Cities’ property tax call

The Chancellor of the Exchequer, George Osborne has 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.

The Mayor of Liverpool, Joe Anderson, said: “Giving the great cities more powers and freedom over the finances will not only benefit the cities themselves but help the national economy to grow and compete more effectively globally. The devolution of property tax would be an important first step in empowering the core cities by giving them more financial freedom.”

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.”