Key facts
- England's regional mayors will gain the ability to borrow for investment and retain a share of income tax and business rates.
- These new revenue streams will replace existing Treasury grants, aiming to provide greater funding certainty.
- The reforms are intended to enable mayors to fund major infrastructure projects and local initiatives.
- The government is also considering devolving further powers in education and health to mayoral authorities.
- The changes are framed as a significant transfer of power from central government to local leaders.
England's regional mayors are set to gain significant new fiscal powers, including the ability to borrow for investment and retain a share of income tax and business rates, under plans announced by Mayor Andy Burnham. These measures, described as "transformational" and "the biggest transfer of power from Westminster in a generation," aim to free local leaders from the "death grip of the Treasury" by providing long-term funding certainty.
Starting in 2028, mayors will keep a portion of income tax generated in their areas, and by April 2027, they will retain business rates totalling tens of millions of pounds. While these funds will replace existing government grants rather than being additional money, local leaders believe this shift will fundamentally alter their ability to fund major projects.
Experts highlight that the ability for combined authorities to take out 30-year loans against projected income will be a significant consequence, allowing them to fund large-scale housing and transport initiatives without needing direct Treasury approval for each one. This could unlock projects such as an underground station at Manchester Piccadilly.
Beyond fiscal powers, the government is considering further devolution, with some close to Prime Minister Burnham suggesting mayors could oversee schools, GPs, and childcare providers. The plans also aim to make Britain's civil service "smaller and more strategic" as decision-making moves out of London.
However, policy experts have cautioned that rushing fiscal devolution could create a "two-tier England," potentially leaving areas without mayoral authorities behind. The government is reportedly encouraging these areas to form mayoral bodies to benefit from greater autonomy. Details on the exact proportion of income tax and business rates to be retained are still being finalized, with the Chancellor expected to provide more information in the autumn budget.