Starmer plans income tax powers for England's mayors

Keir Starmer’s plan to hand England’s mayors a share of income tax receipts would mark a sharp break from the way power has been held in Whitehall, with the prime minister saying the move would give power to “every postcode”. Critics say the proposal still lacks the mechanics that would decide whether it is real fiscal devolution or just a new slogan.

The basic idea would let metro mayors keep and spend a portion of the tax generated in their areas, rather than relying mainly on grants and handouts from the centre. That would matter most in places such as Greater Manchester, where Andy Burnham has spent years arguing for more control over local growth and spending. A Commons Library briefing said Burnham had backed more devolution during his time as mayor, but had not specifically proposed new tax-raising powers before the current speculation.

The unanswered questions are the ones that determine accountability. It is still unclear who would set the rate, whether a mayor could vary it, and whether Westminster would keep the decisive power while local leaders took the blame for any rise in tax bills. That matters because a “share” of income tax could mean anything from a fixed assignment of revenue to a genuinely local power to raise and keep money. Some commentary in the debate has warned that giving mayors a “share” of national taxes sounds far more radical than it is if control stays central.

The proposal sits inside a wider Labour devolution push. The English Devolution White Paper was published on 18 December 2024, and the Local Government Association said it would have a significant impact on every council and community. The government also pushed ahead in 2025 with a press release titled “Devolution Revolution” for more mayoral powers, while a consultation on creating a Mayoral Combined Authority across Cheshire East, Cheshire West and Chester, and Warrington opened on 17 February 2025.

Support for fiscal devolution has been building for years. The Resolution Foundation’s In place of centralisation, published on 8 November 2023, called for a devolution deal for London, Greater Manchester and the West Midlands. Centre for Cities argued on 22 November 2023 that fiscal devolution in big cities could help tackle the local government funding crisis, improve growth and reduce regional inequality. Oscar Selby wrote in a Centre for Cities blog on 1 July 2026 that fiscal devolution was essential to shift power from Whitehall, strengthen local government and boost economic growth, adding that the UK remained one of the world’s most over-centralised countries.

For now, the central test is not whether mayors get a headline share of income tax, but whether they get the power to shape it, defend it and spend it in public. Without that, the reform risks leaving the old command structure intact under a new label.