Magazine article Public Finance

Cities Guru Calls for More Fiscal Freedom

Magazine article Public Finance

Cities Guru Calls for More Fiscal Freedom

Article excerpt

Increased fiscal devolution to cities is a 'necessity' to boost the growth rate of the UK, a leading economist examining plans to increase the powers of municipalities has told Public Finance.

Jim O'Neill, the chair of the City Growth Commission established to develop a devolution blueprint for urban areas, said that granting city authorities fiscal powers must be 'top of the agenda'.

The commission, which was established by the Royal Society of Arts, is set to publish its report this autumn, in time for its recommendations to feed into party manifestos ahead of the general electioa Since being formed last October, it has completed a call for evidence and held five evidence sessions to examine the role of'metro areas' in the UK economy.

O'Neill - who when chief economist at Goldman Sachs coined the term Brie to describe the shared growth prospects of Brazil, Russia, India and China - said cities would be key to future economic expansion. 'My premise is that we can think of a few interventions for the 15 metro areas as we define them that can boost the national economy's growth trends,' he added.

Speaking to PF at the halfway point of the project, O'Neill said he wanted to challenge what he described as the Treasury's view that growth in cities was a zero-sum game, with gains in one area likely to be offset by lower activity elsewhere. 'It's challenging the central premise of how, from what I can see, much of central government has approached this - that if you help one region it's got to be paid for at somebody else's expense - which I think is the wrong approach.' Critical to resetting this balance will be increasing the fiscal powers available to cities, he said.

'Some sort of fiscal devolution to at least some of those areas that are well organised seems to be a necessity, but not necessarily sufficient, for the core premise - that if you undertake interventions in various important national regions, the national growth trend of the UK will be raised.'

This was likely to take the form of a recommendation to give cites greater ability to retain or influence their own tax take. 'At the core of it is cities having some basic ability to raise and retain income themselves,' he said. …

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