Fiscal Devolution: The Missing Ingredient in England’s Growth Debate

This week the APPG on Local Government, supported by the LGIU, published a significant report with an admirably direct title: No Government Can Deliver Long-term Growth Without Ambitious Fiscal Devolution. It is a title that makes a simple but important point. England cannot continue to pursue growth, public service reform and regional renewal while keeping one of the most centralised systems of government in the developed world.

For those of us working in local government and broader place-based systems, none of this will come as a surprise. We have spent years being told to be ambitious for our communities while operating within financial frameworks designed in Whitehall, funded through short-term allocations, and constrained by rules that often reward compliance more than innovation.

The report argues that fiscal devolution is not simply about giving local areas more money. It is about giving places greater control over how money is raised, allocated and invested. The APPG proposes a framework that could devolve or assign substantial fiscal powers, including shares of national taxes, alongside reforms to local taxation and a stronger model of equalisation to ensure fairness between places.

One of the strongest arguments in the report is that economic growth does not happen in Whitehall.

Growth happens in towns, cities and neighbourhoods. It happens when transport systems connect people to jobs. It happens when skills provision matches local labour markets. It happens when housing, regeneration, public health and economic development work together around a clear vision for place.

Yet the organisations charged with leading those efforts often have little control over the resources required to deliver them.

We would never run a business by holding all decisions at head office and expecting local branches to be entrepreneurial. Yet that is often how England attempts to govern itself.

The APPG’s central proposition is therefore entirely logical: if local leaders are expected to drive growth, they should have greater responsibility for the revenues associated with that growth.

What I particularly liked about the report is that it moves beyond the narrow economic case.

Growth matters. But fiscal devolution is also about democratic accountability, financial resilience and public service reform. The report argues that local leaders should have clearer responsibility for the taxes raised in their area and the services delivered with those resources, creating a stronger relationship between residents, elected representatives and outcomes.

This resonates strongly with what many of us are trying to achieve through neighbourhood models, integrated care systems and place-based partnerships.

In Oldham, as in many other places, we know that improving outcomes rarely fits neatly into organisational boundaries. Health, housing, employment, education and community resilience are intertwined.

Yet our funding systems remain fragmented and often incentivise organisations rather than places.

Fiscal devolution will not solve that on its own. But it would create conditions in which local partnerships can make longer-term decisions and align resources around community priorities rather than funding deadlines.

Of course, there are legitimate concerns.

Not every area has the same tax base. Not every authority starts from the same position. Unchecked fiscal devolution could risk widening inequalities between places rather than narrowing them.

The report addresses this directly through its emphasis on equalisation and risk-sharing mechanisms. In effect, it argues for a system that combines greater local freedom with a national commitment to fairness.

That balance is crucial.

The goal should not be a competition between places. It should be a stronger overall settlement in which every community has the opportunity to succeed while maintaining solidarity across the country.

The most important question raised by the report may not actually be about finance.

It is about trust.

Do we trust local government, local leaders and local communities enough to exercise greater control over their own future?

For decades England’s answer has often been “only up to a point”.

We devolve responsibility but retain control.

We decentralise delivery but centralise decision-making.

We ask places to innovate while prescribing how innovation should happen.

The result is a system that frequently frustrates both local and national leaders.

If the Government is serious about a new era of devolution, fiscal reform cannot remain the missing piece of the puzzle.

I suspect the debate over fiscal devolution is about to become much more prominent as ministers develop their promised roadmap and consider the next phase of English devolution.

The APPG report makes a compelling contribution to that discussion.

Not because every recommendation will be adopted.

But because it asks the right question:

Can England genuinely become more productive, more equitable and more resilient while remaining one of the most centralised countries in the developed world?

My own view is increasingly that the answer is no.

If we want stronger places, stronger public services and stronger growth, we have to be prepared to trust places with more power.

That means fiscal devolution can no longer be treated as a technical finance debate.

It is fundamentally a debate about the future of local democracy itself.