In a significant move towards decentralising power, Andy Burnham is poised to unveil a new devolution strategy that promises to liberate regional mayors from the constraints imposed by the Treasury. This initiative, announced today at the Submarine Academy for Skills and Knowledge in Cumbria, will allow local authorities to retain a share of income tax and business rates, fundamentally transforming funding dynamics across English regions.
Empowering Regional Mayors
Under the proposed reforms, starting in 2028, mayors will be enabled to keep a portion of the income tax collected in their respective areas, alongside business rates expected to reach millions by April 2027. This shift is seen as a crucial step in alleviating the dependency on central government grants, which have often been seen as limiting and insufficient.
Oliver Coppard, the Labour Mayor of South Yorkshire, expressed the importance of this development, stating, “It’s really important because it gets us out of the death grip of the Treasury and gives us that long-term certainty around income.” The aim is clear: to provide local leaders with the autonomy required to drive forward essential projects in public transport, housing, and job creation.
A Bold Transfer of Power
Burnham has framed this initiative as “the biggest transfer of power from Westminster in a generation.” He emphasised that, under the new framework, the taxes generated within a community will largely remain there, allowing local authorities to make more impactful decisions. He stated, “I know what it’s like to be ignored by politicians in Westminster. I’m not going to make that same mistake now I’m PM.”
In a further commitment to regional empowerment, a “local first” principle will be instituted, compelling ministers to justify any powers that remain centralised. This could lead to mayors gaining control over education and healthcare, echoing the existing model of police and crime commissioners.
Financial Implications and Future Projects
One of the most groundbreaking aspects of Burnham’s plan is the ability for combined authorities to secure long-term loans against their anticipated income. This flexibility will allow regions to undertake substantial projects that previously required Treasury consent, which has often been a barrier to progress.
Henri Murison, chief executive of the Northern Powerhouse Partnership, highlighted the transformative potential of this change, suggesting that it could unlock significant transport initiatives, such as the proposed underground station at Manchester Piccadilly. However, details on the exact percentages of income tax or business rates that may be retained by local authorities are still under discussion, with further announcements expected in the upcoming autumn budget.
Addressing Economic Disparities
As the government rolls out this ambitious devolution plan, there are concerns about ensuring equitable distribution of resources across all regions. Ministers are reportedly exploring methods to support less economically productive areas, such as Humberside and the north-east, to prevent them from being sidelined in the new funding landscape.
Research from the thinktank Re:State indicates that disparities could emerge, with regions like London receiving significantly more funding compared to areas like Hull and East Yorkshire. Critics fear that without careful planning, this could exacerbate existing inequalities.
Why it Matters
This devolution initiative represents a pivotal moment for England’s regional governance, allowing local leaders to harness greater financial autonomy. By shifting power away from Westminster, the plan aims to empower mayors to make more informed decisions that directly benefit their communities. As the details unfold, the challenge will be to ensure that this new framework does not entrench existing disparities but fosters equitable growth across all regions. The implications of this transformation could redefine the relationship between local and central government, setting a precedent for future governance and funding strategies.
