Ahead of the summer Budget, Richard Threlfall, head of infrastructure, building and construction at KPMG UK, says the Government needs to up the pace on fiscal devolution to allow significant investment in the UK’s regions. He said:
“Our politicians tell us how keen they are on devolution. But so far we haven’t seen any clear proposal for the amount of buying power that Government proposes to put into the hands of city regions. Until we get that, the devolution debate is just hot air.
“The UK is one of the most fiscally centralised economies in the world. The spending power in the hands of local authorities is less than 2% of GDP in the UK, compared to an OECD average of 10%. The announcement in the last Budget of pilot schemes for Manchester, Cheshire East, Cambridgeshire and Peterborough to retain 100 per cent of additional business rate growth above forecasts is welcome as a principle but in financial terms is a drop in the ocean. It might buy a bus lane in Manchester but it won’t buy HS3.
“The Government has shown over recent years that it understands the critical link between infrastructure investment and the UK’s economic prosperity and competitiveness. Longer-term planning and fiscal devolution to our major city regions, could turbo-boost that investment, leading to the development of regional infrastructure funds and drawing in much higher levels of private capital, ultimately to the benefit of the country as whole.”