Let mayors keep portion of income tax and stamp duty in regions, Andy Burnham told

A report led by Sir Andy Street, the former West Midlands Mayor, also says that stamp duty, vehicle excise duty and air passenger duty should be kept where they are raised and not sent to Whitehall.

Mr Burnham is set to become Labour leader tomorrow and then prime minister on Monday, with no other challengers emerging from the Labour ranks.

Sir Andy worked with Mr Burnham on a potential private-public sector solution for the cancelled leg of HS2, when the pair were mayors for the West Midlands and Greater Manchester respectively.

Now the former John Lewis boss has set up a new Conservative grouping called Prosper UK, which today has published the report “Set Up For Success? The Case for Greater Devolution”.

It 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.

The UK is one of the most centralised tax-raising countries in the world, with 90 per cent of taxes collected by Whitehall.

Prosper UK argues that this centralisation drives regional imbalance, which has seen projects like HS2 cancelled and Northern Powerhouse Rail consistently delayed.

Chancellor Rachel Reeves pledged to announce a plan for fiscal devolution at the next Budget, and Mr Burnham is expected to keep this promise and potentially go further.

The report argues that this should include assigning 2.5p of the 20p basic rate of income tax to established mayoral authorities, such as West and South Yorkshire.

It estimates that this would raise £553m per year for Tracy Brabin in West Yorkshire and £335m for Oliver Coppard in South Yorkshire.

The report also calls for taxes such as stamp duty land tax, vehicle excise duty and air passenger duty to be collected and kept locally.

Sir Andy also wants mayoral authorities to retain the increase in their business rates, split down the middle with local authorities.

He said: “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 £100bn.

“Regions such as this and the West Midlands have never raised, kept and deployed their own tax revenue.

“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.”