Last Updated on 5 minutes ago by TodayWhy Editorial
On Monday, Andy Burnham moves into 10 Downing Street as Britain’s seventh prime minister in a decade. On the same weekend, a report landed calling on him to do something no UK government has seriously attempted: let regional mayors keep a slice of the income tax raised in their own patch.
Burnham was confirmed as Labour leader on Friday after securing nominations from 379 of the party’s 403 MPs, following Keir Starmer’s ouster in a Labour rebellion. He takes office with little detail public about his policy plans — except for one consistent thread that runs through years of speeches as Greater Manchester mayor: Britain’s regions need the power to raise their own money, not just spend what Westminster allows them.
What’s actually being proposed
The report, from the think tank Re:State, recommends assigning 2.5 pence of the 20 pence basic rate of income tax directly to established mayoral authorities, rather than letting all of it flow to the Treasury as it does now. For West Yorkshire, that would mean roughly £553 million a year for mayor Tracy Brabin. South Yorkshire mayor Oliver Coppard would get an estimated £335 million.
Crucially, mayors would not gain the power to raise or lower the tax rate itself — the basic rate would stay at 20p either way. What changes is who the money belongs to once it’s collected: 2.5p would go straight to the local mayoral authority, and the remaining 17.5p would still go to the Treasury as before.
The same report wants stamp duty land tax, vehicle excise duty, and air passenger duty collected and retained locally too, and it proposes letting mayoral authorities keep the full increase in business rates in their areas, split down the middle with local councils. Re:State’s chair also delivered these recommendations to Burnham directly, according to the report.
Why Burnham wants this
Burnham’s argument is not new — it’s the same one he has made for years as mayor, and it’s a core plank of what’s come to be called “Manchesterism,” his signature political brand. Devolution, in his telling, has handed regional mayors political visibility and some investment, but not real fiscal autonomy: mayors can champion projects, but they still have to ask Westminster for the money to pay for them.
He points to his own record as evidence the model works when given room to run: Greater Manchester’s economy has grown at roughly twice the UK average since 2015, passing £100 billion. His broader economic instinct, as reported by the Telegraph, is that the UK “over-taxes labour” — income from work — “and under-taxes assets,” a view that has shaped a wider set of tax ideas beyond devolution, including a income tax cut on a portion of the basic-rate band.
Burnham has also talked about giving mayors the power to issue municipal bonds and set up new public corporations to fund infrastructure — financing tools that only work if lenders can see a guaranteed, dedicated stream of local tax revenue behind them. Fiscal devolution isn’t just a symbolic transfer of power in that framing; it’s the collateral that makes bigger regional projects financeable in the first place.
This isn’t starting from zero
Burnham isn’t inventing this policy out of nothing. Chancellor Rachel Reeves committed the Treasury in March 2026 to a “fiscal devolution roadmap,” expected in full at the autumn Budget, with an interim report due this summer. Leeds has already served as a live test case for combined authorities keeping their business rates.
What’s shifted is the ambition. Burnham is expected to go well beyond Reeves’ existing commitments — reportedly looking at mayors gaining real income tax powers, not just a share of collection, and pushing the devolution rollout across more combined authorities than currently planned. Lord O’Neill, the former minister and ex-Goldman Sachs chief economist advising Burnham, has said devolution “on a much more ambitious scale” is the one thing that’s certain if Burnham becomes prime minister — and that it means real money moving with the power, not devolution in name only.
The political risk: a “postcode lottery”
Not everyone in Burnham’s own party is comfortable with this. Handing mayors a cut of income tax collected in their region only helps regions that already raise a lot of it — wealthier areas would keep more, poorer ones less, unless the system is paired with some form of equalisation.
Some commentary has already labelled the plan a risk of turning tax into “a postcode lottery,” where the public services you get increasingly depend on which mayoral authority you live under rather than a single national standard. A significant group of backbench Labour MPs, particularly those representing London and the Home Counties, worry that a policy agenda built around “rebalancing” toward the North could read as indifference to the affluent suburban voters who helped build Labour’s parliamentary majority in 2024.
There’s also a fiscal credibility question hanging over it. As recently as this summer, Starmer himself warned that Burnham-style economic thinking risked “harm” to working people comparable to Liz Truss’s 2022 mini-budget, criticising what he called an abandonment of “iron-clad” fiscal rules. Burnham’s team rejects that comparison directly — this proposal reassigns an existing revenue stream to a different level of government rather than cutting taxes without a funding plan behind them, the distinction that sank Truss’s budget in the bond markets.
What happens next
Burnham is due to be appointed prime minister on Monday, succeeding Starmer. The interim fiscal devolution report Reeves promised is expected this summer, with the full roadmap due alongside the autumn Budget — the point at which it should become clear how much of the Re:State-style proposal survives contact with the Treasury, and how far Burnham is willing to go beyond what Reeves had already committed to before he took office.
Frequently asked questions
What is Andy Burnham’s income tax devolution plan?
A think tank report recommends assigning 2.5 pence of the 20 pence basic rate of income tax directly to established mayoral authorities like West Yorkshire and South Yorkshire, rather than sending all of it to the Treasury. The basic rate itself would not change — only who receives the revenue collected.
When does Andy Burnham become prime minister?
Burnham is due to be appointed prime minister on Monday, succeeding Keir Starmer, after being confirmed as Labour Party leader on Friday, July 17, 2026.
Would mayors be able to raise or lower income tax rates themselves?
Not under the current Re:State proposal. Mayors would receive a fixed share of revenue from the existing 20p basic rate; they would not gain the power to set the rate.
Why are some Labour MPs worried about this plan?
Critics warn it could create a “postcode lottery,” where wealthier regions that raise more income tax keep more revenue, while poorer regions get less — unless paired with a way to equalise funding across areas. Some backbench MPs also fear the focus on regional rebalancing could alienate voters in London and the South East.
How does this relate to Rachel Reeves’ fiscal devolution plans?
Reeves, as Chancellor, already committed in March 2026 to publishing a fiscal devolution roadmap at the autumn Budget. Burnham is expected to go further than her existing commitments, particularly on giving mayors a genuine share of income tax revenue rather than just collection responsibilities.