English Mayors Set to Receive Share of Income Tax Under Devolution Plans
The proposed reforms would give regional leaders greater financial control while reducing their reliance on funding from central government.
By BBC News
Regional mayors in England could receive a share of locally raised income tax under government proposals aimed at giving local leaders greater control over investment and public spending.
The plans form part of a wider package of devolution reforms designed to hand mayoral combined authorities more responsibility for transport, housing, economic development and long-term growth. Ministers say the changes would allow more money raised in local communities to be invested back into those areas rather than being distributed through central government.
Under the proposals, mayoral authorities would begin retaining a share of locally collected business rates from April 2027. A share of income tax revenue is expected to follow from April 2028, although the Government has not yet confirmed what proportion would be retained.
The new funding model is intended to replace part of the existing grant system rather than provide additional government funding. Supporters believe a more predictable source of income would give regional leaders greater certainty when planning investment and delivering long-term economic growth.
Combined authorities would also gain greater flexibility over how funding is used across areas including housing, transport, skills and regeneration. They would be able to borrow against future revenue over longer periods to help finance major infrastructure projects, subject to the new funding arrangements.
The Government has said redistribution between wealthier and less affluent areas would remain part of the system, ensuring authorities with lower tax revenues continue to receive additional support.
If approved, the reforms would apply to England's directly elected mayoral combined authorities, which together cover around three-quarters of the country's population. Further details, including the proportion of income tax that authorities would retain and how the new arrangements would work alongside existing funding, are expected to be published later this year.