Newcastle is being held back by the Government’s tight hold on local authority purse strings, it has been claimed.
The argument was made by Newcastle City Council leader Nick Forbes at its annual ‘State of the City’ event.
He called on the Coalition to adopt a much more radical approach to local authority finances to enable the city to become more economically viable and compete “on a level playing field”.
Coun Forbes said: “In England 95% of all taxes raised in the city go back to the Government, and most of the funding that comes back to us does so with strings attached.
“This is stifling local innovation and hampering the ability of local decision makers to purse local priorities.”
He was joined at the event by a panel of experts in a public debate on the matter including representatives of the Thinking Cities campaign, an independent body calling for more power to be devolved to local authorities.
They say unemployment, poverty, housing and economic growth can all be helped positively in this way.
Coun Forbes acknowledged there had been some movement in this direction by the Government through its Local Growth Fund and City Deals initiatives.
But he added: “While these are welcome developments, we should remember that local growth pot of around £2bn is a drop in the ocean compared to Lord Heseltine’s original recommendation of £70bn be devolved from Whitehall to local areas to get the economy moving.”
The City Deal allows Newcastle to borrow to fund development and use the additional business rates by the investment to pay the loan back.
“This releases £92m to invest in our city’s future, generating a massive £1bn return and 13,000 jobs over the nest 25 years,” he said.
Coun Forbes cited the work on the Stephenson Quarter, Science City and the Central Station, as examples of the city deal’s benefit. It has also led to transport improvements around Newcastle including improvements to key junctions on the A1.
However, compared to other cities around the globe, Government policy is still “centralist”, Coun Forbes said, with German cities controlling six times more of the taxes raised than the UK, while in the US and Canada it is seven times and 10 times the amount respectively.
Coun Forbes: “Greater freedom to decide how to spend the money generated in cities, such as property taxes, would help the Core Cities meet their target of outperforming the national economy and becoming financially self sustaining.”
Source – Newcastle Evening Chronicle, 30 July 2014