In a significant shift towards decentralisation, Andy Burnham is poised to unveil a transformative devolution strategy that promises to liberate regional mayors from the constraints of central government funding. Scheduled for announcement on Friday, this plan aims to provide local leaders with greater control over their finances, enabling them to invest in essential public projects without relying on the Treasury.
A New Era for Local Governance
Burnham’s initiative will allow mayors across England to retain a portion of the income tax generated within their jurisdictions starting in 2028, alongside business rates expected to total millions by April 2027. While these funds will replace existing grants rather than augment them, local authorities believe this change will fundamentally enhance their financial independence. Oliver Coppard, the Labour mayor of South Yorkshire, emphasised the importance of this shift, stating it would provide “long-term certainty around income,” effectively ending the “death grip of the Treasury.”
This comprehensive devolution framework, which Burnham describes as “the biggest transfer of power from Westminster in a generation,” is set to empower local authorities to improve public infrastructure, build housing, and create jobs. He remarked, “More of the taxes raised in a community will stay in that community. Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs.”
Local First: Empowering Communities
The proposed “local first” principle will require ministers to substantiate any decision to retain powers within Whitehall rather than devolving them to local governments. This approach also encompasses increased control over technical education for young people, as recently announced by the government. Close advisers to the Prime Minister have suggested that mayors could extend their oversight to schools, healthcare providers, and childcare services, functioning similarly to the roles of police and crime commissioners.
In a bid to streamline operations, the government plans to reduce the size of the civil service, which currently numbers around 520,000, promoting a more strategic approach to decision-making as authority shifts away from London.
Financial Autonomy and Long-term Investment
The new measures will grant directly elected mayors the liberty to utilise the revenue from business rates and income tax as they see fit. This includes the potential for tax incentives for local industries or rebates for residents. However, experts point out that the most groundbreaking aspect of the plan is the ability for combined authorities to secure 30-year loans based on their projected income, enabling them to undertake significant housing and transport projects that previously required Treasury approval.
Henri Murison, Chief Executive of the Northern Powerhouse Partnership, articulated that this development “completely transforms” the capabilities of combined authorities. He noted that the prospect of borrowing against future revenues could pave the way for large-scale transport initiatives, such as the proposed underground station at Manchester Piccadilly.
While the exact proportions of income tax and business rates to be retained by combined authorities remain under discussion, Chancellor John Healey is expected to reveal comprehensive details in the upcoming autumn budget.
Addressing Regional Disparities
Concerns have been raised regarding the potential for a “two-tier England,” where economically lagging regions might be sidelined. Ministers are actively exploring mechanisms to ensure that less prosperous areas, such as Humberside and the North East, are not left behind in this new framework. A recent report indicated that if mayors were to receive 2.5% of the 20p basic rate of income tax, disparities could become pronounced; for instance, London would gain £2.3 billion in 2026-27, while Hull and East Yorkshire would receive only £135 million.
The think tank IPPR North has characterised this shift as “the most significant change in how England is funded in a generation.” The government is also encouraging areas without mayoral authorities, including regions in Dorset, Somerset, and parts of Kent, to establish such frameworks to benefit from increased fiscal autonomy.
Since 2024, only two combined authorities, Greater Manchester and West Midlands, have managed to retain all business rate income generated in their areas, with Greater Manchester’s first-year total reaching £100 million. This revenue was divided, with three-quarters allocated to local councils and the remaining £25 million directed towards mayoral projects.
Why it Matters
This devolution initiative marks a pivotal moment in the governance of England, promising to reshape the relationship between local authorities and central government. By granting mayors greater financial control and autonomy, Burnham’s plan could usher in a new era of localised decision-making, fostering economic growth and enhancing public services. As regions gain the ability to invest in their futures, the focus will shift from dependency on Westminster to a model of self-sufficiency and empowerment, potentially redefining the landscape of governance across the country.
