UK Budget Shifts Tax Revenue to Mayors in Fiscal Devolution Push

Britain's Treasury has unveiled a fiscal devolution roadmap that would, for the first time, route a share of national income tax receipts to mayoral strategic authorities beginning in 2028, according to details emerging from Wednesday's budget. Starting next year, those authorities will also receive 20% of business rates revenue collected in their regions, a figure the government says could climb to 100% by the end of the decade.

A new overnight visitors levy is also set to create an additional local income stream, broadening the revenue base available to mayors beyond traditional central-government grants. Treasury minister Torsten Bell framed the changes as a direct reversal of policies he attributed to Margaret Thatcher, who he said in the 1980s "hugely hollowed out local government" and sought to "emasculate" major cities.

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The announcement has reignited debate over whether Labour's reform agenda matches the ambitious language associated with Greater Manchester Mayor Andy Burnham, whose calls for structural change have become a benchmark for commentators assessing the gap between political rhetoric and legislative action. Bell pushed back on that framing, describing the devolution plan as "a step change and a really big deal."

Analysts note that replacing central grants with locally generated tax streams does not automatically narrow regional economic inequalities, since wealthier areas tend to generate more tax revenue. The political implications, however, are considered far-reaching, potentially reshuffling power dynamics between Westminster and England's largest city-regions for a generation.

The full impact of the changes will depend on implementation details still to be worked out before the 2028 income-tax-sharing start date. Continue reading at Business | The Guardian.