• New Prosper UK report calls on the new government to give England’s mayors the power to keep their own tax revenue and drive their regional economies
  • Report proposes a 2.5p share of income tax for mayors, worth £billions a year across England’s city regions
  • Stamp duty, vehicle excise duty and air passenger duty should be kept where they are raised, not sent to Whitehall
  • New fiscal powers should be delivered in exchange for the Integrated Settlement, not as an extra handout

England’s combined authority mayors have been given real powers and, in the early years, real money, but they have never been able to raise, keep and spend a meaningful share of the tax revenue their own economies generate, according to a new policy paper published today by Prosper UK, Set Up For Success? The Case for Greater Devolution.

Headed by former Mayor of the West Midlands, Sir Andy Street, the paper calls on the incoming Burnham Government to place a greater focus on fiscal devolution so that the transfer of power from London can be a driver of economic growth throughout the country.

Central government collects more than 90 per cent of all UK tax revenue, against an OECD average of around 53 per cent, making the UK one of the most fiscally centralised countries in the developed world. Prosper UK argues that this centralisation drives regional imbalance, and that a Treasury roadmap for fiscal devolution, expected ahead of the Autumn 2026 Budget, gives ministers a genuine opportunity to close the gap.

Key recommendations from the report include:

  • Assigning 2.5p of the 20p basic rate of income tax, a 12.5 per cent share of basic rate revenue, to Established Mayoral Strategic Authorities in place of the Integrated Settlement, so mayors can plan and make strategic decisions with confidence.
  • Devolving clearly local revenue streams in parallel, such as stamp duty land tax, vehicle excise duty and air passenger duty.
  • Letting all Mayoral Strategic Authorities retain the whole of any increase in their business rates, split 50:50 with local authorities.
  • Extending the Overnight Visitor Levy to all levels of Strategic Authority as new revenue, not offset against existing grant.
  • Resourcing the next wave of mayoralties at least at the level of the funding streams they replace, building them around real functional economies while respecting local identities, backed by a strengthened Council of the Nations and Regions.

Andy Street said:

For greater growth there must be fiscal devolution with mayors in the driving seat to build regional economies and enable better strategic decision making for communities.

Devolution has delivered political accountability and investment, but not fiscal autonomy. In Andy Burnham’s former patch of Greater Manchester, the economy has grown at roughly twice the UK average since 2015, passing £100 billion. Regions such as this and the West Midlands have never raised, kept and deployed their own tax revenue.

The mayoral model already commands real public trust, with 74 per cent of voters able to name their mayor, against 43 per cent for their MP and 20 per cent for their council leader. Regions that depend on London for every pound cannot plan, borrow or take risks on the same footing as the places they compete with.

Fiscal devolution is the single greatest change that would set mayors up to succeed, and it would bring real maturity to the model, with mayors accountable for the money they raise, not just how they spend it.

Andy and I worked effectively as mayoral colleagues, and these recommendations build on much of what we worked on together. I hope he’ll underpin his belief in devolution by grasping the potential of real fiscal devolution and let growth truly take off. I will be delivering these recommendations directly to him.