PM Allocates Income Tax Share to Mayors for Improving Lives Across Every Postcode

Empowering Local Communities Through Devolution

The Prime Minister is set to unveil a historic transfer of authority from Westminster, marking the most significant shift in power for a generation. This initiative aims to grant communities enhanced control over crucial areas such as employment, transport, housing, and public services, allowing for tailored solutions to local needs.

In a landmark move, English mayors will now receive a portion of income tax revenues for the first time, providing them with a direct financial stake in their local economies. This change ensures that as jobs are created and economies flourish, local leaders will retain a more substantial share of the benefits, empowering them to invest in initiatives that matter most to their constituents.

The government’s vision is clear: every community should reap the rewards of stronger local governance. Even regions lacking an elected mayor will be supported in establishing strategic authorities, enabling them to exercise greater control over local priorities. This initiative is positioned as a critical step towards a new era of devolution, shifting decision-making power away from Westminster and closer to the people it affects.

Commitment to Local Investment and Growth

In his address, the Prime Minister expressed a commitment to decentralising power, stating, “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.” He emphasised that local leaders will gain the necessary resources to enhance public transport, develop housing, and create jobs, thereby addressing long-standing issues of neglect felt by many communities.

The proposed reforms aim to dismantle the entrenched Whitehall-centric culture that has historically stifled local progress. By transferring authority and funding closer to the communities, the government aspires to provide every region with the tools needed to foster robust local economies, enhance public services, and shape their own futures.

Chancellor of the Exchequer John Healey echoed this sentiment, highlighting the importance of local knowledge in guiding decision-making. “The people who best understand what skills employers want and what transport an area needs are those who live there,” he remarked, underscoring the rationale behind this significant policy shift.

A Gradual Shift Towards Local Funding Resilience

Beginning in spring, mayors will start to retain a larger share of locally generated revenues, initially focusing on business rates. Additional details regarding income tax retention will be outlined in an upcoming roadmap during the Budget announcement, reflecting the government’s commitment to fiscal responsibility.

The overarching aim is to gradually reduce local areas’ reliance on Whitehall grants, transitioning towards funding mechanisms that reward growth at the community level. Plans are also in place to extend the benefits of this devolution across the entire UK, collaborating with devolved governments and local leaders to empower communities further.

Angela Rayner, Secretary of State for Housing, Communities and Local Government, articulated the vision for a reimagined governance structure, stating, “This is the first step in our plan to rewire this country and build a better future.” She emphasised the importance of equipping local leaders with the necessary tools to instigate meaningful change, thereby ending the reliance on a “begging-bowl culture” that has prevailed for too long.

Enhancing Local Authority Over Essential Services

The reforms will enable local authorities to exercise greater control over essential services that impact daily life, including housing, transport, skills development, and employment support. Key powers being devolved include:

• Increased local control over rail and bus services, facilitating integrated ticketing and improved service reliability.
• Enhanced planning and regeneration powers to expedite housing development and unlock stalled projects.
• Greater authority over substantial local transport initiatives, including trams and metros, by streamlining processes with Whitehall.
• Control over funding for education and employment support, ensuring young people are equipped with relevant skills for local job markets.
• Support for local industries and innovation, fostering investment and job creation.

As power is decentralised, the accompanying resources from Whitehall will follow, providing devolved leaders with the backing needed to implement changes closer to home. This shift represents a pivotal movement towards a more locally-focused governance model.

Driving Growth and Opportunity Across the UK

The United Kingdom has historically lagged behind other G7 nations in long-term investment. By granting local leaders increased control over funding and investment decisions, these reforms aim to unlock opportunities that have often been sidelined by a centralised approach. The Prime Minister is optimistic that towns, cities, and communities will thrive when provided with the necessary tools to drive their own economic growth.

Success stories from regions granted greater autonomy illustrate the potential of this approach. In West Yorkshire, a substantial Housing Investment Fund is facilitating land development and promoting the construction of thousands of new homes. Meanwhile, the Liverpool City Region is enhancing transport infrastructure through the implementation of local ticketing systems and plans to reintegrate rail services into public ownership by 2028. In the North East, significant strides have been made in equipping residents with qualifications that lead to new job opportunities.

The aim is to ensure that growth is not concentrated in a few areas but rather distributed across the entire nation, enhancing living standards and enabling more individuals to benefit from economic prosperity. As the shift in power unfolds, the Civil Service will also adapt, becoming more strategic and focused on national responsibilities, thereby reinforcing the goal of a more effective and responsive governance framework.