Budget 2015: Manchester business rate powers prompt backlash

Manchester has pulled further ahead of the rest of England on economic freedom after the latest round of devolution unveiled in chancellor George Osborne’s 2015 Budget statement.

Osborne announced that Greater Manchester – along with Cheshire East plus Cambridgeshire and Peterborough – will be able to retain 100% of its additional business rate growth from April.

Manchester’s new freedoms come on top of a £1.2bn “earnback” mechanism for transport, a £300m housing fund and control over £6bn of health spending, which it has been handed within the last three years.

Some have voiced concerns over the government’s “piecemeal” strategic approach to devolution.

Responding to the Budget statement, Labour leader Ed Miliband said: “I have to ask. Why doesn’t he do it for all councils across the country?”

Andrew Carter, interim chief executive of think tank Centre for Cities, said questions have been raised as to how widespread government policy on devolution will spread.

He said the announcement “means that the gap between Greater Manchester and the powers available to other UK cities to decisively shape their economic future continues to grow.

“Even London was unable to secure any steps towards the kind of fiscal devolution that would enable the capital to tackle its housing and infrastructure shortfall, and help achieve the future growth the chancellor claims he would like to see.”

And Local Government Association Chair David Sparks, also voiced worries about the approach being taken.

“Local areas having autonomy over their local services should no longer be dependent on incremental concessions from Westminster. The future of local services depends on this becoming the default,” he said.

He said a bigger and faster approach to devolution for all places – not just a small number of cities – was essential for both the economy as well as “the survival of good quality public services”.

Paul Martin, spokesperson for local government finance at the Society of Local Authority Chief Executives, and chief executive of Wandsworth Council, said: “The announcement of pilots in Greater Manchester, Cheshire East, Cambridgeshire and Peterborough keeping a greater share of this income is a significant step forward, but one which should not just be limited to a couple of areas. All parts of the country should be able to reap the benefits of having a thriving local economy.”

Earlier this week, leaders in the West Yorkshire Combined Authority expressed disappointment at the shape of a devolution deal it signed with government, which stops well short of the powers granted to Manchester in  a similar agreement last year.

Keith Wakefield, leader of Leeds City Council, said:  “This does not match our ambitions for the people of Leeds and the city region.

“We were promised by the deputy prime minister that there would be no strings attached in relation to governance models so we are disappointed by the lack of devolution on transport and housing investment powers.”

Elsewhere in the Budget, Osborne said he would stick to his plan to cut £30bn from government spending over the course of the next parliament.

Paul Dossett, head of local government at Grant Thornton UK LLP, said that there could be some light at the end of the tunnel for beleaguered council treasurers.

He said: “It remains unclear how much of the forthcoming cuts will be borne by local government.

“However, the key message today on public finances is that a surplus is forecast during 2019/20 and that public spending will then grow in line with growth in the economy.”

Osborne also announced the creation of a number of new enterprise zones, which also allow for the retention of business rates uplift, along with the extension of previously announced ones.