Prime Minister Andy Burnham has unveiled plans to grant England’s city-region mayors a portion of income tax revenue, marking a significant step in his strategy to shift authority from Westminster to regional leadership. In addition to income tax, mayors will gain the ability to retain a share of local business rates and exert greater influence over housing, transportation, and skills development.
While the specific percentages remain undecided, Chancellor John Healey is expected to provide further clarity in the upcoming autumn budget. The move aims to decrease reliance on central government grants, which currently fund the majority of English regional authorities. Burnham stated that the initiative fulfills his commitment to empowering every community, suggesting that keeping more tax revenue locally will incentivize economic growth.
The United Kingdom currently maintains a highly centralized fiscal system, with local tax collection accounting for only 5.8% of the national total—a figure notably lower than that of other G7 nations like France and the United States. To address potential inequalities, the government intends to design an equalisation mechanism ensuring regions with smaller tax bases are not disadvantaged.
The timeline for implementation involves retaining business rates by April 2027, followed by the share of income tax in April 2028. Reactions to the proposal have been varied. Supporters like West Yorkshire Mayor Tracy Brabin believe the policy will allow residents to see the tangible benefits of local economic success. Conversely, critics such as Conservative shadow chancellor Sir Mel Stride expressed concerns about the lack of concrete detail, warning that the plan might inadvertently harm weaker economies. Meanwhile, Reform UK representatives argued that the government should prioritize devolution regarding immigration control.
