Prime Minister Andy Burnham announced plans to allocate a portion of income tax revenue to mayors of English city regions, marking the first time such tax-sharing will occur. The initiative forms part of a broader devolution strategy aimed at transferring governmental authority from Westminster to local leadership. English strategic authorities will also be permitted to retain portions of business rates collected within their areas and exercise increased authority over domains including housing, transport, and skills development.
The specific percentage of income tax revenue designated for mayors remains undetermined, with further details expected when Chancellor John Healey presents his first budget in the autumn. Mayors are anticipated to begin retaining business rates revenue from April 2027, with income tax allocations commencing from April 2028. The government is simultaneously developing an equalisation mechanism to ensure regions generating lower tax revenues continue receiving adequate financial assistance. Transport Secretary Heidi Alexander announced that the threshold for seeking approval on infrastructure projects will increase to £500 million from the current £200 million, establishing a fast-track route for constructing tramways, roads, and light rail systems.
Opposition critics contended the proposal lacked adequate detail and could disadvantage economically weaker regions. Labour backbencher Perran Moon termed the approach “discriminatory,” expressing concern that areas without mayors or combined authority status would face a “two-tier system.” Conservative shadow chancellor Sir Mel Stride highlighted the absence of new funding announcements, warning that economically disadvantaged localities might experience reduced resources. The Liberal Democrats cautioned the reforms could generate a “postcode lottery” affecting rural populations unfairly.
Burnham emphasised that the policy serves economic growth objectives rather than enabling mayors to function as “mini-chancellors” or “local home secretaries.” He referenced his prior tenure as Greater Manchester mayor, during which he advocated for tax revenue control rather than dependency on government grants. The UK presently ranks as an outlier internationally, with only 5.8% of national taxes collected locally—the lowest proportion among G7 nations according to the OECD, compared to France’s 20.4%, Japan’s 36%, and the United States’ 45.7%. The government is implementing a “local first” principle requiring ministers to justify why powers should remain centralised, with comprehensive policy details expected alongside the autumn budget announcement.
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