Prime Minister Andy Burnham announced a devolution plan on July 30 that grants England’s regional mayors a share of income-tax and business-rates revenue.

The move seeks to decentralize political and economic authority by shifting power from Whitehall to local regions. This structural change aims to provide regional leaders with more direct control over their budgets to address chronic funding shortfalls for local councils.

Burnham said the plan is designed to impact "every postcode" [1]. The initiative comes as local governments face significant financial pressure, with a projected £7 billion funding gap for local councils over the next three years [2]. By allowing mayors to retain a portion of the taxes generated within their jurisdictions, the government intends to create a more sustainable financial model for regional development.

The plan also includes specific targets for business-rates revenue. Regional mayors will be able to keep a share of business rates totaling tens of millions of pounds by April 2027 [3]. This mechanism is intended to incentivize local economic growth by allowing regions to reinvest a portion of the wealth generated by local businesses directly back into their own infrastructure, and services.

Supporters of the move argue that local leaders are better positioned than central government officials to identify the specific needs of their communities. By decoupling a portion of regional funding from central government discretion, the plan aims to reduce the reliance on grants from London and empower mayors to implement localized economic strategies.

Burnham said the shift represents a devolution revolution aimed at providing more powers to local areas. The implementation of these tax-sharing agreements will mark a significant departure from the traditional centralized fiscal model used in England.

“"every postcode"”

This policy represents a fundamental shift in the UK's fiscal architecture, moving away from a centralized 'top-down' funding model toward regional autonomy. By granting mayors a direct stake in income and business tax revenue, the government is attempting to bridge a massive funding gap while testing whether local financial accountability leads to more efficient public spending and faster economic growth outside of London.