Prime Minister Andy Burnham has announced that all mayors of city regions in England will receive a share of income tax revenue for the first time, along with new rights to keep a portion of business rates — the tax on commercial properties — collected in their areas. The BBC reported the package on 25 July, following a Sunday Times preview the previous day (BBC; The Sunday Times).

The government has not yet decided the exact proportion of taxes to be devolved. More detail will follow when Chancellor John Healey delivers his first Budget in the autumn (BBC).

Mayors of English strategic authorities — the combined authorities that group councils around a city region under an elected mayor — will also gain greater control over housing, transport and skills. Burnham said the move would "make good" on his pledge to "bring power home" to "every postcode in the country" (BBC).

The announcement builds on groundwork laid before Burnham entered Downing Street. The July 2024 King's Speech included an English Devolution Bill designed to give mayors and local leaders more say over economic decisions, including transport and jobs (Reuters. The previous government had already been exploring whether a share of national tax revenue could be distributed to metro mayors (BBC). In March 2026, Chancellor Rachel Reeves said the UK would devolve more fiscal powers to regions, adding that handing regional mayors control of some tax revenues could amount to a major shift in Britain's financial system (Reuters.

Burnham's personal commitment to fiscal devolution long predates his move to Number 10. During his time as Greater Manchester mayor he pushed for greater control over tax revenue rather than relying on central government grants (BBC). A House of Commons Library briefing published on 2 July noted that Burnham had previously said "I think exploring [devolving] aspects of income tax is possible" (House of Commons Library. In a June speech on devolution, Burnham said he would "oversee the biggest rebalancing of power our country has ever seen" if he became prime minister (BBC).

That speech framed what Reuters has described as Burnham's "Manchesterism" vision for the UK, under which he has vowed to stay within existing fiscal rules, including balancing day-to-day spending with revenues by 2029/30 (Reuters.

The scale of the shift is best understood against the UK's unusually centralised tax base. The share of national taxes collected at local level in the UK stands at 5.8%, the lowest in the G7, according to OECD data cited by the BBC (BBC). Reuters has put the figure at roughly 6% for tax raised below national government level, noting that Britain has expanded devolution in stages over three decades (Reuters.

Devolution of tax powers to English mayors is a separate matter from the fiscal arrangements that apply in Scotland, Wales and Northern Ireland. Income tax is already partially devolved to the Scottish Parliament and, to a lesser extent, to the Senedd — the Welsh parliament. Stormont, Northern Ireland's assembly, operates under a different framework again. The Burnham package applies to England only.

The direction of travel has had local-government backing for some time. A Staffordshire County Council economic bulletin from November 2025 noted that English regional mayors were to be given tax powers (Staffordshire County Council. A December 2023 London Assembly report on devolution recommended handing the capital control over stamp duty, air passenger duty, vehicle excise duty, a share of income tax, VAT revenue and a tourism tax (London Assembly.

The broader context here is a structural one. English metro mayors currently depend on central government grants negotiated in spending reviews, with limited ability to raise their own revenue. Think of it as an allowance from a parent: reliable, but you cannot increase it yourself. Shifting mayors onto a tax-share model would alter the fiscal relationship between Whitehall and combined authorities in a way that is constitutionally novel for England, even if the principle is well established in the devolved nations. The unanswered question is the size of the share. If the proportion is modest, the change may be more symbolic than structural; if it is significant, combined authorities would gain genuine spending flexibility but also exposure to income tax volatility — the risk that tax receipts rise and fall with the economy — creating both opportunity and risk that does not arise under grant funding.

The fiscal-rule commitment is worth noting alongside this. Burnham's pledge to balance day-to-day spending with revenues by 2029/30 constrains how far the overall envelope can grow. Devolving a share of income tax does not, in itself, increase total public revenue; it reallocates it. If mayors spend from their own tax base, the corresponding grant from Whitehall would presumably fall. The net effect on combined-authority budgets will depend on the terms set in the autumn Budget, and on whether the Treasury adjusts the grant reduction to match the devolved revenue exactly or builds in a transitional buffer.

For those working in and around combined authorities, the practical implications are immediate. Medium-term financial planning, borrowing headroom and programme design may all need to be revisited once the share is confirmed. Transport infrastructure business cases, in particular, have traditionally been built around fixed grant profiles. A revenue stream tied to income tax performance would introduce cyclical risk into long-term capital programmes that have, until now, been insulated from it.