Sadiq Khan Urges Londoners to Embrace Andy Burnham’s Upcoming Announcement

Sir Sadiq Khan has expressed optimism regarding Andy Burnham’s forthcoming announcement on the devolution of additional fiscal powers to London and other cities, suggesting it should serve as a source of encouragement for Londoners. The Mayor of London indicated that he has been “truly impressed” by the new Prime Minister’s initial actions in Downing Street, which have included a series of policy initiatives concerning transport, energy bills, and hospitality.

Anticipated Announcement on Devolution

Mr Burnham, a staunch advocate for greater devolved powers during his tenure as Mayor of Greater Manchester, is expected to unveil plans that will grant increased autonomy to all of England’s 14 regional and metro Mayors this week. Reports suggest that the announcement will include proposals for local leaders to receive a share of income tax revenues, thereby reducing the Treasury’s control over funding distribution across various regions. Earlier this month, Sir Sadiq remarked that Mr Burnham’s drive for devolution could significantly aid London in “boosting housebuilding and delivering even more council homes,” as well as “driving growth across our city and country.”

During an interview with the Local Democracy Reporting Service (LDRS), Sir Sadiq noted that the new Prime Minister is “walking the walk” when it comes to fostering growth across every postcode in the UK by empowering local leaders. “I have been really impressed with Andy’s initial days as Prime Minister,” he stated. “He is demonstrating a commitment to being a transformative leader. My conversations with him and his team prior to his leadership bid were encouraging, and I last met with him on Friday.” He added, “I believe that Londoners will find Mr Burnham’s forthcoming remarks on Friday to be quite encouraging.”

Income Tax Retention and Fiscal Equity

For some time, the Mayor has advocated for London to retain a larger portion of the income tax it generates. A report from City Hall in 2019 highlighted that London retains a mere six per cent of the total tax paid by its residents and businesses, in stark contrast to New York’s 50 per cent and Tokyo’s 70 per cent. Officials have emphasised that one of the most effective means of sustaining shared prosperity across the nation is to grant city regions greater control over their tax revenues. Presently, London contributes approximately £4 for every £10 raised by the government, yet only five per cent of the total tax revenue collected in England is allocated to mayors and local authorities, with the remaining 95 per cent directed to Whitehall.

John Dickie, Chief Executive at BusinessLDN, commented, “The Prime Minister is correct in seeking to end the dependency on the Treasury that has hindered regions throughout the country, including London. Granting local leaders a more substantial share of the proceeds from growth will empower them to invest in initiatives that stimulate development, such as enhancing transport connections to make new areas more appealing for future investment.” He expressed eagerness to collaborate with the Government, City Hall, and regional business groups to help shape these important reforms and ensure they benefit London. “The intricacies of how much tax revenue will be retained locally and how the additional powers will be practically applied will be crucial,” he added.

Comparative Analysis with Other Global Cities

Recent analysis from the Centre for Cities think tank revealed that the Greater London Authority (GLA) currently relies more heavily on central government funding than other major cities across Canada, France, Germany, Italy, Japan, and the United States. Unlike cities such as New York, Tokyo, or Paris, City Hall lacks access to local income taxes and has limited control over property taxes. Less than a quarter of the GLA’s £23.9 billion budget is derived from business rates and the Mayoral precept portion of council tax.

“With greater powers and resources devolved to London, we could achieve even more,” Sir Sadiq stated this week. “It is essential to address how the current distribution of the government’s financial resources is structured. We deserve a fairer share, along with increased powers, whether that pertains to an overnight accommodation levy or other initiatives that could further contribute to our vibrant city. While we aim to retain a higher percentage of what we generate, we are also focused on attracting more investment for the country. As a capital city, we have a responsibility to support other regions as well.” He further noted, “The prosperity of the country is linked to London’s success, just as London’s success is intertwined with the prosperity of the rest of the nation. It is not a zero-sum game.”

However, it is understood that Mayors will not be granted any powers to raise taxes. As it stands, the Mayor is yet to implement newly acquired powers to impose taxes on overnight visitors to London, as this policy remains under consultation.