Regional mayors to retain share of income tax and business rates

Prime Minister Andy Burnham has announced plans to transfer greater powers to regional mayors to control finances in their areas by enabling them to retain a share of income tax and business rates revenues.

Changes will mean regional leaders will keep more of the rewards when delivering policies that grow local businesses and incomes, with the shift in funding beginning to take effect, starting with business rates, from Spring 2027.

The October Budget will set out a roadmap on both business rates and income tax retention, and over time will see local areas move away from dependence on grants from Whitehall. The ambition is to extend the benefits of devolution across the whole UK, working with devolved governments and local leaders to give communities more control over their future. Areas without a mayor will be supported to establish strategic authorities, and gain greater control over local priorities.

The reforms will be driven by a strengthened No 10 North operation, based at Heron House in Manchester city centre, and set to be led by the Prime Minister’s Deputy Chief of Staff, Caroline Simpson, who was previously Chief Executive of Greater Manchester Combined Authority, and prior to that Chief Executive of Stockport Council. The office will work with mayors, local leaders and other partners to remove barriers to growth, accelerate delivery and ensure government is better connected to communities across the country.

Local leaders will gain greater control over the services that shape people’s lives, including housing, transport, skills, employment support and public services.

These largely include powers in line with city-region’s such as Greater Manchester and the West Midlands that already have the greatest devolved powers:

• Bring rail and bus services under greater local control, helping introduce integrated ticketing and more reliable services.
• Build more homes where they’re needed and unlock stalled development sites by giving local leaders stronger planning and regeneration powers and more devolved funding.
• Give more control over large local transport schemes, trams and metros to Mayors by removing and streamlining Whitehall.
• Give mayors control over 16-19 funding and employment support, so young people can train for the jobs local employers need and people out of work can get tailored support back into employment.
• Back local industries and innovative businesses, and attract investment, creating more well-paid jobs.
• Where power is devolved, Whitehall resource will follow, giving devolved leaders the resources they need to drive change closer to home