Economic renewal through devolution? Tax reform and the uneven geographies of the economic dividend

Abstract

The economic governance of the UK is currently in flux with various devolution agreements being negotiated across the country. This article examines the changing political economy of the UK enforced by Wave 1 City Deals, to analyse the claims made by devolution proponents that there is an ‘economic dividend’ to devolution. The argument is made that scant evidence exists to suggest that these reforms respond to the pathologies of the UK economy. Instead, the Northern Powerhouse discourse serves to disguise the implementation of a tax and investment settlement which regressively concentrates taxation revenue in the more affluent parts of the country. These reforms though are a political expression of a certain understanding of wealth creation which privileges low tax taxation, inter-territorial competition to promote it and a belief in the major UK cities to drive the economic recovery. It is a strategy likely to produce very uneven geographies of growth which will exacerbate uneven development; ironically so given the ‘Northern Powerhouse’ rhetoric through which it was reasoned.

Keywords

Devolution Northern Powerhouse economic dividend economic growth inequality

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