Local authorities should be given financial incentives to merge

A new report from manufacturers’ organisation EEF has advised that councils should be given financial incentives to merge, such as limiting business rates retention to combined and unitary authorities.

The EEF argued that using such measures would help those areas that don’t have the capacity or capability to agree a devolution deal with the the government.

Manufacturing Local Growth puts forward a number of suggestions including limiting the benefits of business rates retention to combined and unitary authorities, and allowing councils access to other fiscal retention such as stamp duty.

The paper also calls for a discussion on how council tax can be used to incentivise council mergers, which ultimately help speed up decision-making, lower the cost of delivering services and give businesses just one local authority to deal with.

Chris Richards, senior business environment policy adviser at EEF, said: “Despite this compelling case, some areas of England are being left out due to the legacy of inefficient local government structures – this needs to be tackled. If England did not have a two-tiered council structure, no one would be arguing for its creation.

“With a new government there is an opportunity to look again at local government mergers as a solution - and central government should push this by putting in place funding and fiscal incentives to make it happen.”