The Chancellor of the Exchequer, George Osborne, has received a letter from the Core Cities Cabinet calling for the devolution of property taxes to the UK’s big cities.
The Core Cities Cabinet which represents the cities of Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield, has added its voice to that of Mayor of London, Boris Johnson and Chair of London Councils’, Mayor Jules Pipe in calling for greater financial freedoms, starting with property taxes.
Core Cities’ urban areas already deliver 27% of the English economy, more than London and are home to 16 million, yet they underperform by international standards.
This is because, currently, cities only retain about 5% of the total tax base raised in them which is damaging their economic potential.
According to the OECD, the level of taxes managed at the local or regional level is about 10 times greater in Canada, 7.5 in the US, 7 in Sweden, almost 6 in Germany, and over 5 times greater across the OECD on average.
The devolution of property taxes could rectifying this issue in the UK by increasing the amount of tax retained in our cities to 12%, including council tax, and giving them the freedom to grow and compete globally.
The extra money generated from handing the cities greater freedom to retain property taxes would help the Core Cities meet their target of outperforming the national economy, and becoming financially self-sustaining. Independent forecasts demonstrate this could mean an additional £222bn and 1.3m jobs for the country by 2030.
Leader of Newcastle City Council, Coun Nick Forbes, said: “It is essential that our great cities – the engines of growth – perform to their maximum level if UK Plc is to successfully compete in the global economy. One way to help cities is to allow them to retain more of their taxes so they can be used to improve transport links, upgrade development sites for infrastructure and attract investment to create jobs that residents, especially young people, so desperately need.’’