Prime Minister Andy Burnham announced plans to grant all city region mayors in England a portion of income tax revenue, marking a significant shift in devolving power from Westminster. This initiative aims to transfer greater control over funding and services, including housing, transport, and skills, to local leaders.

This move is part of Burnham's broader agenda to empower local communities and ensure that taxes raised within a region are reinvested there. For the first time, mayors will have a direct stake in their area's economic performance through a share of income tax and revenue from business rates.

The government has not yet specified the exact percentage of income tax that mayors will receive. Further details are expected in Chancellor John Healey's upcoming autumn budget. The proposals have drawn criticism from the Conservative party, who argue the plans lack clarity and could disadvantage economically weaker regions.

First Secretary of State Louise Haigh clarified that the benefits of this decentralization would extend beyond areas with elected mayors. She stated that "strategic authorities" – bodies formed by local councils to manage regional issues collectively – would also be able to access these new powers and resources, even without a directly elected mayor.

These strategic authorities, which bring together local councils to oversee services like transport and economic development, will be established across England. This ensures that all regions, whether they have a mayor or not, can potentially retain a proportion of their income tax and business rates, and even introduce an overnight visitor levy to generate local revenue.

The UK's system of local taxation is highly centralized compared to international standards. According to the OECD, the share of national taxes collected at the local level in the UK is 5.8%, significantly lower than countries like France (20.4%), Japan (36%), and the US (45.7%).

Currently, mayors of strategic authorities in England primarily rely on central government grants for their funding. Burnham, during his tenure as Greater Manchester mayor, had consistently advocated for more direct control over tax revenues, moving away from grant dependency.

The UK government was reportedly already examining the feasibility of distributing national tax revenues to metro mayors prior to Burnham assuming the role of prime minister. This latest announcement formalizes and expands upon those considerations.