Andy Burnham plans to hand income tax powers to Labour mayors, new reports show
Andy Burnham is set to transfer billions of pounds in income tax revenue to Labour mayors across England as part of an ambitious devolution agenda.
The proposal would grant regional leaders a portion of income tax collected within their areas, with the aim of incentivising local economic growth initiatives.
Treasury officials have drawn up an "income tax sharing" scheme to present to the incoming prime minister during his initial days at Number 10, The Telegraph reported.
If the proposals went ahead, seven senior mayoral authorities could fall under the scheme, six of which are currently Labour-controlled, covering London, the West Midlands, Liverpool, the North East, South Yorkshire and West Yorkshire.
The Greater Manchester mayoralty remains vacant following Mr Burnham's departure from the role.
Throughout his time as mayor, he consistently advocated for fiscal devolution, pushing for regional leaders to gain tax-raising capabilities including tourist levies and transport network control.
Speaking on Friday after becoming Labour leader, Mr Burnham declared his intention to "take power back from Westminster and Whitehall and give it to the place where you live."
His allies suggest he will point to OECD data demonstrating that nations with greater devolution tend to be more prosperous.
Switzerland, Germany, Canada and the United States all redistribute over 30 per cent of tax revenue regionally, compared to just five per cent in Britain.
Around three quarters of people in England live in an area with a mayor, although many of these authorities were only created in the past five years and have fewer powers than those in Manchester and London.
People living in areas without a mayor could miss out under the proposed income tax sharing scheme.
This includes large parts of the Home Counties and the South West, which would not be eligible to receive the extra funding.
Even if mayors received just one per cent of the income tax collected in their regions, billions of pounds would be transferred from central government.
The Institute for Public Policy Research has cautioned that Mr Burnham's approach could produce a "two-tier" England unless mayoral authorities are established more rapidly across the country.
In a report this week, the Labour-aligned think tank urged the government to ensure every English region secures a devolution agreement before the current Parliament concludes.
"Leaving large gaps risks creating a two-tier England in which opportunities and the benefits of devolution depend on geography rather than need," the IPPR told The Telegraph.
Economist Aditi Sriram from the institute explained that mayors who assume risk on local projects could reap rewards through increased tax receipts if successful.
Chancellor Rachel Reeves indicated on Tuesday that proposals remained under development.
