Let the South East raise new revenues to boost economy

Tuesday, 22 March, 2022

By Cllr Tony Page, Vice Chair of South East Councils and Deputy Leader, Reading Borough Council

The global economic outlook is bleak and is being felt close to home as the cost of living crisis threatens and energy costs look set to spiral out of reach for a sizeable number of UK households. Against this uncertainty, the conflict in Ukraine and the resulting refugee crisis demands support from communities across our country.

Councils across the South East are ready and willing to help but support is urgently needed. Demand pressures are already rising and as one of the most populated regions, this will continue to put a strain on already overburdened councils.

The South East region is one of only two net contributors to the Treasury. Undoubtedly the region has a vital role to play in driving the UK’s economic recovery. Councils across the South East would be well placed, if adequately empowered, to support local industries in driving export-led growth, coordinating investment in clean growth and promoting more sustainable local communities.

South East Councils, which represents most of the councils in the region, today launched a new report – Resetting the South East – from think-tank, Localis, exploring the potential for our region to be more in control of the Government’s Levelling Up agenda.

Its recommendations set out a path for effectively tackling major local inequalities and clearly points to the opportunity for the South East to step up its role in strengthening the UK economic recovery. Against a backdrop of unprecedented demand pressures, rising costs and reducing central government grants, additional fiscal freedoms are urgently needed.

Councils in the South East should be supported to explore new revenue raising opportunities as a catalyst for growth within, and beyond, the South East. Harnessing the revenues raised through existing taxes such as reformed business rates, a more progressive council tax structure, or even new ideas such as a ‘tourist tax’ should be explored. This would allow the South East to generate its own additional funds to support Levelling Up priorities and further boost Treasury income for the benefit of the whole UK.

There is support for this from stakeholders, councils and members of the public. Our SEC South East 1,000 Regional Monitor (Autumn 2021), found that most respondents regard Business Rates as a matter to be set and managed locally (41%) or regionally (25%). Similarly, most see a potential Tourist Tax as a matter to be set and managed locally (37%) or regionally (25%).

Today’s report calls for the formation of a South East Finance Commission, in the style of the London Finance Commission, which could be a vehicle to explore these opportunities in an open, collaborative forum where bold, innovative ideas can be put on the table.

On the eve of the Spring Statement, we would urge the Chancellor to consider further fiscal freedoms for a region that has a proven track record of delivering economic growth to the benefit of the whole UK.

Devolution deals aside – which in most cases offer no fiscal devolution – it is time to empower the South East to build on its strength as the UK’s powerhouse and raise more of its own revenues. This would then better support a UK-wide approach to deliver for those most in need, and address inequalities regardless of geography.

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