Economic Affairs Committee — hearing of 7 July 2026: transcript & video

00:08 - 01:19

Speaker 4

Welcome to the Lords Economic Affairs Committee's sixth evidence session of our inquiry into fiscal devolution in England. And we're delighted to have Kate Ogden, a research economist at the Institute for Fiscal Studies. Welcome. And Aditi Sriram, economist at the Institute for Public Policy Research. We're really grateful for you as well, Aditi.

Thank you for your time. We are broadcasting live on Parliament Live TV, and a full transcript will be taken and we will share that with you so that you can make any factual corrections that are needed afterwards. Could I start by asking you about a small question, which is the purpose of fiscal devolution, or rather, more specifically, what the evidence base is, or what your views are on whether fiscal devolution is indeed a good way of boosting growth, and under what conditions that might be true? And if so, what are the mechanisms or channels by which fiscal devolution can plausibly be seen to be something that you would do if you were keen on boosting growth or productivity in different parts of the UK? Kate, maybe I'll start with you.

01:19 - 02:49

Speaker 9

Yes, so I think firstly it's worth saying fiscal devolution means different things to different people. At its sort of least extensive, it could be about funding and spending responsibilities moving down closer to people, closer to the areas that they affect. You might think that's important if local decision makers have more information about what is good for their areas and what policies might be appropriate. So you might expect that to lead to better decision making if there's kind of proper accountability mechanisms. More along the lines of what's being considered by the Chancellor at the moment are a kind of assigning a share of revenues.

There I think there are kind of two important rationales and channels by which you might get more growth. One would be giving local decision makers more skin in the game, more incentive, more reward is the term they prefer to incentives because they'd say they already have incentives, but linking what they do to some kind of outcome that they they get. Another rationale for revenue assignment though would be actually giving areas something more like a longer term, more stable source of revenues that might allow them to make better long term decisions, to plan better. And finally you've got something more extensive still, which would be tax varying powers. There I think you'd you'd want to be thinking about tax varying powers if you really think that local decision makers, local people can have different preferences about the size of the state and you want to give them a much much more control over that.

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