PM's tax sharing plan welcome but must be fair to all - Chamber

The Prime Minister’s pledge to share income tax revenue with English mayors could provide “a powerful incentive for investment, job creation and business growth”, business leaders said today.

However, Greater Birmingham Chambers of Commerce warned additional funds must be distributed fairly to ensure smaller towns and cities are not left behind.

Under plans set out by Andy Burnham today, metro mayors in England will be given a share of income tax revenue for the first time.

As part of his drive to transfer power from Westminster to local leaders, Burnham will also allow mayors to keep some cash from business rates collected in their areas, and gain greater control over services such as housing, transport, skills.

The government has not yet decided the exact portion of taxes mayors will get, with more details to be announced when Chancellor John Healey delivers his first budget in the autumn.

The PM vowed to “make good” on his pledge to “bring power home” to “every postcode in the country”.

“Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs,” he added.

The development follows a recommendation from Business Commission West Midlands – convened by the GBCC, along with the Black Country and Coventry & Warwickshire Chambers of Commerce – for Government to devolve more powers and funding to the West Midlands Combined Authority.

Emily Stubbs (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Giving local leaders greater control over the funding levers that drive growth is a welcome step and reflects a key recommendation of our Business Commission West Midlands report, which called on national government to build on the region’s Deeper Devolution Deal by providing the WMCA with greater powers and funding flexibility.

"The prospect of mayors retaining a share of the economic growth they help create is particularly significant.

“If designed well, linking local funding more closely to the strength of local economies could provide a powerful incentive for investment, job creation and business growth.

"However, the detail will be crucial. We will be carefully analysing the White Paper expected alongside the Autumn Budget, and it is essential that any new system is fair.

“Larger areas should not automatically receive a greater share of funding, while places earlier in the devolution journey, including the Staffordshire Gateway, must not be left behind as powers and resources are devolved.”

Reacting to announcement, West Midlands mayor Richard Parker said: “We’ve already shown under devolution what we can achieve when we are trusted, smashing government targets on homes, jobs and business support while building new rail stations and Metro routes.

“But the financial firepower being given to me by the Prime Minister means we will be able to go even further and faster, delivering the things that really matter to local people.

“The Prime Minister trusts us to deliver. He knows how much more we can achieve by putting further powers and funding into the hands of local people – who have skin in the game.

“Local decisions are better decisions and that means more local lives changed for the better.”

Find out more about the Business Commission West Midlands roadmap for unlocking business growth across the region.

Read our latest report identifying opportunities to unlock business growth in South and East Staffordshire.