Communities across England, including the Liverpool City Region, could keep more of the tax they generate under Government plans giving mayors a share of income tax revenues for the first time. The proposals are being described as the biggest transfer of power from Westminster in a generation. Liverpool City Region Mayor Steve Rotheram says the changes could help fund transport, housing, skills and infrastructure, while ministers insist support will continue for areas collecting less tax.
The UK government has announced plans to implement major reforms aimed at increasing the financial autonomy of local leaders. Under these proposed changes, English mayors would retain a larger portion of income tax and business rates generated within their regions. This initiative is designed to provide local authorities with greater control over spending decisions, allowing them to better address the specific needs of their communities.
Government officials have described the move as a significant transfer of power from Westminster to local regions, marking the largest shift in a generation. Despite this increase in local financial authority, the national income tax rates for taxpayers across England will remain unchanged.
To ensure regional equity, the proposal includes an equalization system. This mechanism ensures that areas collecting less tax revenue continue to receive the necessary financial support, preventing wealthier regions from gaining an unfair economic advantage under the new funding model.
The plans are expected to be detailed in a white paper, which will be released alongside the Chancellor’s upcoming autumn budget. Prime Minister Rishi Sunak emphasized the importance of this shift, stating, “Every local leader should have the resources needed to improve services and create opportunities.”
The proposal has received support from local government leaders, including Liverpool City Region Mayor Steve Rotheram. Rotheram noted that allowing more locally generated revenue to remain within the region would facilitate crucial investments in public transport, housing, skills, and infrastructure. By building on existing devolution powers, the initiative aims to support sustainable long-term economic growth across the country.
