England’s regional mayors are set to gain new fiscal powers under a government plan aimed at devolving significant control from Whitehall and encouraging local economic growth. The measures, scheduled to begin in stages from April 2027 and fully operational by 2028, will allow mayors to retain a share of income tax and business rates generated within their areas. This move is intended to replace existing government grants, giving local leaders more autonomy and long-term certainty over their funding.

Andy Burnham, the mayor of Greater Manchester, described the initiative as the largest transfer of power from Westminster in a generation. He emphasized that these changes would enable local authorities to invest in priorities such as public transport, housing development, and job creation. Under a “local first” policy, ministers will be required to justify why any powers should remain centralized rather than devolved.

One significant aspect of the reforms is that combined authorities will be granted the ability to borrow against projected income over 30 years, a capability not previously available due to the one-year funding settlements imposed by the Treasury. This could allow mayors to fund large-scale infrastructure and housing projects without requiring Treasury approval for each initiative. Local leaders such as Oliver Coppard, mayor of South Yorkshire, have welcomed this, viewing the reforms as liberating authorities from what he called the “death grip of the Treasury.”

However, questions remain about the details, including the exact share of income tax and business rates revenue that will be devolved. The chancellor, John Healey, is expected to provide further specifics in the autumn budget. While some mayors have expressed interest in using these funds to offer tax rebates to residents, technical challenges related to tracking individual tax contributions make this unlikely. Rather, most of the revenue is expected to be directed toward long-term investment projects.

The government has also acknowledged concerns about regional disparities. Some ministers are exploring mechanisms to support less economically productive areas, possibly through revenue-sharing arrangements involving wealthier regions such as Manchester and London. This is in part a response to warnings from think tanks cautioning that fiscal devolution could deepen inequalities and create a “two-tier England.”

Critics point to the challenge posed by the fact that about half of England’s population reside in areas without elected regional mayors, who will not have access to the new fiscal powers. Labour MP Perran Moon highlighted concerns that areas like Cornwall, which already benefits from certain business rates devolution but will not gain income tax powers, could feel excluded by the reforms. This exclusion has led to fears of increased resentment towards central government.

In response, ministers plan to extend additional powers aimed at improving local transport, housing, and jobs to non-mayoral strategic authorities. The work and pensions secretary, Pat McFadden, underscored that the changes intend to empower leaders with deep local knowledge to better address community needs. The government is also encouraging non-mayoral areas, including several large counties, to consider establishing mayoral combined authorities to access the full suite of devolved powers.

Overall, while the reforms represent a significant shift towards fiscal devolution in England, the full implications and effectiveness will depend on how these powers are implemented and how inclusive the policy proves for all regions.