Andy Burnham to give regional mayors share of income tax

Prime Minister Andy Burnham is set to transfer significant financial power to regional mayors across England, marking a major devolution effort. For the first time, mayors of city regions will receive a share of income tax revenue collected in their areas. Additionally, they will be allowed to keep a portion of business rates and gain enhanced control over housing, transport, and skills services. This initiative is part of Burnham's broader agenda to shift power away from the central government in Westminster and empower local leaders. The exact share of taxes mayors will receive is still under discussion, with further details expected in Chancellor John Healey's upcoming autumn budget. Critics have raised concerns that the plan lacks specific details and could disadvantage regions with weaker economies. However, Burnham stated the move fulfills his promise to "bring power home" and ensure more locally raised taxes remain within the community. The UK's system of tax collection is highly centralized compared to other major economies. Currently, local authorities in the UK collect only 5.8% of national taxes, significantly lower than countries like France, Japan, and the United States. Mayors in England primarily rely on central government grants for funding. Burnham, during his tenure as Greater Manchester mayor, advocated for greater control over tax revenues. The government had already been considering distributing national tax revenues to mayors before Burnham's recent appointment as prime minister. He has emphasized devolution as a cornerstone of his administration, believing metro mayors are best positioned to drive economic growth. The proposed reforms aim to move local areas away from dependence on central government grants towards funding models that reward local economic expansion. Business rates retention is expected to begin in April 2027, with income tax sharing to follow in April 2028. The fundamental rates of income tax will not change. Treasury sources suggest that mayors who successfully grow their local economies could see increased spending power. The precise mechanism for allocating income tax shares among mayors is still being developed.

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Under our plans, more of the taxes raised in a community will stay in that community.