Core cities join forces with London to put pressure on the Chancellor to devolve property taxes

Issued on behalf of The Core Cities Group

Today, the Chancellor of the Exchequer, George Osborne received a letter from the Core Cities Cabinet calling for the devolution of property taxes to the UK’s big cities. Although this will more than double the taxes cities retain locally, it is only a rise from 5% to 12% and still leaves the UK trailing behind the international competition.

The Core Cities Cabinet which represents the cities of Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield, has added its voice to that of Mayor of London, Boris Johnson and Chair of London Councils’, Mayor Jules Pipe in calling for greater financial freedoms, starting with property taxes.

Core Cities’ urban areas already deliver 27% of the English economy, more than London and are home to 16 million, yet they underperform by international standards. This is because, currently, cities only retain about 5% of the total tax base raised in them which is damaging their economic potential.

According to the OECD, the level of taxes managed at the local or regional level is about 10 times greater in Canada, 7.5 in the US, 7 in Sweden, almost 6 in Germany, and over 5 times greater across the OECD on average. The devolution of property taxes would go some way to rectifying this issue in the UK by increasing the amount of tax retained in our cities to 12%, including council tax, and giving them the freedom to grow and compete globally.

The extra money generated from handing the cities greater freedom to retain property taxes would help the Core Cities meet their target of outperforming the national economy, and becoming financially self-sustaining. Independent forecasts demonstrate this could mean an additional £222 billion and 1.3 million jobs for the country by 2030. That is like adding the entire economy of Denmark to the UK.

Specifically, the money generated from the devolution of property taxes would be used on projects that benefit cities such as improved transport networks and upgrading business infrastructure.

In September 2013, London and the Core Cities officially launched the ‘City Centred’ campaign which calls for the devolution of financial powers to our cities, with property taxes being the primary focus.

Sir Richard Leese, Leader, Manchester City Council and Chair, Core Cities Cabinet said:

"Our great cities once led the world in both economic and social transformation, through the industrial revolution and urban reformers like Joseph Chamberlain and Robert Peel. We have the opportunity to emerge from recession with the world once again looking to the leadership of our cities, generating the next set of ideas and industries that will change the globe.

“To realise that ambition, cities must be empowered with the necessary freedoms to deliver. That is why we have joined our voices to those of London in calling for the rapid devolution of property taxes to our major cities.”

Councillor Keith Wakefield, Leader of Leeds City Council, said:

“If we are to secure sustainable long-term growth as a nation, we must rebalance our economy. To do that, cities like ours need the power, freedom and resources to deliver on key regional priorities. Retaining a greater proportion of locally generated revenue could enable us to invest in the infrastructure projects we know will make the biggest difference to people living in our area – improving links to employment opportunities and opening up new markets for businesses.

“The evidence already proves that where we are given the powers and resources to act locally, we have the potential to deliver vastly improved outcomes. Most recently, local projects to tackle youth employment through the Devolved Youth Contract have consistently outperformed national schemes such as the Government’s Work Programme. We need the Government to now come good on its promises of greater devolution. This letter to the Chancellor sets out one of a number of ways we can continue that process.”


Notes to editors

The 5% of the total tax base currently retained by the cities is made up almost entirely of council tax.

Property taxes consist of: council tax, business rates, stamp duty land tax, annual tax on enveloped dwellings and capital gains property disposal tax.

The Core Cities recently released a Growth Prospectus which can be read online here.

The Core Cities are a unique and united local authority voice to promote the role of their cities in driving economic growth. They represent the councils of England’s eight largest city economies outside London. The Core Cities Group has a track record of 15 years as a cross party group, led by the City Leaders. It is a self-selected and self-funded group. For more information please visit http://www.corecities.com/.