Mayors to get income tax and business rates cash in devolved regions

Government has today announced a raft of new plans designed to give even more decision-making and spending powers to devolved regions. 

Prime Minister Andy Burnham has confirmed that his government will give all mayors of city regions in England a share of income tax revenue.

Mr Burnham will also allow mayors of English strategic authorities to keep some cash from business rates collected in their areas.

Greater controls over services such as housing, transport, skills also form part of plans announced today. 

Full details, including the amounts of money involved will be announced when Chancellor John Healey delivers the autumn budget.

But First Secretary of State Louise Haigh this morning told BBC Radio 4's Today programme that areas would not need mayors to benefit from investment.

That means that Leicester, Leicestershire and Rutland would be eligible for the cash once a strategic authority is operational in the region.

"We won't be imposing mayors to areas that don't want it but we will be creating strategic authorities in every area of England and they will be able to hold these powers and resources as well," she said.

"They don't need to have mayors in order to control them or in order to retain a share of their income tax and business rates."

Roughly half of the regions across England currently do not have devolved status -including Leicester, Leicestershire & Rutland.

Currently mayors and areas with strategic authorities receive the majority of their funding from central government grants.

The First Secretary of State added: "Vast swathes of England don't have strategic authorities or mayors and today's blueprint will set out that roadmap for every area of England to be covered by strategic authorities that will ultimately be able to retain a proportion of their income tax, business rates and set an overnight visitor levy should they wish, so they can generate revenue and really reinvest it in their local area."

The announcement has attracted criticism from opposition parties who say the plans ‘lack detail’. 

The plans and an accompanying policy paper are being led by No10 North.

It is understood that ministers have been told that a "local first" principle needs to be adopted across the country in an attempt to reduce Whitehall control over local budgets. 

What this means for Leicester and Leicestershire

The recently announced Local Government Reorganisation (LGR) decision means that, from April 2028, two new unitary councils will replace the current ten councils across Leicester, Leicestershire and Rutland. 

This reorganisation is part of the national Devolution agenda and is intended to pave the way for a future mayoral strategic authority - giving the region stronger, more direct powers over funding, transport, skills and economic growth.

Devolution Leicestershire is calling for the acceleration of Devolution in Leicester, Leicestershire and Rutland. Read more about the coalition's aims here.