Chancellor Rachel Reeves has announced plans to give England's regional mayors a share of national tax revenues, starting with income tax, as part of a radical push to rebalance the economy. Speaking at the Mais lecture in London, Reeves promised 'a genuine break with the past' that would shift spending power away from Westminster and create investment-led growth across the UK.
Reeves noted that the UK is 'the most politically centralised of advanced democracies, and one of the most geographically unequal'. Treasury officials will bring forward a detailed plan at the autumn budget, building on research by her chief economic adviser Neil Amin-Smith, who previously examined the case for devolving taxes while at the Institute for Fiscal Studies.
The chancellor also announced £2.3bn in new city investment funds for England's metro mayors, allowing them to spend on long-term projects and retain future business rates revenue. She described the approach as 'a permanent transfer of power and resources, not another exercise in local ambition frustrated by central government control'.
Reeves acknowledged the 'anxious moment' due to the Iran conflict and its potential impact on the global economy, but vowed to press ahead with Labour's growth plans. She stressed that closer trading ties with the EU, support for growth corridors between Oxford-Cambridge and Liverpool-York, and investment in AI were key strategic choices.
Aditi Sriram of the Institute for Public Policy Research welcomed the move, saying: 'Giving regions a share of tax revenues, including income tax, is the missing piece of the UK's devolution settlement.' The announcement comes amid severe funding pressures on local authorities, with several large councils having declared bankruptcy in recent years.
