Burnham should give mayors more tax powers – and the Tories should work with him
5 min read
Fifteen years ago, David Cameron and George Osborne took a hard look at how the United Kingdom governs itself.
They saw that the country was one of the most centralised in the developed world. Britain's second, third and fourth cities were falling further behind their European counterparts, held back not by a lack of talent or ambition but because local leaders did not have the tools or the mandate to change anything of substance.
In 2014 they signed the Greater Manchester Agreement, the first devolution deal to provide for a directly elected mayor. The Cities and Local Government Devolution Act 2016 enabled the model to be extended, and by 2017 there were metro mayors in six regions, myself included. Jeremy Hunt and Michael Gove championed the Trailblazer Deals in 2023. And the Labour government introduced the Integrated Settlement last year, which for the first time consolidated dozens of separate funding pots into one. It was at times slow and unglamorous work, but it was important – and in the West Midlands, it delivered. Over seven years, our region secured around an additional £10bn of government-backed investment, drew in private capital and became the fastest-growing region outside London before the pandemic hit.
However, the project remains unfinished. Our current devolution settlement is political and administrative – not fiscal. Mayors have genuine powers, but every pound still comes from Whitehall. Anyone who has run anything knows that certainty over your own income line is mission critical, and it is what any leader needs to plan, borrow and take real risks. That is the missing piece, and it is what will decide whether the next wave of devolution succeeds.
Andy Burnham knows this from experience. Greater Manchester's economy has grown at roughly twice the UK average since 2015, passed £100bn, delivered more than 100,000 homes and brought its transport together as one integrated ‘Bee Network’. He and I worked as mayoral colleagues, and I have great respect for what was achieved. He has said for years that fiscal devolution is what mayors need. He now has the mandate and the platform to deliver it.
Prosper UK, the movement Ruth Davidson and I are co-chairing, published its devolution paper this week. Prosper UK exists to make the practical, deliverable case for a centre-right that can win elections again, not by chasing Reform to the fringes but by winning back the millions of voters who left the Conservatives for Labour, the Liberal Democrats or stayed at home. Devolution is one of the arguments that speaks to them.
The Conservative Party started this, and I hope we can work with the new government to deliver the next stage
We are calling for fiscal devolution, giving mayors a share of the taxes generated by their own residents. We have put forward a number of proposals. The central one is giving mayors 2.5p of the 20p basic rate of income tax paid by residents in their area, a 12.5 per cent share of basic rate revenue. On illustrative figures from Re:State, that would be around £675m a year for Greater Manchester, £667m for the West Midlands, over £2bn for London, and between £300m and £700m for the other established authorities.
The paper argues for other important areas of tax to be devolved too, including retaining the taxes that are already clearly local, such as stamp duty, vehicle excise duty and air passenger duty, letting all mayoral authorities keep the whole of any increase in their business rates, shared 50:50 with their councils.
Taken together, that is a revenue basket that would give a mayor a stable income that rises with local earnings, rather than a settlement reset at every spending review. That kind of certainty is what lets a mayor plan and commit to the long-term investment.
None of it asks the taxpayer for a penny more. It would be in place of the Integrated Settlement rather than in addition to it.
What it does do is change who decides, and that is what makes it a genuinely Conservative change. Mayors are accountable for the money they raise, not just for how they spend it, which is what a mature tier of government looks like.
If regions choose different things, they will end up with different results, and some places will do more with these tools than others, which is part of the deal, not a flaw in the model. That is what accountability at a regional level actually means, and the answer when it happens is not to protect every region from the consequences of its own choices, but for the electorate in that region to hold their mayor to account, backed by proper local scrutiny.
What we are calling for goes further than just tax. It calls for skills and innovation funding to be devolved as well, for our anchor institutions, universities and colleges to be treated as partners in a single regional growth plan, and for police and fire to come under the mayor where the boundaries line up. Put all of that together and you have a rounded settlement.
This is what the country now needs. This is also about the union, and it runs through England's regions as it does through Scotland, Wales and Northern Ireland. If English regions are strong, the whole country is strong, and what you get is a partnership between the nations and the regions rather than centralisation.
The Conservative Party started this, and I hope we can work with the new government to deliver the next stage. For Andy Burnham, this is the change that would set mayors up to succeed. If he prioritises this in his first 100 days, England's cities finally get the tools to compete with their European rivals, and the country will get the growth it has needed for a long time.
Andy Street was mayor of the West Midlands from 2017 to 2024 and is co-chair of political movement Prosper UK
