- Published
Prime Minister Andy Burnham will give all mayors of city regions in England 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 English strategic authorities to keep some cash from business rates collected in their areas, and gain greater control over services such as housing, transport, skills.
asserted
authorities → publish → 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.
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Healey → decide → autumn
Opposition parties said the plans lacked detail and could lead to areas with weaker economies losing out on funding.
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areas → say → funding
But Burnham said the move would "make good" on his pledge to "bring power home" to "every postcode in the country".
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move → say → country
"Under our plans, more of the taxes raised in a community will stay in that community," the prime minister added.
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minister → raise → community
Speaking to BBC Radio 4's Today programme, First Secretary of State Louise Haigh said areas would not need mayors to benefit from investment, because devolution powers would be held by new strategic authorities across England.
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powers → speak → England
Strategic authorities bring together local councils to control regional issues such as transport and economic development, with decisions taken collectively by council leaders rather than a single elected mayor.
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authorities → bring → mayor
For example, the Lancashire strategic authority will take in Blackburn with Darwen Borough Council, Blackpool Council and Lancashire County Council, which form the Lancashire Combined County Authority area, despite the area not having a mayor.
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area → take → mayor
The power to raise and control tax revenues is highly centralised in the UK, making the country an outlier by international standards.
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country → raise → standards
The share of national taxes collected at a local level in the UK is 5.8%, the lowest in the G7, according to the OECD, external, a global policy forum.
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share → collect → OECD
As it stands, mayors of strategic authorities in England receive most of their funding from central government grants.
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mayors → stand → grants
During his time as Greater Manchester mayor, Burnham pushed for greater control over tax revenue, rather than having to rely on government grants.
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Burnham → push → grants
The UK government had already been exploring whether a share of revenue from national taxes could be distributed to metro mayors, before Burnham became prime minister earlier this month.
But in a major speech on devolution in June, Burnham said he would "oversee the biggest rebalancing of power our country has ever seen" if he became prime minister.
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he → explore → power
Burnham has put devolution at the heart of his plan for government, arguing that metro mayors are best placed to boost economic growth across the country.
'Postcode lottery'
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mayors → put → country
The prime minister says he wants local areas to move away from dependence on Whitehall grants, replacing grants with revenue from tax, arguing this will reward local economic growth.
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this → say → growth
English metro mayors are expected to start retaining some revenue from business rates from April 2027, and receive a portion of income tax from April 2028.
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mayors → expect → April
The rates of income tax - for example, the basic rate of 20% on income from £12,571 to £50,270 - will not change as a result of the reform.
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rates → change → reform
Treasury sources say some metro mayors could end up with more money to spend if they grow their local economies and expand their tax bases, but officials are still figuring out how it will work in practice.
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it → say → practice
One think tank, Re:State, has suggested, external the government should allocate mayors 2.5p in every pound raised by the 20p basic rate of income tax in their areas.
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government → suggest → areas
Labour backbencher Perran Moon said the plans were "discriminatory" and could create a "two-tier system".
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plans → say → system
The MP for Camborne and Redruth in Cornwall said the area would never have a mayor and so risked not having access to devolved powers that other areas would have.
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areas → say → that
"What we're asking government to do is to provide us with the same powers, the same funding that mayoral combined authorities have without the requirement of becoming a combined authority or having a mayor."
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authorities → ask → mayor
Conservative shadow chancellor Sir Mel Stride said Andy Burnham's announcement was "very short on the detail" with "no new money being announced", which could mean areas with weaker local economies could end up losing out.
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areas → say → economies
The Liberal Democrats warned the plans risked "creating a postcode lottery" that would leave millions of people living in rural areas "short-changed and underfunded".
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that → warn → areas
Reform UK home affairs spokesman Zia Yusuf said the prime minister should "fully devolve the power to stop the housing of illegal migrants in local communities by the Home Office".
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minister → say → Office
Rebates row
Ministers will be expected to justify why powers should remain in Whitehall rather than being devolved, under a "local first" principle being developed by No 10 North in Manchester, with full details set to be published in a policy paper on the same date as the autumn budget.
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details → expect → budget
The government is also working out the details of an equalisation system to ensure areas where less tax is collected continue to receive financial support.
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tax → work → support
The reforms come after a policy blitz during Burnham's first two weeks in Downing Street, with announcements on the cost of living followed by a speech on his plan to overhaul social care.
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announcements → come → care
The reaction to the plans has been mixed among metro mayors from different parties, with the Labour mayor of West Yorkshire, Tracy Brabin, saying that giving regions like hers a proportion of income tax means "people will be able to see and feel the real benefit of their hard work and where that money is going".
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money → mix → work
However, Lord Ben Houchen, the Conservative mayor for Tees Valley, said he would prefer the government to cut taxes and claimed if he was handed a slice of local income tax, he would "create a new rebate scheme to put money back into people's pockets".
Haigh poured cold water on this idea, arguing the aim was to reinvest money to improve services.
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aim → say → services
"We've seen what the mayors have said about rebates," she said.
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she → see → rebates
"There's not a system that would currently allow that.
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that → be → that
They certainly wouldn't be able to set tax rates locally or regionally."
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They → set → rates
Lord Houchen hit back in a post on X, saying: "So devolution means getting people's taxes to spend but not being allowed to give it back to them.
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taxes → hit → them
"Last time I spoke to the PM, devolution was about Whitehall not dictating what areas can or can't do.
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areas → speak → what
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