Burnham unveils major devolution plan to free mayors from Treasury constraints

Prime Minister Andy Burnham is preparing to announce a fundamental reshaping of how England's regional mayors access money and power. Starting in 2028, mayors will keep a portion of the income tax collected within their boundaries. Before that, by April 2027, they'll retain business rates—revenue streams that currently flow to Westminster as part of annual grants that come with strings attached. The shift sounds technical, but local leaders describe it as liberation.

Oliver Coppard, Labour mayor of South Yorkshire, framed the change plainly: it extracts his region from what he called the Treasury's stranglehold, replacing uncertainty with the ability to plan years ahead. Burnham, now prime minister, is calling this "the biggest transfer of power from Westminster in a generation." He has instructed his cabinet to operate under a new principle: justify why any power should stay in London rather than move outward. The message is direct—Westminster has ignored regional concerns for too long, and that era is ending.

The practical consequence is more radical than the language suggests. Combined authorities—the governance bodies that represent England's directly elected mayors—will be able to borrow against their future tax revenue for thirty years. This unlocks projects that previously required Treasury sign-off at every stage. Henri Murison, chief executive of the Northern Powerhouse Partnership, pointed to a concrete example: an underground station at Manchester Piccadilly, a project that has languished partly because mayors couldn't secure long-term financing without annual approval from Whitehall. That constraint dissolves under the new framework.

The mechanics remain unsettled. Officials are still calculating what percentage of income tax and business rates mayors will actually retain. Chancellor John Healey will provide those numbers in the autumn budget. Conservative mayor Ben Houchen of Tees Valley has suggested using income tax revenue to rebate money to residents, though officials note this would be technically complex—mayors don't have access to individual tax records, and because this revenue replaces rather than supplements existing grants, it's more likely to fund long-term infrastructure than giveaways.

The equity problem is already visible in the numbers. If mayors received 2.5 percent of the basic income tax rate, London would capture £2.3 billion in 2026-27, while Hull and East Yorkshire would receive £135 million. Wealthier regions naturally generate more tax revenue. The government is aware of this arithmetic and is considering safeguards to prevent what policy experts call a "two-tier England." The strategy includes encouraging areas without mayoral authorities—parts of Dorset, Somerset, Oxfordshire, Gloucestershire, Wiltshire, and Kent, representing roughly a quarter of the country's population—to form them so they can access the same fiscal autonomy.

Greater Manchester offers a preview. Since 2024, it has retained all business rate income generated within its boundaries. In the first year, that totaled £100 million. The mayoral authority kept £25 million for its own projects while the ten constituent local authorities split the remainder. It's a working model, though modest compared to what the new income tax arrangement could unlock. The Institute for Public Policy Research North called the overall shift "the most significant change in how England is funded in a generation." Whether that transformation narrows or widens regional inequality depends on decisions still being made in offices across Whitehall.