Andy Burnham's Income Tax Plan Empowers Regional Mayors

New Delhi, India Jul 31, 2026 ALN: Prime Minister Andy Burnham will give all mayors of city regions in England a share of income tax revenue for the first time, as part of his drive to transfer power from Westminster to local leaders.

Burnham will also allow mayors of English strategic authorities to keep some cash from business rates collected in their areas, and gain greater control over services such as housing, transport, and skills. This initiative marks a significant shift in the governance structure of the UK, where traditionally, power has been heavily centralized in Westminster, the seat of the UK government.

The government has not yet decided the exact portion of taxes mayors will be given, with more details to be announced when Chancellor John Healey delivers his first budget in the autumn. This uncertainty has led to questions about the feasibility and effectiveness of the proposed reforms, as critics argue that without clear guidelines, the initiative may not achieve its intended goals.

Critics said the plans lacked detail and could lead to areas with weaker economies losing out on funding. This concern is particularly relevant given the disparities in economic performance across different regions of England. Areas with robust economies may benefit significantly from the new tax-sharing arrangements, while those with struggling economies could find themselves at a disadvantage, exacerbating existing inequalities.

But Burnham said the move would "make good" on his pledge to "bring power home" to "every postcode in the country." This statement reflects a broader trend in UK politics, where there is an increasing demand for local governance and decision-making. Many argue that local leaders are better positioned to understand and address the unique challenges faced by their communities.

"Under our plans, more of the taxes raised in a community will stay in that community," the prime minister added. This approach aligns with the principles of fiscal decentralization, which advocates for the redistribution of financial resources to local governments, allowing them to tailor services to the needs of their constituents.

The power to raise and control tax revenues is highly centralised in the UK, making the country an outlier by international standards. The share of national taxes collected at a local level in the UK is 5.8%, the lowest in the G7, according to the OECD, a global policy forum. This statistic underscores the historical trend of centralization in the UK, where local authorities have often been reliant on central government grants for their funding.

That share is far below that of other countries with large economies such as France (20.4%), Japan (36%), and the US (45.7%). These figures highlight the potential for local governments in other countries to generate revenue and invest in their communities, a capability that has been limited in the UK.

As it stands, mayors of strategic authorities in England receive most of their funding from central government grants. This reliance on grants has often resulted in a lack of financial autonomy for local leaders, limiting their ability to respond effectively to local needs and priorities.

During his time as Greater Manchester mayor, Burnham pushed for greater control over tax revenue, rather than having to rely on government grants. His experiences in local government have shaped his understanding of the challenges faced by regional leaders, and he has consistently advocated for measures that empower local authorities.

The UK government had already been exploring whether a share of revenue from national taxes could be distributed to metro mayors, before Burnham became prime minister earlier this month. This indicates a growing recognition among policymakers of the need to decentralize power and resources to enhance local governance.

But in a major speech on devolution in June, Burnham said he would "oversee the biggest rebalancing of power our country has ever seen" if he became prime minister. This ambitious vision for devolution reflects a fundamental shift in the political landscape of the UK, where the conversation around local governance is becoming increasingly prominent.

'Local first'

The prime minister wants local areas to move away from dependence on Whitehall grants and towards funding that rewards local economic growth. This approach is designed to create a more sustainable financial model for local authorities, encouraging them to invest in initiatives that stimulate economic development and job creation.

English metro mayors are expected to start retaining some revenue from business rates from April 2027, and receive a portion of income tax from April 2028. The timeline for implementation suggests that the government is committed to a gradual transition towards this new funding model, allowing local authorities to adjust to the changes.

The plan is to replace grants with revenues from these taxes. This shift could fundamentally alter the financial landscape for local authorities, providing them with greater flexibility and control over their budgets.

The rates of income tax - for example, the basic rate of 20% on income from £12,571 to £50,270 - will not change as a result of the reform. This means that while local leaders will gain more control over revenue, the tax burden on individuals will remain consistent, addressing concerns about potential tax increases.

Treasury sources say some metro mayors could end up with more money to spend if they grow their local economies and expand their tax bases. This potential for increased funding could incentivize local leaders to implement policies that foster economic growth and improve public services.

The share of income tax assigned to each mayor could differ, but officials are still figuring out how it will work in practice. The complexity of these arrangements highlights the need for careful planning and consultation to ensure that the new system is equitable and effective.

One think tank, Re:State, has suggested that the government should allocate mayors 2.5p in every pound raised by the 20p basic rate of income tax in their areas. This proposal reflects ongoing discussions about the specifics of the tax-sharing model and the importance of establishing a framework that supports local governance.

Conservative shadow chancellor Sir Mel Stride said the announcement was "very short on the detail." His criticism underscores the need for transparency and clarity in the implementation of these reforms, as local leaders and communities seek to understand how the changes will affect them.

"Unless Burnham is going to launch another tax raid elsewhere, borrow even more, or make cuts to central government grant, there is no new money being announced here," Sir Mel said. His concerns highlight the potential pitfalls of the proposed reforms, particularly if they do not lead to an overall increase in funding for local authorities.

He said areas with weaker local economies could end up losing out - "the opposite of what Andy Burnham claims he wants to achieve." This sentiment reflects broader worries about the potential for unequal distribution of resources, which could exacerbate existing disparities between regions.

Reform UK home affairs spokesman Zia Yusuf said the prime minister should "fully devolve the power to stop the housing of illegal migrants in local communities by the Home Office." This call for additional devolution highlights the complexities of local governance, particularly in relation to sensitive issues such as immigration and housing policy.

He said: "Andy Burnham says he wants to devolve power and actually listen to local people. If he was listening, he would know that they do not want unvetted illegal migrants dumped in their areas." This statement reflects the ongoing debates around immigration policy and its impact on local communities, which are often at the forefront of such discussions.

The government is also working out the details of an equalisation system that will ensure areas where less tax is collected continue to receive financial support. This commitment to equity is essential to maintaining social cohesion and ensuring that all regions have the resources necessary to thrive.

Ministers will be expected to justify why powers should remain in Whitehall rather than being devolved, under a "local first" principle. This principle emphasizes the importance of local decision-making and accountability, encouraging a shift away from the traditional top-down governance model.

The reforms are being developed by No 10 North in Manchester and a policy paper that will set out the full details will be published on the same date as the autumn budget. This coordinated approach suggests a commitment to ensuring that the reforms are well-integrated into the broader budgetary framework.

The reforms come after a policy blitz during Burnham's first two weeks in Downing Street, with announcements on the cost of living followed by a speech on his plan to overhaul social care. This rapid succession of policy announcements reflects Burnham's determination to establish his agenda and signal a new direction for the government.

The reaction to the plans has been mixed among metro mayors from different parties. Tracy Brabin, the Labour mayor of West Yorkshire, said giving regions like hers a proportion of income tax means "people will be able to see and feel the real benefit of their hard work and where that money is going." This perspective highlights the potential for increased local accountability and transparency in how tax revenues are utilized.

"This will enable us to deliver on our ambitious plans including vital improvements to public transport, providing better skills and employment support," she told the BBC. Her comments reflect the aspirations of many local leaders who are eager to leverage new funding sources to address pressing community needs.

Ben Houchen, the Conservative mayor for Tees Valley, said he would prefer the government to cut taxes. His preference for tax cuts over revenue-sharing highlights the differing priorities among local leaders, which may complicate discussions around the implementation of the reforms.

But he said if he was handed a slice of local income tax, he would "create a new rebate scheme to put money back into people's pockets." This suggestion reflects a pragmatic approach to the proposed changes, as local leaders seek to balance the need for revenue with the desire to alleviate the financial burden on their constituents.