Mayors are set to be one of the big winners of the budget after Sir Keir Starmer stepped in personally to ensure they have more freedom to spend money and boost growth, Sky News understands.

England’s ten metro mayors worked together to push the Prime Minister, Rachel Reeves and Angela Rayner for more powers and money after years of frustration with the way the Treasury allocates money for projects and salaries.

But there is deep concern that Ms Reeves, the chancellor, could only allocate money to some key areas but not others.

There is agreement among all the mayors who spoke to Sky News that tightening local government budgets – which metro mayors work alongside – will drive other councils out of business and hamper their ability to regenerate their local areas.

In budget on Wednesday the mayors think they will receive:

• A so-called “single pot” of money that allows them much more freedom to allocate funds where they think it’s most needed;
• More flexibility for raising local taxes. In the Liverpool City Region, Metro Mayor Steve Rotherham is imposing a £1-per-night ‘tourist tax’ on city hotels to fund local tourism projects. There are hopes among some mayors that they will get more flexibility in how they can spend locally raised taxes, known as precepts;
• Multi-year budget settlements to enable long-term planning.
• Mayors are pushing for more powers in a wide range of areas, from transport, where they hope for some success, to skills, where they see the Department for Education reluctant to loosen its grip.

Sky News understands that Sir Keir has repeatedly said in meetings that he believes metro mayors, who have planning powers and work with local authority groups, must be put at the heart of growth efforts in England.

Treasury “very frustrating”.

The Mayor of Liverpool, Mr Rotherham, told Sky News he had been told that mayors “can become the delivery arm of the national government” across a range of projects, including modernizing homes, improving transport and productivity and skills.

However, several mayors who spoke to Sky News warned that they need to break free from the Treasury’s way of deciding what should be funded if growth is as big a priority as the government says it is.

Mr Rotherham said the Treasury had been “massively frustrating so far” and “we are pushing to see change”.

He called for an urgent reform of the Treasury manual for assessing the value for money of large projects – known as the Treasury Green Paper.

He argued that this way of measuring value is biased towards long-term projects, making true reform impossible.

Councils ‘on the brink of bankruptcy’

Meanwhile, Ben Houchen, the Tory Mayor of Teesside, said: “The Treasury is a very difficult department to deal with.

“I think the officials have a very narrow view – they know the cost of everything and the value of nothing.”

He warned the chancellor that if, as expected, she announces a raft of big infrastructure and growth projects on Wednesday but also raises the government’s day-to-day running costs, then the initiatives unveiled next week it may never happen.

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“If you’re putting money towards big projects like railways or roads or whatever, big infrastructure – that’s one thing,” he said.

“But to achieve that, you have to have the day-to-day expenses of hiring people, going through the planning — all those things in the background that require money, revenue, day-to-day expenses.

“So allocating a big check is one thing. That doesn’t necessarily mean we’re going to see these projects come to fruition if there’s no money to develop those projects in the first place.”

Mr Houchen said local councils in the Tees Valley were in a bad financial position.

“You have local councils, which most people interact with on a daily basis, in a very difficult situation.

“The quality and experience of the staff is not there. Money is extremely tight.

“Things like adult and children’s social services in Tees Valley, for example, are typically around 80% of a council’s entire budget, just for adult and children’s social services. So it is in a very difficult state. I’m very aware, just not everywhere. Tees Valley, but across the country, there are plenty of councils on the brink of bankruptcy.

“You saw some of this already under the previous government. Without more revenue funds and funding for types of departments like local government, that won’t change that outcome and we could still see a lot of capital spending, but we could still see governments broken, services not improving and actually continuing to deteriorate.”

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If councils fail, communities ‘fall’

Richard Parker, the new Work mayor of the West Midlands, also agreed that funding had been squeezed for councils.

“Birmingham has lost £1bn of funding over the last 10 years… it has been taken from some of the poorest and most vulnerable communities and made those communities even more vulnerable.

“And I cannot allow our councils to fail because if our councils fail, the communities they support collapse.

“So I understand the criticality of the situation.

“I hope the government will start, as they said, to make longer-term funding plans for local government so that they have the opportunity to plan ahead and plan for the future, rather than working on short-term budget cycles for a year.”

Mr Parker said getting more skills on top of skills – which other mayors believe is unlikely at the moment – will be a key driver of growth.

Read more:
Analysis: A growing storm over rumors of a budget tax hike
Analysis: The mess of working with messages
Are Starmer and Reeves on the same page with the budget?

“Too many people in low paying jobs”

“That’s actually when I need revenue support, more powers particularly around post-16 education,” he said.

“We have around a quarter of the workforce in the West Midlands low-skilled in these skills, which means too many people in work are in low-paid jobs.

“And I have twice as many young people out of work as the national average.

“So I need to help these people get access to the skills they need to build careers here and get access to better paying jobs and really the jobs they need occupy the investors who come to this region”.