Report

Design principles for the fiscal devolution roadmap

This report from UK think tank Re;State sets out the design principles for the Treasury’s fiscal devolution roadmap.

Fiscal devolution would be a genuinely dramatic shift.

It would put firepower behind regional efforts to tackle the productivity puzzle, enabling places to go further in experimenting with approaches tailored to their specific context. It would help to peel away layers of man-marking and micromanagement by Whitehall, allowing for a more focused and strategic centre, and a shift to policy genuinely rooted in place, unencumbered by departmental silos. It would mean empowered local leadership, with meaningful decisions about revenue as well spending being taken closer to the people they impact. And it would end England’s outlier status as the largest and most complex country to manage almost all of its finances centrally.

The Chancellor’s commitment to develop a fiscal devolution roadmap represents a significant opportunity. However, we find that to fulfil its promise any fiscal settlement must:

• Offer actual fiscal autonomy, not better-labelled grant funding, which means genuine discretion over how money is spent from place to place

• Disrupt and streamline how devolution funding currently words, bringing an era of multi-departmental negotiations across Whitehall to an end

• Give places a very direct stake in local growth

• Thread the needle of fair equalisation, so that all places are resilient to shocks, and poorer places are not simply left behind

• Shift accountability, ending the upward-looking norms of today and empowering local democratic and technical scrutiny.

The design principles set out here, an output from our Devo Next Initiative – an ambitious collaboration with leading edge strategic authorities – should be read as a test for the Treasury’s fiscal devolution roadmap: metrics to determine whether this blueprint can change the political economy of devolution.