Jonathan Carr-West is the Chief Executive of the Local Government Information Unit.
It’s February 2025. Prime Minister George Osborne is celebrating his seventh year in Downing Street. His afternoon is filled with calls. 3.15pm – the Mayor of Manchester; 3.25pm the Mayor of the North East; 3.35pm; the Mayor of the East Midlands.
All are calling in to tell him how their local economies are looking. Manchester is updating him on how much revenue their port tax has garnered: a great deal since the enlargement of the Manchester Ship Canal. The East Midlands is using its business rates to part-fund a second runway at East Midlands airport. The Mayor of the North-East is particularly pleased with the receipts from her new tourist tax as people flock to see Northumberland National Park and the beautiful cathedral city of Durham.
Back in 2015, of course, it was a very different story. As Chancellor, Osborne would annually issue local government grants and councils would set ever-decreasing budgets. Voting in local elections was recovering from record lows in the 2000s but remained stubbornly below 50 per cent. The Scottish referendum of 2014 had introduced the nebulous idea of ‘devolution’ and a bid to create the Northern Powerhouse, but people still weren’t sure what it meant. In October 2015, Ipsos MORI told us that over three-quarters of the public either knew a ‘little’ or ‘nothing’ about these devolution proposals.
Successive governments had tinkered with the finance formula but large-scale reform of local taxation had been effectively put to bed after the poll tax. This was until the Local Revenue and Taxation Act of 2021. The Act had ushered in a vast liberalisation of how the UK funded its public services. Councils were able to raise income based on their strengths. Bristol had become an international centre for tech start-ups. The Mayors of Yorkshire and Manchester presided over the fastest growing city in Europe, underpinned by the Manchester/Leeds stock market. The powers of the Mayor of London had in effect created a city-state, which continued to grow as a command centre for the global economy.
This is all a fantasy of course, but it’s not an entirely implausible one.
The Chancellor is effectively acting as the curator of our local economies, haggling behind the scenes with the right players (in the right regions) to pull together the best deals that will lead to the most prosperous outcomes. The result could and should lead to exactly this sort of scenario but what are the chances of it being realised? The Autumn Spending Review should give us some early clues.
Of course there will be a major focus on cuts: we know they are coming, but it’s still not clear just how deep and how fast. They should allow councils some space to adapt and grow and not trap them into a vicious cycle of budget-to-budget survival.
Just as important, will be what we learn about the other side of the ledger, the ability for local government to raise and retain its own money. We’ve seen the Chancellor’s announcements about business rates but we don’t know whether the current system of tariffs and top ups will continue exactly as they are or whether there will be new forms of redistribution or a safety net. The detail on this should give us more of a sense of how far local areas will be able to control the levers of economic growth and benefit from it.
New devolution deals will be set out, with city and county regions due to be given more control over skills, transport, building and infrastructure. Will we also see local government given the power to integrate health and social care funding or set multi year budgets? Councils tell us in our annual members survey that they want the ability to raise local taxes, such as tourism or environmental taxes, to borrow more easily and to have control over all local public spending.
We hope the Chancellor will set the scene for these developments by using his Autumn Spending Review as an opportunity to build services fit for the future.
If he does, there’s a real opportunity for this to be the start of a truly collective process where local areas come up with increasingly sophisticated and credible plans for how to drive growth, improve public services and engage their communities. There’s genuine potential to redraw the political map and to align it with local economic geographies.
George Osborne deserves credit for moving further and faster towards localism than any British politician of modern times. It’s been a great beginning, but if he genuinely wants to be fielding those calls in 2025 the real work has to start now.