Prime Minister Andy Burnham has unveiled plans to transfer unprecedented financial powers from Westminster to local leaders.
The policy will grant English city region mayors a direct share of income tax revenue and business rates.
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Under the new measures, mayors will begin retaining a portion of local business rates starting in April 2027.
A direct share of local income tax receipts will follow in April 2028.
These reforms replace traditional ringfenced Treasury grants. Overall national income tax rates will remain unchanged.
The changes represent the largest shift of authority and funding from central government in a generation. They aim to end decades of centralized control in London.
Expanded Local Powers
Strategic authorities will gain expanded control over transport, housing, employment support, and 16-to-19 education funding.
The approval threshold for local transport infrastructure projects will rise from £200 million to £500 million before requiring Whitehall authorization.
Whitehall departments will now be required to justify why specific powers should remain in London under a new "local first" principle.
Government figures show the UK currently collects just 5.8% of national taxes at a local level, ranking lowest among G7 nations.
By comparison, local tax collection reaches 20.4% in France, 36% in Japan, and 45.7% in the United States, according to the OECD.
Burnham framed the policy as a direct fulfillment of his pledge to decentralize national decision-making.
"Under our plans, more of the taxes raised in a community will stay in that community," he said.
