Andy Burnham has been warned that he must complete the devolution map in England quickly or face a “two-tier England” where the company’s prospects depend on whether it is possible to stay within the mayoral boundary.
The warning comes from IPPR North, a leading think-tank in the North of England, in a paper published as the incoming prime minister prepares a plan designed to empower regional mayors.
More than a quarter of England’s population still live outside the Mayor’s Strategic Authority, the bodies that increasingly plan decisions on transport, housing and regeneration. For business owners in those areas, that means there is no local champion with the power and budget to compete with in Greater Manchester or the West Midlands.
The researchers argue that leaving gaps in the segregated map risks angering communities that feel left behind, with public confidence in political institutions already in dire straits.
Money is already flowing through the power of the mayor’s model. NatWest’s recent £20 billion commitment to the North of England was clearly pitched as a bet on transfers. Firms outside of the mayor’s areas risk watching that money pass through them.
The current government has passed legislation, and the English Devolution and Community Empowerment Act received Royal Assent in April, and has shown a willingness to continue devolving taxing powers to mayors. But the think tank warns that slow, incremental change has left Whitehall in charge of decisions, so the full benefits are yet to be felt.
Its recommendations are blunt. Complete a devolution map in England by the end of this parliament, and explore extending regional devolution to urban areas in Scotland and Wales. Put in place cheap tax cuts in this autumn’s Budget, allowing localities to keep part of their taxes and borrow money to invest in transport, housing and regeneration. And expand “hyperlocal” government so that communities, not just mayors, shape decisions.
The financial point is where SME owners should pay close attention. Rachel Reeves has already described the transfer of funds as her “unfinished business”, with ongoing consultations on the tourist tax and the transfer of income from income, business and land tax. Who sets and implements those taxes, and where, will be very important to firms’ costs and the local trading environment.
Dr Ryan Swift, researcher and author of this publication, said: “We know that the incoming PM has shown his desire to govern England, but we must go beyond growth, or his efforts will be in vain.
“If the new government is determined to bring economic growth, address regional inequality, and restore trust in politics, we cannot continue as we are.
“That means giving counties not just more responsibilities, but the power, resources, and democratic legitimacy to make a real difference in places across the country. It means empowering communities and mayors. And it means embedding these changes constitutionally, so we can benefit from them for decades to come, regardless of who is in Number 10.”
“Now is the time, now is the opportunity. It will not be used.”
Mirte Boot, interim head of IPPR North, said: “With the UK in a crisis of political trust, the next prime minister has no time to waste.
“We have put forward a strong proposal to see devolution make a real difference in people’s lives, with ambitious fiscal devolution and a reformed regional chamber. Local leaders should be in charge of local decisions. We have seen the impact it has had in Manchester, now we must see it replicated across the country.
“But with this big job you have to be quick: Whitehall will resist change and the populists will exploit every failure. The test now is whether Burnham can act quickly enough to bring about the meaningful change this country has been waiting for.”
In a business community where eight out of ten SME owners have admitted they are nervous about being a Burnham Premier, the test cuts both ways. If Burnham delivers what he calls “the biggest rebalancing of power the country has ever seen”, decisions on transport, skills and innovation will be brought closer to the firms involved. If they fail, businesses in England will be trading in two very different countries.
