Local control over taxation in focus

The All-Party Parliamentary Group (APPG) on Local Government has launched a new inquiry focused on fiscal devolution in England. The inquiry aims to explore the potential for increasing local control over taxation and revenue, particularly in devolved areas governed by metro mayors. This initiative seeks to foster economic growth and productivity, address regional inequalities, and support public service reform. This move is a direct follow-up to the Chancellor’s announcement regarding the Treasury's plans to create a roadmap for fiscal devolution ahead of the Spending Review 2027.

Laura Hughes, Partner and Head of Public Law at Browne Jacobson, a UK and Ireland law firm, has extensive experience in this area. She was instrumental in the legal work surrounding the establishment of the first combined county authorities in regions such as the East Midlands, Lancashire, and Greater Lincolnshire. Hughes stated, “If we’re to truly realise the benefits of devolution, then fiscal devolution is needed – across England but also in all our devolved nations.”

She emphasised that transferring powers related to transport, skills, and housing from Westminster to local areas has indeed made a transformative impact in many regions. However, she cautioned that these positive changes could only go so far without accompanying fiscal autonomy. “Without genuine control over taxation and revenue, local and regional leaders remain fundamentally dependent on the centre,” Hughes added.

Furthermore, she highlighted the significance of addressing structural questions during this inquiry. “If this inquiry is serious about examining how greater local control over taxation and revenue could support economic growth, improve public services and strengthen accountability, then it needs to grapple with the structural questions that have been ducked for too long.”

Hughes also urged that any discussion around fiscal devolution must consider the broader context, noting that Wales and Northern Ireland do not yet possess the same degree of fiscal devolution as Scotland. “This asymmetry creates real tensions in the intergovernmental landscape that this government has not yet resolved,” she remarked.

This inquiry may present a substantial opportunity for reform, suggested Hughes, laying down practical options including the devolution of existing taxes, as well as necessary safeguards and equalisation mechanisms. Ultimately, she concluded, “It’s then up to government to use the legislative tools at its disposal to match the ambition set out.”