Andy Burnham’s promise to deliver the biggest power shift away from Whitehall in modern history has won early support from London’s business community, with leaders arguing that the capital is being hampered by central policy-making like the regions it is often accused of overshadowing.
Responding to the Mayor of Greater Manchester’s speech, outlining the vision of “No 10 in the North” and the full devolution of decision-making to local leaders, John Dickie, chief executive of BusinessLDN, said the direction to go is exactly what the economy needs.
“Andy Burnham is right to put a lot of energy into the core of his agenda,” Dickie said. “Giving regions the power they need to attract investment, grow communities and deliver infrastructure is critical to getting the economy back on track.”
The intervention is notable because BusinessLDN, the business membership group formerly known as London First, represents firms in the city that are often framed as the main beneficiaries of Westminster largesse. Dickie was quick to challenge that frame, saying that being close to Whitehall had done him very well.
“It’s good to hear that he supports London as the biggest capital in the world and plans to give more energy to this city,” he said. “Contrary to perception, proximity to Whitehall has not automatically worked in the capital’s favor and London is bound by the same policymaking as other parts of the country.”
The crux of the case for the hospitality business is that London punches below its weight in terms of power and purse strings found in similar world cities. The mayor of London currently wields less power than his counterparts in New York and Paris, and has less financial freedom than the mayors of Greater Manchester and the West Midlands.
The numbers behind that argument are clear. London and its regions retain only 7 per cent of the tax raised in the capital, compared to more than 50 per cent in New York, according to a recent report by BusinessLDN on the new energy London needs to thrive. About three-quarters of the city’s funding still comes as a grant, much of it with strings attached.
That dependence sits badly on London’s status as the engine room of the country’s economy, and analysts at the Institute for Government have long noted that the capital’s governance compares favorably with Paris, New York and Berlin than English regions of very different sizes and shapes. For BusinessLDN, the lesson is that a strong London presence and a strong Northern settlement are not competing interests but two parts of the same growth strategy.
Dickie also welcomed Burnham’s determination to tackle the structural problems that have plagued successive governments, dividing housing supply and the high street tax.
“Commitment to facing some of the challenges that have been facing the country for a long time, from building houses to changing the level of business, will be welcomed by firms across the capital,” he said.
Both of these issues are live in the business community. Pressure to overhaul business rates has been building for years, with retailers, manufacturers and tour operators all warning that the current system penalizes brick-and-mortar firms and prevents expansion. The question of how far to go in devolution, meanwhile, has already been flagged by Chancellor Rachel Reeves as part of the unfinished business, as the Department of Finance weighs giving more power to raise and keep taxes to local leaders.
There are signs, too, that Burnham’s economic prospectus reaches beyond the distribution machinery. His advisers have floated ideas such as tying pension tax relief to British investment, part of a wider campaign to channel domestic money into domestic growth.
For Dickie, the prize is ultimately about the prosperity felt in people’s pockets, in the capital as in the North.
“The only way to improve living standards is growth, and unleashing power in London is essential to achieving that, while tackling deep inequality and persistent poverty across the capital,” he said.
Whether Burnham’s plan survives the Treasury’s engagement, and the political reality that any meaningful devolution means central government is letting go, remains to be seen. But in this morning’s evidence, the business voices often thought to be defending the current state of Westminster are following an entirely different model, where power, money and accountability are much closer to the communities they serve.
