South East is ripe for a fiscal devolution trial

Wednesday, 19 October, 2022

Council leaders from across the South East, are today [Wednesday 19th October] calling on the Government to allow cohorts of councils in the region to run a two-year financial devolution pilot.

Paul Scully MP, Minister for DHLUC heard from a broad range of local leaders and stakeholders from the South East at a major summit, Tomorrow’s South East, organised by South East Councils in partnership with think tank Localis and supported by the MJ and Willmott Dixon.

Sean McKee, Director for South East Councils said:

“The South East is one of only three regions to make a net contribution to the Exchequer.

A specified financial devolution pilot could be run in confidence, in a region with a proven track record of economic stability and the demonstrable appetite for devolution.

“As we face yet more economic turbulence, isn’t this the ideal time to build on our region’s foundations for growth and allow the South East to kickstart the economic recovery of the UK?

“A trial such as this over two financial years, would provide valuable insights for the Government as it explores a myriad of devolution models”.

“We need a reset – an opportunity to allow the South East region’s inherent economic strengths to shine and drive the country’s growth.”

Jonathan Werran, Chief Executive for Localis said:

“This demands a shift to greater and nuanced devolution of economic control, a reset that would empower local councils in the South East to alleviate deprivation, improve living standards, and boost the Government’s environmental and trade ambitions.

“It starts with local government finance and Localis is calling for the establishment of a South East Finance Commission to investigate how appropriate fiscal levers could help the region, as a net contributor to the Exchequer, to self-fund investment to boost the economy and local services.

Council budgets are at breaking point, with income streams severely depleted following Covid-19, increasing service demands and significant, and growing, inflationary pressures. With the recent announcement that the Fair Funding Review is yet again delayed, local leaders are calling for action.

Growing evidence from the region shows that councillors, businesses and local people believe that councils should have greater financial powers. Polling commissioned by South East Councils South East 1,000 shows that an increasing proportion of people think certain taxes, levies, or charges should be set or managed at the local level.

In the report, 45 percent of respondents think business rates should be set at the local council level compared to just 24 percent of respondents believe rates should be set and managed at a national level.

Polling also shows strong support for a local tourism tax set at a local council level with 40 percent of respondents in favour compared to just 18 percent who say it should be set and managed at a national level.

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