Taxing for take-off: a new plan for fiscal devolution

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England has long been outlier when it comes to tax centralisation. Central government in the UK raises over 90 per cent of overall revenues compared to an average of 53.2 per cent across OECD countries. Strategic authorities are being asked to take on growing responsibilities for transport, skills, housing, regeneration and local growth, while remaining heavily dependent on Whitehall for the money to deliver. That imbalance weakens accountability, blunts local incentives, and leaves places without the fiscal tools they need to act on the economic opportunities in front of them.  

The current funding approach creates a “begging bowl” culture. Local leaders are expected to drive public service innovation, grow regional economies, and improve outcomes, all with funding that is subject to departmental whims, Spending Review cycles, opaque allocation decisions, and micromanagement from the centre. This is not the devolution revolution that was promised. The relationship between central government and England’s regions needs to change. 

If devolution is to be more than administrative reorganisation, it must be backed by real fiscal firepower. That means giving strategic authorities flexibility over how money is spent and a direct stake in the economic performance of their areas, so that they benefit when the local economy performs well and revenue is more closely linked to spending.  

Taxing for take-off argues that the Treasury’s approach to fiscal devolution will be one of the defining tests of the Government’s wider devolution agenda.  

If the fiscal devolution “roadmap” promised by Rachel Reeves is to amount to more than a rebadging of central government grant funding, it must shift power, reward economic success, and come with stronger local accountability and scrutiny alongside an equalisation mechanism that protects places with weaker starting positions. Taxing for take-off offers a practical blueprint for that transition and a test of whether England is finally ready to match responsibility with revenue-raising powers.  

To read an executive summary and see an action plan click here.