Prime Minister Andy Burnham has unveiled plans to grant regional mayors greater control over local tax revenues as part of a broader shift to devolve power from Westminster. Beginning in 2027, mayors will be able to retain a portion of income tax and business rates raised within their areas, though this is expected to be less than 10 percent of local income tax receipts. The arrangement will involve a corresponding reduction in central government grant funding.

Burnham framed the policy as a measure to stimulate economic growth and investment, stating that mayors are better positioned than Whitehall officials to decide how to allocate funds towards infrastructure, training, and development initiatives. He emphasized that the new powers aim to incentivize economic expansion by enabling regions to benefit directly from increased local revenues.

However, Burnham made clear that this does not equate to mayors becoming “mini Chancellors of the Exchequer,” firmly rejecting calls from some Conservative and Reform UK mayors who proposed using the additional funds to issue local tax rebates. During a visit to Sheffield, he said he was “not comfortable” with mayors having the authority to alter national tax or asylum policies, describing those issues as matters for the central government. Burnham also indicated that he would veto Reform UK’s demands to empower mayors to block the housing of asylum seekers in their areas.

The restrictions on using devolved tax revenues for local rebates sparked criticism from opposition politicians. Conservative Cabinet Office spokesman Alex Burghart dismissed the proposals as a “joke,” while Shadow Local Government Secretary Sir James Cleverly accused the Labour government of pursuing a “top-down devolution agenda” that limits local autonomy. He argued that the administration’s approach forces local councils with low tax rates to increase charges due to cuts in central funding, branding it an effort to impose a “high-tax model” across England.

Local Conservative mayors expressed frustration as well. Ben Houchen, Tees Valley mayor, who had announced plans to introduce a local tax rebate scheme, questioned the government’s definition of devolution, pointing out the contradiction in being responsible for raising taxes but not permitted to reduce them. He stated, “The last time I spoke to the PM, devolution was about Whitehall not dictating what areas can or can’t do.”

First Secretary of State Louise Haigh, responsible for devolution policy, acknowledged current limitations on mayors’ ability to offer tax rebates but said that eventually all areas of England will be covered by such devolved powers to enable broader regional autonomy.

Overall, the plan marks a significant redistribution of fiscal authority, while maintaining national control over core tax and immigration policies. The government has indicated that further details will be announced in the autumn Budget, which will clarify the scope and implementation of the new arrangements.