UK ministers weigh new oversight powers for devolved regional spending

Whitehall prepares white paper on ‘rewiring the state’ as concerns grow over mayoral accountability

By LineZotpaper
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Ministers are exploring how to ensure England's regional leaders do not misuse new spending powers as the government prepares to devolve more income tax revenue to mayors. Ideas under consideration include a new select committee, enhanced reporting rules, a dedicated audit body for local government, and even the possibility of recalling spendthrift mayors by the electorate.

The government will publish a white paper on 'rewiring the state' later this month, setting out detailed plans to hand over more income tax revenue to regional mayors. Chancellor Rachel Reeves suggested the idea in her Mais lecture earlier this year, and it has been adopted by Andy Burnham’s government, which sees devolution as a key part of its growth policy. However, officials are concerned about how to ensure local leaders are fully accountable for what they do with the additional cash – including between elections.

Meg Hillier, the Labour MP who chairs the Treasury select committee, said she believed her committee would be the right body to scrutinise the use of the new powers. 'It is absolutely critical that strong, clear scrutiny structures are established which match this move to localism. It would be reckless to hand out new powers without ensuring there are transparent mechanisms to hold mayors to account for their decisions,' she told The Guardian. She added that a core role of select committees is to ensure politicians are publicly held to account for how they spend taxpayers' money, and that this is just as important at a local level.

The Audit Commission, which had the specific task of overseeing local government spending, was abolished in 2015, with its role split across several other bodies. As well as shoring up accountability, there have been lengthy discussions in government about how to balance incentivising local leaders to encourage economic growth with ensuring funding is stable over time. The Institute for Fiscal Studies said last week that the government should use 'equalisation payments' to prevent areas with the highest share of income tax, such as London, from pulling ahead of other regions.

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Analysis

Why This Matters

  • If devolved spending powers are not matched with robust accountability, taxpayers could face inefficient use of funds or regional disparities in public services.
  • The debate over oversight mechanisms will shape how much freedom local leaders have to innovate versus the need for uniform standards.
  • The white paper's proposals will determine whether the government can deliver on its devolution agenda while maintaining public trust.

Background

The government's push to devolve income tax revenue to regional mayors marks a significant shift in England's fiscal architecture. The abolition of the Audit Commission in 2015 left a gap in dedicated local government oversight, which ministers now seek to fill. The upcoming white paper builds on ideas floated by the chancellor and embraced by Prime Minister Andy Burnham's administration as part of a broader growth strategy. However, concerns about accountability and regional inequality have prompted scrutiny from parliamentary committees and think tanks.

Key Perspectives

Meg Hillier (Treasury select committee chair): Argues that existing select committees are the right bodies to scrutinise new local spending powers, emphasising transparent accountability for taxpayers' money at all levels. Government officials: Concerned about balancing local autonomy with stable funding and preventing misuse of devolved revenue; exploring multiple oversight options including new audit bodies and recall elections. Institute for Fiscal Studies: Recommends equalisation payments to prevent wealthier regions (like London) from pulling ahead of others, highlighting the risk of widening regional disparities under devolution.

What to Watch

  • The white paper's publication later this month and its specific proposals for accountability mechanisms.
  • Whether the government adopts a new dedicated audit body or relies on enhanced select committee scrutiny.
  • Reaction from regional mayors and local government bodies to any proposed recall powers or oversight constraints.

Sources

Zotpaper

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