Prime Minister Andy Burnham has confirmed that mayors will be handed a share of income tax and business rates as part of a major devolution shake-up, with the new financial powers taking effect next spring. The Labour leader described the move as the biggest transfer of power from Westminster in a generation, saying it would allow communities across the country to benefit directly from local economic growth.
The announcement was made in an official statement to the nation, ahead of the formal launch on Friday. Under the plans, local leaders will retain a portion of tax revenues raised in their areas, breaking from the current system under which virtually all income tax receipts go to central government. Burnham said the change would put power 'into every postcode in the country' and give local leaders the resources to improve public transport, build homes, and create jobs.
PM: power to every postcode
Speaking in the statement, Burnham said: "I said we'd take power out of Westminster and carry it into every postcode in the country. Today, we make good on that promise." He added: "Under our plans, more of the taxes raised in a community will stay in that community. Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs."
Burnham, who is also the MP for Makerfield, acknowledged past frustrations with centralised government. "I know what it's like to be ignored by politicians in Westminster. I'm not going to make that same mistake now I'm PM," he said. "The whole of government will now pull together behind the people and places that desperately need our support. This is how we'll bring back hope and bring power home to you."
Chancellor: first time mayors share income tax
Chancellor of the Exchequer John Healey MP underlined the significance of the change. "The people who best understand what skills employers want, what transport an area needs and where investment can make the biggest difference are those who live there," he said. "For the first time we're giving Mayors a share of income tax so communities directly benefit when their economy grows - passing power out of Westminster and driving growth in every postcode."
Healey continued: "This is the way we start to build new hope and advance the working people of this country."
Rayner: end of begging-bowl culture
Secretary of State for Housing, Communities and Local Government Angela Rayner also welcomed the announcement, framing it as part of a wider "devolution revolution." She said: "This is the first step in our plan to rewire this country and build a better future, where power is no longer hoarded in Westminster but is put back in the hands of local people – where it belongs."
Rayner added: "Our devolution revolution is about bringing an end to the begging-bowl culture of the past, and instead making sure our local leaders have the tools they need to drive the change that communities have been crying out for. We need every region to be firing on all cylinders if we want good growth in every postcode, and we will do everything in our power to make that a reality."
What happens next
The changes will kick in next spring, meaning households across England will see a portion of their income tax retained at a local level for the first time. Communities still on the road to devolution will also gain new powers as part of the wider shake-up. The government says the aim is to ensure that when a local economy grows, the benefit is felt directly by residents in that area, rather than being funnelled solely to Westminster.
