Andy Burnham is preparing to introduce a proposal granting mayors in England a portion of income tax and business rates for the first time, marking a significant shift in devolution strategy.
The former Greater Manchester Mayor, now serving as the new Prime Minister, emphasized that this initiative would empower local leaders to reinvest funds collected from their communities for local development projects. This move is being hailed as the most substantial transfer of authority and financial resources from Westminster in decades.
While assuring that the income tax rate for taxpayers will remain unaffected by the reforms, the government disclosed that specific details, such as the extent of income tax retention for local leaders, will be outlined in Chancellor John Healey’s inaugural Budget scheduled for the autumn.
In anticipation of an imminent announcement, Burnham expressed, “Our intention is to decentralize power from Westminster and distribute it to every neighborhood across the nation. Today, we are delivering on that pledge. Our proposal ensures that a larger portion of locally generated taxes will remain within the community for local investment.”
He further stated, “Soon, every local leader will possess the authority and funding necessary to enhance public transportation, construct residences, and generate employment opportunities. Having experienced being overlooked by politicians in Westminster, I am committed to not repeating that oversight now as Prime Minister. The entire government will now unite in support of individuals and regions in dire need of our assistance. This approach will restore hope and return authority to you.”
Healey remarked, “Those who are best acquainted with the skills sought by employers, the transportation requirements of an area, and where investments can yield the greatest impact are the residents themselves. For the first time, we are allotting mayors a portion of income tax, ensuring that communities directly benefit from their economic growth, thereby decentralizing authority from Westminster and fostering growth in every postal code.”
Former Chancellor Rachel Reeves had previously mentioned in a lecture that the Treasury was exploring the possibility of granting regional mayors control over a portion of national taxes traditionally managed by the central government. Collaborating with the new No10 North, the government also revealed that local leaders would acquire increased jurisdiction over services such as housing, transportation, and skills development.
This expanded authority will encompass the ability to oversee railway and bus services more closely, expedite the construction of local trams and metros, and facilitate more rapid infrastructure development.
Angela Rayner, Secretary of State for Housing, Communities and Local Government, stated, “Our devolution revolution aims to eradicate the dependency culture of the past and instead equip our local leaders with the necessary tools to drive the transformative changes that communities have long awaited.”