Winners Soar, Losers Panic Under Burnham

Andy Burnham’s tax “devolution” lets mayors keep slices of your income tax and business rates, creating big winners and losers across England without cutting the size of the state.

Story Snapshot

Burnham will let English mayors keep part of the income tax and business rates raised in their areas, starting from 2027–2028.
National tax rates stay the same, but control over billions shifts from the UK Treasury to Labour-run city regions.
Richer regions like London could gain far more cash than poorer towns, raising sharp fairness concerns.
Despite talk of “local power,” Whitehall still sets the rules, and many financial details remain unclear.

Burnham’s Tax Devolution: What He Is Giving Mayors

Prime Minister Andy Burnham has promised a major change in how local government is funded in England. Under his plan, mayors will keep a share of the income tax and business rates collected in their own areas rather than relying only on grants from the Treasury. The government says this shift will begin with business rates by April 2027 and income tax from 2028, and is meant to help mayors invest in transport, housing, and jobs. Officials stress that headline income tax rates for workers will not change because of this reform.

Reports describe this as “income tax sharing,” where part of what people already pay is passed straight to combined mayoral authorities. Burnham claims this will “take power out of Westminster” and ensure more of the taxes raised in a community stay there, giving local leaders freedom to shape their own growth plans. Mayors would be able to use their new revenue streams as they see fit, including offering tax breaks to selected industries or rebates to local residents. Supporters say this will push mayors to focus on economic growth rather than waiting for handouts.

Who Wins, Who Loses, And Why It Matters

Early analysis shows this type of fiscal devolution could create huge gaps between regions. A blueprint from the centre‑right think tank Re:State models one likely approach, where mayoral authorities collect up to 2.5 pence of the 20 pence basic income tax rate paid by residents. On those figures, London could receive about £2.3 billion in 2026‑27, while Hull and East Yorkshire would get only about £135 million. Greater Manchester and the West Midlands would each gain around two‑thirds of a billion pounds, with other established mayoral areas getting between £300 million and £700 million a year.

This means prosperous, high‑income areas gain a far larger war chest than struggling regions that most need investment. Even supporters admit this raises serious fairness questions and will require some form of “equalisation” so poorer areas are not punished. The government says an equalisation system will protect places with lower tax receipts, but has not explained how that will work in detail. Until those rules are clear, leaders in weaker economies worry they could be left behind while big cities race ahead on their own tax‑fuelled growth plans.

Power Shift Or Just New Strings From Whitehall?

Burnham frames his plan as “the biggest transfer of power out of Whitehall in modern times,” with a promise of “good growth in every postcode.” England’s directly elected mayors, covering about three‑quarters of the population, would no longer depend only on ring‑fenced grants from the Treasury and could borrow against their own tax streams for large local projects. Business groups and some commentators argue that genuine fiscal devolution, if done fairly, can reward strong local leadership and cut red tape from central government.

Parliament Politics Magazine shares confirmed political coverage of the mayoral income tax devolution plan. Andy Burnham and Chancellor John Healey outlined greater local control.

Read More: https://t.co/blzWGLDbLk #theparliamentpolictics #Devolution #Westminster #UK #Mayors pic.twitter.com/PIAjcKrGq3

— Parliament Politics Magazine (@ParlMagazine) July 31, 2026

But key limits remain. Mayors are not being given true tax‑raising powers like those held by the Scottish Parliament and the Welsh Parliament; they can only share in taxes that Westminster still controls. Crucial numbers, such as the exact share of income tax and business rates each area will keep, are still being worked out by Treasury officials and will not be confirmed until Chancellor John Healey’s first Budget this autumn. Critics warn that, without clear rules and strong safeguards, this “devolution revolution” could simply swap one form of central control for another while locking in big regional imbalances.