Prime Minister Andy Burnham has confirmed that mayors, and potentially other local authorities, will be allocated a share of regional income tax receipts from 2028. This move will replace central grants and builds on earlier announcements by then-Chancellor Rachel Reeves in March, who stated the Treasury would develop a fiscal devolution roadmap.
The government's English Devolution and Community Empowerment Act, which became law in April this year, already set up a framework for transferring powers from Whitehall. This Act includes creating elected strategic authorities, expanding local mayoral powers, and establishing a Community Right to Buy for Assets of Community Value.
Further details of Burnham's plan are anticipated to be revealed in the Budget on 28 October. A new devolution White Paper, which will contain draft legislation, is also expected to be published this autumn. This will expand on a blueprint called "The New Model of Government," aiming to give local leaders more control over areas such as local transport, housing, innovation, local energy, and cultural investment.
The Centre for Cities think tank estimates that approximately 2% of locally raised income tax would be sufficient to replace the grants currently received by existing mayors. However, challenges remain, including local council budgets being dominated by legally obligatory spending liabilities like adult social care and children's services.