Regional mayors in England could soon gain greater fiscal powers under proposed reforms announced by Prime Minister Andy Burnham. The plan, expected to be detailed in a white paper alongside Chancellor John Healey’s autumn Budget, would allow local leaders to retain a share of income tax and business rates generated within their areas. This move aims to provide greater control over spending to promote local growth, improve public services, and create jobs.
Prime Minister Burnham, who previously served as Mayor of Greater Manchester, emphasized that devolving tax and spending authority will fulfill his commitment to transfer power away from Westminster and into local communities. “Every local leader will have the power and resources to improve public transport, build homes and create jobs,” he said. Under the proposals, more of the taxes raised in a community would remain there, enabling tailored investments based on local priorities.
Currently, several regions including Greater Manchester, the Liverpool City Region, Cambridgeshire and Peterborough, and South Yorkshire have metro mayors with powers over transportation, skills, and infrastructure planning. Other areas, such as Greater Essex, Hampshire, and the Solent, are scheduled to elect mayors for the first time in the coming years.
The concept of fiscal devolution has garnered broad support among mayors across party lines, though their intended uses for the additional funds vary. Conservative and Reform UK mayors have indicated plans to provide tax rebates or direct relief to residents, addressing local concerns over high tax burdens. Ben Houchen, Mayor of Tees Valley, which covers approximately 700,000 residents, has expressed intentions to create a rebate scheme to return money directly to families if his region gains access to local income tax revenue. Houchen also envisions making Tees Valley "a more attractive place and a more competitive place to invest in than Manchester and London.”
Similar approaches are reportedly under consideration by other right-leaning mayors, including Luke Campbell of Hull and East Yorkshire and Andrea Jenkyns of Greater Lincolnshire, who are exploring ways to ease the tax load on their residents.
In contrast, many other mayors are expected to use the additional fiscal powers primarily to invest in local infrastructure, housing, and economic development.
However, some government sources have expressed caution about the feasibility of significant tax relief initiatives due to ongoing financial pressures on local authorities. They noted that while devolved budgets could increase, the varying economic strengths of regions might lead to uneven capacity to provide rebates or boosts in local services.
The government has also affirmed that the reforms will not change the overall rate of income tax paid by workers. An equalization mechanism is expected to remain in place to support areas where less tax revenue is generated, ensuring continued financial support for less affluent regions.
Overall, the move signals a substantial shift toward decentralizing fiscal control, aiming to empower local leaders and enable more responsive governance tailored to the needs and aspirations of their communities.