Andy Burnham, the Mayor of Greater Manchester, is set to unveil a groundbreaking devolution strategy on Friday, designed to liberate regional leaders from the constraints of central government funding. This initiative aims to significantly alter the financial landscape for English mayors, enabling them to keep a portion of income tax and business rates generated in their areas, beginning in 2028. The proposed measures promise to redefine local governance, allowing mayors to undertake substantial investments in infrastructure and public services without reliance on Westminster.
New Fiscal Powers for Mayors
Under the new framework, regional mayors will retain a share of the income tax collected in their jurisdictions, along with business rates projected to amount to tens of millions by April 2027. This historic shift signifies a move away from traditional Treasury grants, offering local leaders greater autonomy over their financial resources. Oliver Coppard, Labour Mayor of South Yorkshire, emphasised the importance of this change, stating it provides “long-term certainty around income” and frees them from the “death grip of the Treasury”.
Burnham has described the initiative as “the biggest transfer of power from Westminster in a generation”, asserting that it will enable local authorities to harness the revenue generated within their communities to deliver better public transport, housing, and job creation. His commitment to not repeating the historical neglect felt by regional leaders reflects a broader shift towards a more decentralised governance model.
Local First: Shifting Responsibilities
A key component of Burnham’s proposal is the introduction of a “local first” principle, which requires ministers to justify any powers that should remain centralized in Whitehall rather than being devolved to local authorities. This approach not only enhances local governance but also aligns with recent government announcements regarding increased control over technical education for young people.
Additionally, discussions are underway regarding the potential for mayors to oversee essential services such as education and healthcare, mirroring the role of police and crime commissioners. This could lead to a more integrated and locally responsive approach to public service delivery.
No 10 has indicated that the civil service will undergo restructuring, becoming “smaller and more strategic” as decision-making authority shifts away from London. This change aims to empower mayors, who currently oversee regions that encompass three-quarters of England’s population, to utilise their newly acquired revenue streams effectively.
Financial Implications and Future Prospects
One of the most significant impacts of this devolution plan is the ability for combined authorities to access long-term loans based on projected revenues. This financial flexibility could unlock major projects, particularly in transport and housing, which have previously been stymied by reliance on short-term funding from the Treasury.
Henri Murison, Chief Executive of the Northern Powerhouse Partnership, noted that this reform could enable mayors to initiate transformative infrastructure projects, such as a new underground station at Manchester Piccadilly. However, the precise allocation of income tax and business rates remains to be determined, with further details expected from Chancellor John Healey in the upcoming autumn budget.
While some mayors, like Ben Houchen of Tees Valley, have expressed intentions to utilise their shares of income tax for initiatives such as tax rebates, experts caution that the complexities involved may limit such possibilities. As this new financial structure replaces existing grants rather than adding to them, it is likely that funds will be directed towards sustainable long-term projects rather than immediate giveaways.
Ministers are also considering measures to ensure that less economically prosperous areas, such as parts of the North East and Humberside, do not fall behind in accessing these new financial opportunities. The government’s plan encourages regions without mayoral authorities to establish such governance structures to benefit from enhanced funding autonomy.
A New Era for Local Governance
Since 2024, only Greater Manchester and the West Midlands have been permitted to retain all business rates generated within their jurisdictions. In Greater Manchester, this retention has resulted in £100 million for the first operational year, with significant portions allocated to local projects. As this devolution plan unfolds, its implications for local governance and regional development across England are profound.
Why it Matters
The proposed devolution measures represent a pivotal moment in the evolution of local governance in England. By allowing mayors to retain tax revenues and access long-term borrowing, this initiative not only empowers regional leaders but also fosters a more equitable distribution of resources. As local authorities gain greater control over their financial futures, the potential for enhanced public services and infrastructure development becomes a reality. This shift could ultimately redefine the relationship between central and local government, promoting a more responsive and accountable system that prioritises the needs of communities across the country.