accountable and can't turn and point the finger at Westminster when the books don't balance in years to come. I think it will also be worth noting if this sudden influx of funds for regional devolution will translate into inflation busting pay rises for those chief executives and operating officers who are so warmly welcoming the news?
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