Fiscal devolution measures welcome but delivery is key

Plans announced in the budget to give local authorities greater control over tax revenues generated within the region will be welcomed by the north west business community but their success depends on how effectively they are implemented, according to a leading business adviser in the region.

In last week’s announcement, Chancellor John Healey outlined plans for greater fiscal devolution, including allowing local and regional authorities to retain all business rates revenues collectively by the end of the decade, as well as giving mayoral authorities a share of locally generated income tax from 2028.

The policies form part of the government’s Fiscal Devolution Roadmap, published alongside the budget, which sets out the government’s approach to reforming the funding system for strategic and local authorities.

Graham Gordon, north west regional chair at national accountancy and advisory firm MHA, said the measures, and the government’s commitment to giving local leaders greater ability to align spending with local priorities, had the potential to prompt significant economic growth, but the key was in delivery.

He said: “The announcements mark a significant move toward fiscal devolution, allowing regions to benefit directly from the growth they generate. The measures are designed to stimulate regional investment and create a more balanced UK economy, with long term growth driven by devolved decision making and stronger local financial autonomy.

"But how fast will this happen? And do local mayors and leaders have the plans and ability to make the most of these opportunities? It’s welcome, but the delivery is key.”

According to Graham, meaningful engagement with the north west business community is key to this.

He said: “Local business leaders need to be consulted and play a central role in developing strategies to utilise additional funding which respond to the needs of our local economy.”

Other key measures announced yesterday to stimulate regional growth include a £1.5bn borrowing facility for mayoral authorities from 2028 through the Good Growth Fund and £150m funding to help strategic authorities develop the skills, resources and capabilities to take on greater responsibilities.

The chancellor also announced £100m funding to expand local apprenticeship services across England's existing mayoral authorities to help connect businesses with young people looking for apprenticeship opportunities.

Graham said: “Support for apprenticeship services should help small businesses recruit and develop young talent, while supporting more young people to employment.

“However, they will only partially offset the additional employment costs of previous budgets and must be developed in partnership with local employers in a way which responds to local skills needs.

“For businesses in the north west, the real test of devolution will be whether it improves transport connectivity, strengthens skills pipeline and gives businesses the confidence to invest in their own growth.

"The government has set out an ambitious direction for devolution but financial autonomy alone cannot deliver this. The challenge now is ensuring this ambition translates into meaningful economic growth for businesses of all sizes.”