Give mayors in England double amount of funding through share of income tax – subject to suitable accountability measures, says thinktank

However, in its report, Devolution that delivers: fiscal powers for regional growth, IPPR North also said that there needs to be accountability measures from the outset, including regional audit offices and mayoral authority accountability committees.

The thinktank said the additional funding would give local leaders greater autonomy over billions more to invest in transport, housing and regeneration without increasing income tax.

It claimed that the delivery of projects like mass transit systems, for example, would be “supercharged” under the proposals and provide the scale of fiscal devolution needed to turn the government’s growth ambitions into reality.

IPPR North described Prime Minister Andy Burnham’s plans to bring fiscal devolution to all mayors by 2028 as “a bold and ambitious tool to begin reversing decades of damaging over-centralisation that has held the country back”.

It warned though that a bad decision or mismanaged funding from any one authority risked turning public opinion against devolution and undoing progress everywhere.

The report suggested that accountability is important to this funding shake-up in three main ways:

• Financial accountability. Borrowing against devolved revenues should stay within the Treasury’s fiscal rules and national financing and transparency frameworks.
• Democratic accountability. “Where responsibility moves to a mayor, accountability must move with it. This means mature authorities at the regional level appointing their own accounting officers, in place of Whitehall permanent secretaries, and establishing local audit offices for how money is spent and what it delivers.”
• Institutional accountability. “Fiscal autonomy requires local institutions that are resistant to the misuse of funds, corruption and elite capture by lobbying interests. Advanced MSAs [mayoral strategic authorities] should therefore face enhanced transparency and audit requirements. As part of this, we propose introducing mayoral authority accountability committees, which would expand and professionalise the current role of mayoral authorities’ overview and scrutiny committees, as IPPR North has previously set ….. Together, these make fiscal devolution something that strengthens public trust in how regional economies are run to establish a sustainable fiscal devolution settlement.”

Former Treasury minister Lord Jim O’Neill, who wrote the foreword to the report, said: “The UK is a centralised outlier amongst its OECD peers. 

“Without fiscal devolution, mayors and local leaders won't have the freedom to make real change happen. 

“It is a simple mathematical fact that if the places with the biggest potential grow more strongly, the national economy will also grow to the benefit of all."

Aditi Sriram, economist at IPPR and lead author of the report, said: ““For too long, mayors have been expected to drive growth with one hand tied behind their backs, reliant on Whitehall for the money and permission to get things done. 

“Fiscal devolution, as laid out in this report, would give mayors the freedom to plan for the long term, invest in the things that bring growth and share in the revenues that growth creates, all while ensuring they have the capacity to deliver it.

“But we’re at a defining moment; critics are loud, political trust is faltering, and the public want to see action, so the devolution agenda cannot afford to fail.”