The next stage of devolution in England should shift its focus from how funding is distributed to how growth is rewarded, according to Gus Wiseman, UK Director at Patrizia and former Global Head of Investor Relations at the Office for Investment.
For over three decades, governments have attempted to rebalance England's economy by directing funds to regions outside London and the South East. While some programmes have delivered worthwhile projects, Wiseman states that the fundamental model remains unchanged, with local leaders often competing for government funding instead of attracting long-term investment.
Wiseman argues that attracting long-term investment is crucial as it creates jobs, expands the local tax base, and strengthens the local economy over many years. He suggests that areas that deliver new homes, attract employers, and grow their economies should retain a larger share of the value they generate, encouraging local leaders to act as long-term stewards of their economies.
He highlights that England's local economic success and fiscal reward are unusually disconnected, contrasting this with Germany where local authorities receive property tax and a share of national tax revenues. This system allows communities that attract investment to directly benefit from the growth they create, while an equalisation system supports less prosperous regions.
Wiseman notes that initiatives like Greater Manchester's fiscal freedoms, Enterprise Zones, and City Deals have demonstrated how stronger local incentives can encourage investment. He believes the timing is now right to go further, citing metro mayors with stronger mandates and ambitious economic strategies, alongside initiatives encouraging long-term capital investment in the UK.