Prime Minister Andy Burnham is set to announce a major devolution plan tomorrow that would allow regional mayors to retain a share of local income tax revenues, paving the way for council tax rebates for households. The unprecedented move, expected to be unveiled on 30 July 2026, marks a significant shift in fiscal policy, giving England's mayors greater control over the taxes raised in their areas.
Details of the Plan
Under the proposals, mayors would keep a portion of local income tax revenues instead of sending all of it to the Treasury. This change would enable local authorities to design rebate schemes that put money back into the pockets of residents. Some mayors are already considering such schemes, with the aim of reducing the financial burden on families.
The announcement comes as part of the Labour government's broader push to devolve economic powers to regions, a key promise of Burnham's premiership. The Makerfield MP has long advocated for greater local control over taxation and spending, arguing that decisions are best made close to the people they affect.
Reaction from Mayors
Tees Valley's Conservative Mayor Ben Houchen voiced strong support for the plan, stating: "Every mayor is backing fiscal devolution because they want more money to spend in their area. However, if the Tees Valley is handed a slice of local income tax and business rates generated locally, I’ll create a new rebate scheme to put money back into people’s pockets and let families keep more of the money they earn."
Houchen emphasized that fiscal devolution must empower regions to drive growth: "Fiscal devolution must be about giving places like Teesside the power to do things differently, back growth and reward the people that drive our local economy instead of squeezing every last penny out of them."
Reform mayors Luke Campbell in Hull and East Yorkshire and Andrea Jenkyns in Greater Lincolnshire are also understood to be exploring similar rebate ideas, indicating cross-party interest in the proposals.
No10 North and Economic Context
The announcement follows last week's opening of No10 North, the government's new situation room for growth, which brings together levers of local economic growth and devolution under one roof for the first time. Regional mayors were invited to sit around the table, cementing devolution at the centre of economic decision-making and backing the Prime Minister’s pledge to rewire Britain so that decisions are taken with local leaders, not just for them.
The plan is expected to generate debate about the balance of power between central government and local authorities, with supporters arguing it will boost regional economies and reward local taxpayers, while critics may raise concerns about disparities between areas. Further details of the rebate mechanisms and the specific share of income tax to be retained are anticipated in tomorrow's announcement.
