Unleash cities – but only some of them, says O’Neill
JIM O’Neill’s City Growth Commission is recommending cities have greater powers to raise money through taxes and should be allowed to use government money more freely.
But he says devolution should only be applied to cities that have the “leadership, financial management and accountability structures” in place.
“Not all metros are ready to take this leap and will have to wait until their economic performance and governance structures lend themselves to devolution and enable them to ride the difficult storms of decentralisation,” said the commission in a statement.
The key recommendations are:
* The right to pool revenue streams (rather than be constrained by ringfencing) and leverage assets
* Raise and retain funding through new and existing taxes
* Borrow more freely in open capital markets
* “Take their seat at the table” in national policy making
Jim O’Neill said: “What is ultimately critical for our metros to thrive is for each to identify what is right for them. Just as it is the case that those in Whitehall are hardly in a position to know what is best for the future of different parts of our country, however well-intentioned, it is also the case that our central recommendations, again well-intentioned and evidenced-based, may work for some cities and not for others.
“As we have all witnessed with the run-up to the Scottish referendum on independence, some of our citizens want to have more decisions made about their futures by those who live and operate in their communities. However, the economic importance of our metros is the basis of our medium and long-term economic future. What happens in the likes of Bristol, Cardiff, Edinburgh, Glasgow, Leeds and all of the other 15 metros we defined in our first paper will be more important for UK economic growth than what happens in the rest of Scotland combined.”
In June chancellor George Osborne said he wanted to start a conversation about “serious devolution of powers and budgets” and was considering the introduction of London-style mayors for areas such as Greater Manchester and Merseyside.
The commission was established by the Royal Society of Arts (RSA) and is being led by former Goldman Sachs chief economist Jim O’ Neill. He is being supported by the economists Diane Coyle, Greg Clark and Bruce Katz, a former adviser to President Obama who has written about the potential for cities to drive growth.
It argues that over-centralised decision-making is stifling economic growth and holding cities back. It says the UK has “the most centralised system of public finance of any major OECD country”, and believes they need to be empowered to tackle long-term causes of welfare dependence and manage their own share of the national deficit.
