Burnham to free mayors from 'Treasury death grip' with new devolved powers

England's regional mayors will soon be able to break free from the "death grip of the Treasury" under transformational plans to shift power out of Whitehall. Prime Minister Andy Burnham will announce the measures on Friday, calling them "the biggest transfer of power from Westminster in a generation."

For the first time, mayors will retain a share of income tax generated in their area from 2028, as well as business rates totalling tens of millions of pounds by April 2027. These revenues will replace existing grants, not provide extra funding, but local leaders say no longer relying on ringfenced Treasury handouts will "transform" their finances.

Oliver Coppard, Labour mayor of South Yorkshire, said: "It's really important because it gets us out of the death grip of the Treasury and gives us that long-term certainty around income."

Under a new "local first" principle, Burnham will instruct ministers to justify why powers should remain in Whitehall rather than be devolved. Beyond greater control over technical education, some close to the prime minister have called for mayors to oversee schools, GPs, and childcare providers through health and education commissioners, similar to police and crime commissioners.

Experts highlighted a key consequence: combined authorities will be able to take out 30-year loans against projected income to fund major projects that previously required Treasury approval. Henri Murison of the Northern Powerhouse Partnership said the change "completely transforms" what combined authorities can achieve, potentially unlocking large transport projects like an underground station at Manchester Piccadilly.

The exact proportion of income tax or business rates to be retained is still under discussion. Chancellor John Healey is expected to provide details in the autumn budget. Conservative mayor of Tees Valley, Ben Houchen, suggested using income tax for tax rebates, but this is technically difficult as mayors do not know individual tax payments. Since the revenue replaces grants, it is more likely to fund long-term projects.

Ministers are considering how to avoid leaving behind less economically productive areas like Humberside and north-east England. According to a Re:State thinktank report, if mayors received 2.5% of the 20p basic income tax rate, London would gain £2.3bn in 2026-27 while Hull and East Yorkshire would get £135m.

IPPR North described the move as "the most significant shift in how England is funded in a generation." However, policy experts previously warned that rushing fiscal devolution could create a "two-tier England," leaving behind roughly a quarter of the population without a mayoral authority. The government plans to encourage areas such as Dorset, Somerset, Oxfordshire, Gloucestershire, Wiltshire, and parts of Kent to form mayoral authorities to benefit from greater funding autonomy.

Since 2024, only Greater Manchester and West Midlands have retained all business rate income. In Greater Manchester, this amounted to £100m in 2024-25, with three-quarters retained by local authorities and £25m spent by the mayoral authority on projects.