Control of England’s main commercial property tax should be devolved to directly elected mayors to boost investment, according to the minister overseeing the UK government’s “levelling up” agenda to tackle regional inequality.
Following the launch of his long-awaited policy white paper setting out plans to improve “left behind” parts of the country, Michael Gove told the Financial Times that he would like to see further authority given to mayors.
Although the Treasury is devolving some powers to switch business rates between different sectors, Gove would like to cede more control to adjust the commercial property tax. “That’s definitely the direction of travel we want to go down,” he said, noting that “previous Treasurys” would not have wanted any flexibility.
Ben Houchen, the Conservative mayor of Tees Valley in north-east England, has called on the government to devolve business rates to improve competition between regions and expressed disappointment that tax-cutting powers were not part of the white paper.
He admitted there was “a lot of scepticism” in Whitehall about mayors but said that views had changed and the same would happen with business rates. “I think it’s a case of making the argument. Few people are better equipped to make it than Ben because it’s not just a theoretical case, he can demonstrate how he can make a difference.”
Gove also said that the West Midlands combined authority should be given powers over policing and that other mayoralties should “have more of a role when it comes to skills, to further education, to careers”.
The 332-page white paper published on Wednesday was broadly welcomed by local governments but criticised by the opposition Labour party for lacking new ideas and funding.
The minister rejected suggestions he had been denied further resources by chancellor Rishi Sunak. “You never have everything you want, but sometimes you get what you need,” Gove said, adding: “It’s important that people recognise that we’re in it for the long haul, that there’s a down payment on future investment”.
Gove admitted the government had to convince those who voted Tory for the first time at the 2019 election that it could deliver on the dozen levelling up objectives that will be set into law.
“People are asking if the scale of ambition outlined in the missions is capable of being delivered with the resources necessary. And that’s what we’ve got to demonstrate. I don’t think there’s anyone who’s quibbling with the basic analysis of what’s required to be done.”
He denied that the levelling up agenda, which he said prime minister Boris Johnson had made “the defining mission for the government”, was about punishing London and the more prosperous south-east of England, where economic activity has far outpaced the rest of the UK in recent decades
“London succeeds if the whole of the United Kingdom succeeds, so we’re not doing anything to make London less competitive, less attractive, less of a global supercity. . we mustn’t dampen down the animal spirits in London and the south-east.”
Critics of the levelling up agenda have argued that it is merely undoing the effects of austerity during previous Conservative governments. Over the past decade, core government funding to local governments has been cut 37 per cent, according to the Institute for Government think-tank.
Gove did not reject this, saying that in the past the government had to “bring the budgets back into balance”, but accepted that some of the cuts might have been in the wrong areas. “It is the case that local government had to make some incredibly difficult choices and that’s why we’re now increasing spending in local government,” he said.
The white paper was also criticised by some Conservatives for its interventionist economics. Steve Baker, an influential MP, described the proposals as “socialist”. Gove said he had not taken a leftwing turn in his world view, but that his conservative thinking had evolved.
He said that the government’s approach to reform represented “another modernisation” of the Tory party that sees a focus on economic reform and represents the values of voters who are “part of our new coalition”, a reference to its new supporters in former Labour heartlands.
“The Conservatives are a national party or they’re nothing,” he said. “We can’t be a party of any class, geography or ideology, we have to be a party that recognises the economic and moral imperative of helping cities like Sunderland to succeed. And I think that new sort of conservatism was partly born in the aftermath of the Brexit referendum.”
Gove insisted the levelling up agenda could survive Johnson’s exit from Downing Street, but he stressed: “Boris is the best champion that levelling up has, and that’s why I’m supporting him 100 per cent of the way.”
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