Andy Burnham is preparing to introduce a plan that would grant mayors in England a portion of income tax and business rates for the first time, marking a significant devolution overhaul. The former Greater Manchester Mayor and current Prime Minister stated that this initiative would enable local leaders to retain a portion of the revenue collected from their constituents to invest back into their local communities.
This move is being touted as the most substantial transfer of authority and funding from Westminster in many years. The government clarified that the income tax rate paid by taxpayers would not be affected directly by these reforms. Specifics, such as the extent of income tax retention for local leaders, will be outlined in the upcoming Budget by the new Chancellor, John Healey, in the autumn.
In anticipation of an announcement, Mr. Burnham expressed, “I promised to decentralize power from Westminster and distribute it to every neighborhood in the country. Today, we are fulfilling that pledge. With our proposals, more taxes raised within a community will remain within that community.” He emphasized the potential for local leaders to enhance public transportation, construct residences, and generate employment opportunities.
Mr. Healey commented, “Those who reside in a region are best equipped to comprehend the skills sought by employers, the transportation requirements, and the areas where investments can have the most significant impact. For the first time, we are providing mayors with a share of income tax, ensuring communities directly benefit from economic growth, shifting power away from Westminster and fostering growth in all localities.”
Additionally, former Chancellor Rachel Reeves mentioned in a lecture earlier this year that the Treasury was exploring the idea of granting regional mayors control over a portion of national taxes that have traditionally been allocated by the central government. Collaborating with the new No10 North, the government also disclosed that local leaders would gain more authority over essential services like housing, transportation, and skills development.
This expanded control will encompass overseeing rail and bus services more closely and expediting the construction of local trams and metros. Angela Rayner, the Secretary of State for Housing, Communities, and Local Government, asserted, “Our devolution revolution aims to put an end to the dependency on external funding and ensure that our local leaders possess the necessary tools to drive the changes that communities have long been yearning for.”