Ministers Weigh How to Police Mayors Given Income Tax Powers
A “rewiring the state” white paper due later this month will set out plans to hand regional mayors a larger share of income tax revenue. Among the options being weighed to keep them accountable are a new Westminster select committee, tighter reporting rules and a new audit body for local and regional government. One idea floated is letting voters recall a spendthrift mayor, as they can a rule-breaking MP.
A mayor who became prime minister is preparing to give mayors the money, and Whitehall is quietly building the cage at the same time. The idea was floated by Rachel Reeves in her Mais lecture earlier this year and has been taken up by Andy Burnham, who runs a No 10 North office on the regional side of growth policy. The accountability gap is real: the Audit Commission, which existed specifically to oversee local government spending, was abolished in 2015 and its functions scattered. Meg Hillier, who chairs the Treasury select committee, said it would be “reckless to hand out new powers without ensuring there are transparent mechanisms to hold mayors to account”, and that scrutiny of how taxpayers’ money is spent matters as much locally as nationally. The harder problem is distributional. David Phillips of the Institute for Fiscal Studies said mayors with “more skin in the game of economic growth” will be better incentivised to support it, but that “careful design will be needed to prevent richer areas’ funding unfairly pulling ahead”, and that ministers must decide how big a gap they are willing to see between winners and losers. The institute has urged equalisation payments to stop the areas with the largest income tax base, London above all, simply pulling away. Watch the white paper itself.