Thread by @GeorgePeretzQC

Really important point by @PJTheEconomist. Many discussions of devolution focus on the *legal* powers of devolved bodies (in 🏴󠁧󠁢󠁳󠁣󠁴󠁿, 🏴󠁧󠁢󠁷󠁬󠁳󠁿 or English mayors). But their *fiscal* powers are equally critical: without the ability to raise their own taxes they are constantly supplicants.

https://twitter.com/theifs/status/1472829976315584515

Moreover, without their own fiscal autonomy, accountability for decisions is confused and poor.

Central government uses its purse strings as a whip, but hopes to evade responsibility for the consequences (see the current TfL drama) - and devolved government evades responsibility for its decisions by blaming Westminster parsimony.

We need (a) a much better and fairer system of business and residential property tax (a good tax to devolve, as property can’t move between areas) and (b) a debate about other devolved taxes.

There are also constitutional problems. 1. How do you entrench fiscal autonomy against centralising pressure (central government will always claim that it needs to limit fiscal autonomy for macroeconomic reasons or to “protect taxpayers”)?

2. Given the differences in the tax base (property values/income) across the U.K., how do you redistribute resources between richer and poorer areas? If central government has that function, how do you prevent abuse?

(The problem of central government fiddling funding formulae to favour regions run by its supporters is not new to the current government: see how Thatcher bent the formulae to throw funding at Westminster and Wandsworth in the 1980s.)

So any discussion about devolution to English local government/mayors, and reforming and entrenching the UK devolution settlement, needs to address fiscal autonomy as well as legal autonomy: but discussion of fiscal autonomy also raises deep legal issues.