Rachel Reeves outlines plans to offer regional mayors huge tax enhance
Chancellor uses big speech reveals plans to give regional leaders ‘control of a share of some national taxes’ as she signals closer ties with EU
(Image: PA)
Regional mayors could be given a slice of nationally collected taxes to invest in their areas under plans announced by Rachel Reeves. The Chancellor said she would set out a “road map for future fiscal devolution” at her next Budget in the autumn.
The move would not increase the tax burden, she said, but would share existing tax revenues with regional leaders, rather than the Exchequer controlling the cash.
Giving the annual Mais Lecture at Bayes Business School in London, the Chancellor said: “I have asked my officials to work with mayors and businesses to develop a road map for future fiscal devolution to be published at this year’s budget. This will set out plans to give regional leaders control of a share of some national taxes which have, for too long, been allocated by central government.
“They will look at income tax alongside other taxes, with reforms initially targeted at those places that have the greatest capacity to deliver them and the greatest potential to benefit.”
She said the move represented a “genuine break” with the past and a “generational opportunity for Britain’s regions to make their own future”.
Ms Reeves vowed that “this is not about new taxes” and that she would not ask taxpayers to pay more.
“Reforms will be fiscally neutral,” she said, with region leaders able to spend a proportion of the income tax raised in their areas.
The Chancellor also set out plans for “city investment funds” backed by £2.3billion of funding, focused on northern England and the West Midlands. And Ms Reeves announced the Government would consult on a development corporation for Greater Oxford, similar to the one launched for Cambridge earlier this year.
She doubled the funding commitment – initially £400million for Cambridge – to £800million for both Cambridge and Oxford to grow through upfront land acquisition and infrastructure.
Ms Reeves used the speech to set out what she said were the advantages of closer dealings with the EU. The Chancellor warned the UK risked being “stranded” between rival trading blocs unless it sought a closer relationship with Brussels.
She said the UK would still diverge from the EU’s regulations in some areas but they would be “the exception, not the norm”.
“The prize is considerable,” Ms Reeves said, claiming closer alignment would help bring down prices and inflation.
Brexit had created “profound uncertainty” and left the UK facing the risk of being “stranded between powerful trading blocs as globalisation retreats”, she warned. “Our fate as a country is inescapably bound with that of Europe,” the Chancellor added.
Setting out the “deep damage” of Brexit, Ms Reeves said it had hit gross domestic product (GDP) – a measure of the size of the economy – by up to 8% and contributed to higher prices for businesses and consumers.
