LONDON: Ashington is an old coal mining town in the North East of England that fell by the wayside during the deindustrialisation of the Margaret Thatcher era.<\/p>\n
Its last pit closed in 1986 and its largest employer, an aluminium smelter, shut down in 2012.<\/p>\n
Just 20 miles from the thriving city of Newcastle, but without a train link since 1964, the town went into decline and\u00a0its neighbourhoods are now among the poorest 5% in England.<\/p>\n
For Britain\u2019s new Prime Minister,\u00a0Andy Burnham, towns like Ashington will be the test of his vision for\u00a0\u201cgrowth in every postcode\u201d of the country.<\/p>\n
To get there, he believes\u00a0the United Kingdom needs to end \u201c40 years of neoliberalism\u201d and what he and other critics disparagingly call trickle-down economics.<\/p>\n
Instead, he will rebuild the economy \u201cfrom the bottom up\u201d by giving power away in a devolution revolution \u2013 the driving principle behind a politics he has called Manchesterism, named after the city where he was mayor for nine years.<\/p>\n
Fiscal devolution is well advanced in the nations of Scotland, Wales and Northern Ireland but not in England.<\/p>\n
Burnham\u00a0will address that, albeit stopping short of giving English regions the same broad tax-raising powers.\u00a0<\/p>\n
Currently, local windfalls tend to end up back in Westminster, where the money is then dished out again in the form of grants.<\/p>\n
Burnham\u2019s changes are designed to incentivise growth by letting regions keep their gains.<\/p>\n
Despite these aspirations, the evidence suggests that devolution is no panacea.<\/p>\n
Scotland, the United Kingdom\u2019s most devolved area, has grown more slowly than England since the 2008 financial crisis.<\/p>\n
Despite raising the top rate of income tax to 48% from 45%, and spending more on health and education, outcomes in those areas have been worse than in England. Much the same story can be told of Wales.\u00a0<\/p>\n
Yet, there are\u00a0models of English devolution that have\u00a0proved successful. Burnham\u2019s Manchester is\u00a0one, although a more comprehensive\u00a0model is \u2013\u00a0ironically \u2013\u00a0closer to the Westminster power base Burnham wants to demote. It\u2019s Sadiq Khan\u2019s London.<\/p>\n
Evidence and opportunity<\/p>\n
Burnham\u2019s central theory is supported by studies from Harvard and the Organisation for Economic Cooperation and Development (OECD), showing that devolved\u00a0powers to regional government put\u00a0economic levers \u2013\u00a0transport, housing, skills and investment \u2013\u00a0into the hands of those who know what works, instead of remote bureaucrats hundreds of miles away.<\/p>\n
As the most centralised of all 38 OECD economies, with only 5% of taxes and 20% of spending decisions controlled locally, Burnham sees the United Kingdom\u2019s handicap as an opportunity.<\/p>\n
Britain\u2019s second-tier cities, after London, \u201ctend to underperform relative to international peers of comparable size and density\u201d, the OECD said in its survey of the United Kingdom last month.\u00a0<\/p>\n
Fix those regional inequalities and a prize awaits. A recent joint study by Harvard and King\u2019s College London, co-authored by Labour\u2019s former Treasury Minister Ed Balls, found that bringing the United Kingdom\u2019s second cities up to the standard of western European peers would add \u00a370bil (US$93bil), or 2%, to national output.<\/p>\n
The Centre for Cities think tank said that if the eight largest underperforming urban areas were raised to the average gross domestic product per worker, output would be \u00a347bil higher.<\/p>\n
For the ruling Labour Party, economic rewards promise political ones as well.<\/p>\n
Accelerating regional growth would raise living standards for voters in \u201cleft-behind\u201d regions, the old Labour heartlands that have swung to Nigel Farage\u2019s right-wing Reform UK. Devolution is the latest in a decade of attempts to \u201clevel up\u201d the regions, this time through power rather than hand-outs.<\/p>\n
Last Friday, Britain\u2019s new Prime Minister announced the broad outline of\u00a0his plans.<\/p>\n
\u201cCentral government must become smaller\u201d, according to a statement from the Cabinet published that day. Powers, resources and functions will be transferred \u201cso that decisions can be made locally\u201d.<\/p>\n
Local business rates<\/p>\n
Regional grants will be replaced, over the next two years, with a share of local business rates and income tax, as well as an entirely new local tourist tax so \u201cthat where a region grows its tax base, it benefits from the increased receipts\u201d.<\/p>\n
There will be a distribution mechanism for poorer areas that have suffered historically from a shortfall in investment.<\/p>\n
Funding freedoms will come with greater responsibilities for education, employment, health, transport, policing and housing, with new deputy mayors to meet the expanded brief.<\/p>\n
The cost threshold for local transport projects without central government sign-off will raise to \u00a3500mil from \u00a3200mil. Beyond that, much of the detail is yet to come.<\/p>\n
Work had already begun before Burnham took over on July 20. The tenet of \u201cdevolution by default\u201d that he\u2019s espoused, which inverts the principle that ministers justify a transfer of powers to the regions, pre-dates his premiership, as does the commitment to hand over a greater share of central tax revenues.<\/p>\n
Former Chancellor of the Exchequer Rachel Reeves had already set in train the process of giving regions more financial control.<\/p>\n
Delivering the annual Mais Lecture in March, she announced a locally-run \u201cvisitor levy\u201d and planned to share revenue from income tax and business rates.<\/p>\n
Both proposals had been slated for the autumn budget she now won\u2019t get to deliver, a Treasury official\u00a0said, speaking privately.<\/p>\n
Legislation enshrining \u201cdevolution by default\u201d came into force in April with former Prime Minister Keir Starmer\u2019s English Devolution and Community Empowerment Act.<\/p>\n
Andy Street, the former Conservative West Midlands mayor who collaborated with Burnham in his Manchester days, wants the new Prime Minister to go further.<\/p>\n
Prosper UK, the Conservative Party movement he co-founded this year, has called for local authorities to keep a cut of stamp duty, airport passenger duty, vehicle excise duty and even the value-added tax.<\/p>\n
The Centre for Cities would add corporation tax receipts to the list.<\/p>\n
John Healey, Burnham\u2019s chancellor, is bought in. \u201cThe people who best understand what skills employers want, what transport an area needs and where investment can make the biggest difference are those who live there,\u201d he said last week as the government announced that English metro mayors will retain control of some business rates from 2027 and a portion of income tax from 2028.\u00a0<\/p>\n
Healey has long been a believer in the power of devolution. In a 2021 interview for a Harvard study on regional divides\u00a0he said that, for a government to be \u201cserious about the economic and social development of the city regions,\u201d it must hand over \u201cthe decision powers, the funding streams, the policy instruments.\u201d \u2014 Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"LONDON: Ashington is an old coal mining town in the North East of England that fell by the…\n","protected":false},"author":2,"featured_media":1129063,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3,4],"tags":[748,270649,76965,1700,393,22300,4884,275810,1144,712,16,15,1764],"class_list":["post-1129062","post","type-post","status-publish","format-standard","has-post-thumbnail","category-uk","category-united-kingdom","tag-britain","tag-burnham","tag-devolution","tag-economy","tag-england","tag-fiscal","tag-great-britain","tag-manchesterism","tag-northern-ireland","tag-scotland","tag-uk","tag-united-kingdom","tag-wales"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/117035033381953202","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1129062","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=1129062"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1129062\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/1129063"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=1129062"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=1129062"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=1129062"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}