Early insights from the APPG inquiry into fiscal devolution

Announced in the Chancellor’s Mais Lecture, the government’s intention for a programme of fiscal devolution is a welcome step towards rebalancing England’s highly centralised public finances. Following this announcement, LGIU began working with the All-Party Parliamentary Group (APPG) on Local Government to conduct an inquiry into the rationale for fiscal devolution, the tools that local areas may require, and the necessary design considerations for the intended programme. 

This inquiry incorporates written evidence from a range of organisations – including councils, strategic authorities, charities, trade bodies, and universities – and oral evidence testimonies from invited sector experts. This evidence will inform a final report detailing the inquiry’s findings, which will be launched on 14 July in the House of Commons in the presence of MPs, peers and local government leaders at the APPG’s summer reception. 

This Wednesday, 17 June, the APPG panel – Clive Betts MP (Chair), Zöe Franklin MP (Vice-Chair), and The Lord Porter of Spalding CBE – were joined in Portcullis House by six witnesses who gave oral evidence across two sessions, including:

• Amanda Mays: Deputy Chief Executive, Sussex and Brighton Strategic Authority.
• Tracy Bingham: Deputy Chief Executive and Section 151 Officer, South Derbyshire District Council.
• Tom Dammers: Head of Policy and Integration, East Midlands Combined County Authority (EMCCA).
• David Philips: Associate Director, Institute for Fiscal Studies.
• Mo Baines: Chief Executive, Association of Public Service Excellence (APSE).
• Jonathan Carr-West: Chief Executive, LGIU.

Early insights from the APPG inquiry into fiscal devolution

What’s the end goal?

Defining purpose and extent is the first step of delivering this programme. The panels explored what fiscal devolution is actually intended to achieve – economic growth, local resilience, or genuine local autonomy? The importance of defining this goal was discussed in terms of prescribing the precise changes needed for a successful programme. Our experts also debated the need for primary legislation, if the government intends for devolved fiscal powers to become lasting features of the system.

Who is fiscal devolution for?

The government’s preference for devolution to Mayoral Strategic Authorities (MSAs) was made clear in the Devolution Act, but our panel discussed the extent to which fiscal devolution should go beyond regional geographies to more local scales. Witnesses explored the case for regional coordination and investment alongside the fact that councils remain the primary democratic and delivery institutions closest to local need.

What can we learn from international contexts?

The panels highlighted how international contexts should be both an inspiration and a caution to the government in its programme for fiscal devolution. Comparisons were made with other nations in the UK, Europe, and beyond, highlighting the opportunities of local autonomy together with the challenges that have emerged in different contexts.

What safeguards are needed?

A significant area of discussion was whether fiscal devolution could unintentionally widen disparities between places. Witnesses examined the evidence for needing equalisation mechanisms and explored how reform could balance local incentives with protections against entrenched regional inequality.

What about accountability?

Witnesses discussed what accountability arrangements would need to accompany greater fiscal autonomy. Questions were raised around public understanding of who makes decisions locally, how fiscal powers are scrutinised and whether stronger local control necessarily translates into stronger public trust.

What other system fixes are needed?

Fiscal devolution was discussed as a tool for building resilience, and how the existing evidence suggests that a broader package of fiscal levers is beneficial for financial sustainability. However, the panels highlighted how fiscal devolution alone will not solve the challenges facing local government finance, and the discussion repeatedly returned to whether parallel reforms are needed, particularly to the outdated and regressive council tax system.

Forthcoming report

The oral evidence testimonies collected in this session, combined with written evidence from a range of organisations in the local government sector, will inform a final report detailing the inquiry’s findings. This report will be launched on 14 July in the House of Commons in the presence of MPs, peers and local government leaders at the APPG’s summer reception. 

Further LGIU resources on fiscal devolution