Mayors to keep more tax money under Burnham's plan to give power back to regions
English mayors will be allowed to keep a share of the taxes collected in their area, Andy Burnham has said.
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The Prime Minister said by letting mayors keep a slice of income tax and business rates, he will “make good” on his pledge to “take power out of Westminster and carry it into every postcode in the country”.
Details of the reforms are expected to be announced in a white paper, published when Chancellor John Healey presents his first budget in the autumn.
But Mr Burnham, who was mayor of Greater Manchester for about nine years, said the policy would be designed so that “every local leader will have the power and resources to improve public transport, build homes and create jobs”.
The rate of income tax which billpayers face will not change as a direct result of the reforms, according to the Government.
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Ministers will retain an equalisation system, so areas where less tax is collected continue to receive financial support.
Mr 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.
“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.
“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.
“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.”
Several parts of England have a mayor, including Greater Manchester, the Liverpool City Region, Cambridgeshire and Peterborough, and South Yorkshire including Rotherham and Sheffield.
They have powers over issues such as transport, skills and infrastructure planning.
Mr Burnham hosted several of the local leaders at his inaugural No 10 North meeting in Manchester last Friday, when he told them: “What I’m trying to do here is make the UK one team where we’re all pulling behind you because your place is where growth happens or it doesn’t happen.”
Voters in parts of the country will elect mayors for the first time over the coming years, including in Greater Essex and Hampshire and the Solent.
Mr Healey said: “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.
“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.
“This is the way we start to build new hope and advance the working people of this country.”
Housing, Communities and Local Government Secretary Angela Rayner said the announcement would put “an end to the begging-bowl culture of the past”, instead giving locally elected leaders “the tools they need to drive the change that communities have been crying out for”.
Some mayors are thought to be considering using their powers to roll out tax reliefs, including Conservative Tees Valley mayor Lord Houchen of High Leven and Reform UK’s Greater Lincolnshire mayor Dame Andrea Jenkyns, according to reports in The Times newspaper.
The Conservatives signalled they doubted the tax reforms would help regions across England to flourish.
Sir James Cleverly, the shadow local government secretary, said: “Andy Burnham is right to want to encourage growth in all communities.
“But his top-down Manchesterism will lead to higher taxes, with no guarantee of better outcomes for local people.
“Devolution cannot be imposed from above – it can only work if it’s done in co-operation with local people.
“But Labour’s regionalist approach takes power away from local communities, sidelining local councils and ignoring local identities.
“What works in Manchester won’t be the same for Essex, Cornwall or Cumbria.”
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”.
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.”
Think tank IPPR welcomed Mr Burnham’s announcement, describing it as “extraordinarily bold” and “the most significant shift in how England is funded in a generation”.
Mirte Boot, head of IPPR North, said: “Local leaders know what their places need to drive ‘growth in every postcode’ – but until now they didn’t have the powers to make it happen.
“But fiscal devolution must pass two tests: mayors need the freedom to borrow against future revenues to fund long-term infrastructure, as London did with the Elizabeth line, and some of the proceeds must also be shared with slower-growing places.”