Andy Burnham's imminent announcement on devolving more fiscal powers to London and other cities should encourage Londoners, Sir Sadiq Khan has said. The Mayor of London said he has been really impressed with the new Prime Minister's start to life in Downing Street, which has included a policy blitz in areas such as transport, energy bills and hospitality.
Burnham's Devolution Plans
Mr Burnham, who was an ardent advocate for more devolved powers when he was the Mayor of Greater Manchester, will reportedly outline greater freedoms for all of England's 14 regional and metro Mayors this week. It is understood that the announcement will detail plans to give local leaders a share of income tax revenue, as opposed to the Treasury controlling the distribution of funding in regions across the country.
Earlier this month the Mayor of London said Mr Burnham's push for devolution will help London boost housebuilding and deliver even more council homes and drive growth across our city and country.
Khan's Reaction
Sir Sadiq told the Local Democracy Reporting Service (LDRS) that the new Prime Minister is walking the walk when it comes to delivering growth in every postcode in the UK through empowering local leaders. I've been really impressed with Andy's first few days as prime minister, he said. He's walking the walk when it comes to being a changed prime minister. I've been really impressed by the conversations I've had with him and his team shortly before he became leader and I saw him most recently on Friday. I think Londoners can be encouraged by what Andy Burnham's going to say on Friday.
The Mayor has long called for the capital to retain more of the income tax revenue it raises. In 2019, a City Hall report revealed that London retains barely six percent of all the tax paid by Londoners and businesses, compared to 50 per cent in New York and 70 per cent in Tokyo. One of the best ways of maintaining shared prosperity across the country is to give city regions more control over tax revenues, officials said. At the moment, London contributes about £4 in every £10 the government raises, while as a whole, five per cent of all tax revenue raised in England stays with mayors and local authorities, while 95 per cent goes directly to Whitehall.
Business Reaction
John Dickie, Chief Executive at BusinessLDN, said: The Prime Minister is right to put an end to the begging bowl relationship with the Treasury that has held back regions across the country, including London. Giving local leaders a greater share of the proceeds of growth gives them the ability to spend that money to unlock growth in the first place. For example, by investing in transport connections to make new areas more attractive for future development. We look forward to working with the Government, City Hall and regional business groups to help shape these reforms and make sure they work for London. The devil will be in the detail on the share of tax receipts that are retained locally and how any additional powers will be used in practice.
Last week the LDRS revealed that the Greater London Authority (GLA) currently relies on central government more than other major cities in Canada, France, Germany, Italy, Japan and the United States. New analysis from the Centre for Cities think tank shows that unlike New York, Tokyo or Paris, City Hall has no access to local income taxes and only limited control over property taxes. Less than a quarter of the GLA's £23.9billion budget is funded through business rates and the Mayoral precept portion of council tax.
Khan's Vision
We could do even more with more powers and resources devolved to London, Sir Sadiq said this week. We also recognise that how the pie that the government has is currently split is important. So we get more equitable stake, but also having more powers, whether that's the overnight accommodation levy or other powers to contribute more to our great city. We should keep a higher percentage of what we raise, but also how we can raise more investment for the country. We recognise that as a capital city, we've got a responsibility to other parts of the country. The country does well when London succeeds, but London does well when the rest of the country succeeds as well. It's not a zero sum game.
It is understood, however, that Mayors will not receive any tax-raising powers. He is still yet to be able to enact newly granted powers to tax overnight visitors to London, as the policy is still undergoing consultation.
