Good morning and welcome to our live coverage of UK politics. From 2028 English regional mayors, for the first time, will be handed a share of income tax receipts instead of central grants and be less beholden to the Treasury by being able to borrow (mainly from private investors) to invest in big projects.
Mayors will also be able to keep a share of business rates totalling tens of millions of pounds by April 2027, and gain greater control over services such as housing and transport, under plans that form part of the government’s devolution agenda.
As my colleague Josh Halliday notes in this story, these will replace existing grants rather than being additional money, but local leaders said no longer relying on ringfenced Treasury handouts would be transformative.
Traditionally, the Treasury in Whitehall has controlled the distribution of local funding, leading to patchy distribution of funds across the country and disempowered local leaders feeling money is not going where it is needed most.
The prime minister, Andy Burnham, is expected to visit a community centre in the north of England this morning and officially announce what has been described as “the biggest transfer of power from Westminster in a generation”. The government said it would be developing different proposals for Scotland, Wales and Northern Ireland.
The plans have been criticised by the Conservatives for being vague, with more details to be released in a white paper and the budget this autumn.
Andy Burnham will announce his devolution plan on Friday. Photograph: Christopher Furlong/ReutersThe Conservative shadow chancellor, Mel Stride, said that if faster growing areas get more funding it “could mean those who lose out are precisely those areas which have seen weaker local economies over recent years.”
Some mayors are thought to be considering using their powers to roll out tax reliefs, including the Conservative mayor of Tees Valley and Reform UK’s Greater Lincolnshire mayor, Dame Andrea Jenkyns.
Louise Haigh, who is overseeing No 10 North in her new role as chancellor of the duchy of Lancaster, was asked whether the scheme will enable rich areas to get richer while poorer areas get poorer. Speaking on Times Radio, she acknowledged that London, which already attracts major investment, will be able to retain more money under the government’s tax devolution plans. Haigh said:
double quotation markThere is already a way that the business rates retention is distributed to correspond with central funding formula to correct for that.
Because you wouldn’t want to have it that places like London and Manchester and Bristol were able to retain more of theirs while other areas that weren’t growing at the same rate, were falling behind.
So there will be a formula and funding position set out in the budget that that corrects this, but really, we are the most centralised nation in the G7, and that has held back our growth and our productivity outside London and the south-east for too long.
Asked whether London will be able to retain more money than it has done previously, Haigh added:
double quotation markYes, that’s right, and it will have more powers devolved, 16-19 funding, employment support budgets and the ability to tailor their own vocational routes. This will be an important part of developing their own local regional growth strategy as well.
