Jason Bunting is the Advocacy Manager at the Fairness Foundation, with extensive experience in political advocacy and public policy. He previously served as a Parliamentary Assistant in the Northern Ireland Assembly, focusing on regional economic inequalities, and as a Press and Policy Assistant at the SDLP’s central office, where he contributed to party policy development.
Jason recently completed the Master’s in Public Policy programme at the University of Oxford’s Blavatnik School of Government and holds a First-Class Honours degree in French and Politics from Queen’s University Belfast. He is also an alumnus of the Washington Ireland Program and a former Campaigns Assistant with Amnesty International NI.
The missing piece of devolution
How the UK’s extreme centralisation is holding back a fair economy - and why we need bolder fiscal devolution.
The UK has one of the most fiscally centralised economies in the developed world. Very few fiscal powers are devolved to regions, and an unusually large share of taxation is collected centrally.
In fact, our system is something of an outlier compared to other European economies. We collect just 5% of total revenues at the local level, approximately one-third less than France and a sixth of the proportion collected by Germany.
These extreme levels of centralisation have funnelled wealth and power into a small number of regions, while locking other places into generations of deprivation and disadvantage, leading to a postcode lottery in people’s life chances.
Ending this extreme regional inequality and perverse fiscal centralisation must be a core mission of any Government which is serious about economic fairness.
Yet despite modest progress under the current Labour administration in advancing a devolution agenda, precious little has been done to meet the real test of devolution: shifting genuine power away from Whitehall by loosening the Treasury’s iron grip on our economy and giving local places meaningful fiscal authority.
In defence of its record, the Government would point to the recent decision to devolve tourism levy powers, integrated settlements for Metro Mayors, and the Pride in Place funding that will now be delivered by local Neighbourhood Boards.
This increased tendency to devolve reflects the Government’s welcome recognition that devolving power is not just politically attractive- it is a smart policy choice. Local decisions lead to more responsive and efficient government and help to stem the feeling of a remote and distant politics controlled by Whitehall.
The same logic applies, perhaps even more strongly, when it comes to fiscal devolution. Evidence consistently shows that local fiscal autonomy aligns spending more closely with local priorities, delivers services more efficiently than centrally designed programs and boosts local economic growth. OECD evidence has even found that when properly designed, doubling the devolved share of tax or spending is linked to a 3% increase in GDP per capita.
Nor is there a shortage of options, from reforming business rates and council tax to allocating a locally retained share of income tax.
Advancing fiscal devolution is therefore the logical next step in the Government’s devolution agenda and in the Prime Minister’s ambition to “rewire” the British state.
In fact, this is the missing piece of the government’s devolution agenda so far.
In the debate about the English Devolution & Community Empowerment Bill, the Chair of the Housing, Communities and Local Government Committee called fiscal devolution the “one omission from the Bill”.
Yet it’s precisely this omission that could prove most decisive in tackling the UK’s deepest and most persistent economic problems, not least regional inequality.
A combination of entrenched Treasury orthodoxy, political caution and a reluctance to embrace bold reform has so far blocked meaningful progress, leaving the UK stuck in its anomalous position.
In our new paper, A Fair Share, we argue that the question is not merely which levers to devolve incrementally, but what kind of central state we ultimately want to build.
That’s why we’ve set out some ambitious proposals: a new Commission to review the tax code and identify candidates for longer-term devolution, alongside new legislation to maximise the opportunities of devolution while safeguarding against risks, especially for smaller regions that depend on fiscal transfers.
We also contend that while international examples are instructive, the UK’s own experience of gradual fiscal devolution across each of the devolved nations offers valuable lessons, and that institutions such as the Council of Nations and Regions could play a vital role in strengthening coordination around shared priorities.
The reality is stark - without the devolution of real power, including fiscal power, wealth and opportunity will remain unevenly distributed across the country.
As far back as 2014, a report from the Communities and Local Government Committee concluded that “fiscal devolution in England is an idea whose time has come”.
More than a decade on, we urge the government to finally act on that insight by harnessing fiscal devolution as a tool to build a fairer, more balanced economy for every community.
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