Andy Burnham’s pledge to deliver the biggest shift of power away from Whitehall in modern history has won early backing from London’s business community, with leaders arguing the capital is just as hobbled by centralised policymaking as the regions it is so often accused of overshadowing.
Responding to the Greater Manchester mayor’s speech, which set out a vision for a “No 10 in the North” and a sweeping transfer of decision-making to local leaders, John Dickie, chief executive of BusinessLDN, said the direction of travel was exactly what the economy needed.
“Andy Burnham is right to put greater devolution at the heart of his agenda,” Dickie said. “Giving regions the powers they need to attract investment, upskill communities and deliver infrastructure is key to getting the economy moving again.”
The intervention is notable because BusinessLDN, the business membership group formerly known as London First, represents firms in a city frequently cast as the chief beneficiary of Westminster largesse. Dickie was quick to challenge that framing, arguing that proximity to Whitehall has done the capital few favours.
“It’s good to hear him backing London as the world’s greatest capital and setting out plans to devolve further powers to the city,” he said. “Contrary to the perception, proximity to Whitehall has not automatically worked in the capital’s favour and London is just as constrained by one-size-fits-all policymaking as other parts of the country.”
The crux of the business lobby’s case is that London punches below its weight on the powers and purse strings available to comparable world cities. The mayor of London currently holds fewer powers than counterparts in New York and Paris, and less financial freedom than the mayors of Greater Manchester and the West Midlands.
The numbers behind that argument are stark. London and its boroughs retain only around 7 per cent of the taxes raised in the capital, against more than 50 per cent in New York, according to BusinessLDN’s recent report on the new powers London needs to thrive. Roughly three-quarters of the city’s funding still arrives as central grant, much of it with strings attached.
That dependence sits awkwardly with London’s status as the engine room of the national economy, and analysts at the Institute for Government have long noted that the capital’s governance is best compared with Paris, New York and Berlin rather than with English regions of a very different size and shape. For BusinessLDN, the lesson is that a stronger settlement for London and a stronger settlement for the North are not competing demands but two halves of the same growth strategy.
Dickie also welcomed Burnham’s willingness to take on the structural problems that have dogged successive governments, singling out housing supply and the tax that falls hardest on the high street.
“The commitment to grappling with some of the long-standing thorny challenges facing the country, from housebuilding to reforming business rates, will also be welcomed by firms across the capital,” he said.
Both issues are live for the business community. Pressure for a wholesale overhaul of business rates has been building for years, with retailers, manufacturers and hospitality operators all warning that the current system penalises bricks-and-mortar firms and discourages expansion. The question of how far to go on fiscal devolution, meanwhile, has already been flagged by Chancellor Rachel Reeves as a piece of unfinished business, as the Treasury weighs handing more tax-raising and tax-retention powers to local leaders.
There are signs, too, that Burnham’s economic prospectus reaches beyond the machinery of devolution. His own advisers have floated ideas such as tying pension tax relief to British investment, part of a wider push to channel domestic capital into domestic growth.
For Dickie, the prize is ultimately about prosperity that is felt in people’s pockets, in the capital as much as in the North.
“The only way to improve living standards is through growth, and unleashing London’s potential is vital to achieving that, while also tackling the deep inequality and poverty that persists across the capital,” he said.
Whether Burnham’s blueprint survives contact with the Treasury, and with the political reality that any meaningful devolution means central government letting go, remains to be seen. But on the morning’s evidence, the business voices that are often assumed to defend the Westminster status quo are lining up behind a different model entirely, one in which power, money and accountability sit a good deal closer to the communities they serve.