The government has revealed plans to devolve more power to local regions, pledging to cover 90 per cent of England's population in the coming years. Labour shared more details alongside the Autumn Budget, with ten new devolution agreements in their final stages as part of the plan.
The agreements, part of Labour's bid to transfer power from Whitehall to local leaders, will establish new mayoral authorities in Devon, Plymouth and Torbay; Hertfordshire; Lancashire; Leicester, Leicestershire and Rutland; Stoke and Staffordshire; Surrey; Thames Valley; and Wessex. Kent and Medway, and Cornwall will set up slightly different devolution models under the proposals. Once established, there will be 22 regional authorities operating across England, up from the current 12.
Delivering the Budget, Healey said: "New powers to the people who know their areas best, not sentimentality but supply-side economics. The biggest wave of devolution in a generation, driving good growth in every postcode delivered to the British people by this Labour government."
Central to the changes is a plan to give most mayoralties a share of income tax generated in their regions. From April 2028, authorities with directly elected mayors will receive a uniform rate of local basic-rate income tax. Mayors will not set tax rates or bands, but will retain the revenue to fund local infrastructure, transport and housing. Each mayoral authority will initially receive a bespoke funding allocation; in later years, each authority will be 'rewarded for growing' their local economies with an unconfirmed percentage of income tax revenue. The Treasury has said it intends to introduce an equalisation adjustment to prevent regional inequality that may arise from the plans.
Every mayoral authority will also be given the power to implement an 'Overnight Visitor Levy', commonly called a tourist tax, by March 2028. Commercial property taxes will undergo structural reform. Starting in 2027, mayoral authorities will receive a direct 20 per cent share of retained business rates alongside a 20 per cent share of local business rate growth. Local councils will keep at least 70 per cent of their business rates revenues, and by 2030 the government plans to allow regional and local tiers to retain 100 per cent, ending the historic 50 per cent split with the Treasury.
Healey also revealed £285 million in funding for mayors and local leaders to invest in local projects, backing schemes including the Black Country Metro extension in the West Midlands and the reopening of Doncaster Airport in South Yorkshire. London mayor Sadiq Khan said the capital's allocation will go towards delivering the West London Orbital.
The UK currently shares around 5 per cent of its tax receipts with local regions directly, making it an international outlier; in Germany, Spain and the United States, around 30 to 35 per cent of tax revenue remains in local regions. Unlike in those countries, regional administrations in the UK will still not have the power to raise or lower local tax rates, with those decisions remaining with central government.
Analysis
Why This Matters
- The expansion would take England from 12 to 22 regional authorities and extend devolution to around 90 per cent of the population.
- Mayors would for the first time receive a share of income tax revenue, giving them a direct financial stake in local economic growth.
- The changes restructure how local government is funded, shifting business rates away from a 50-50 split with the Treasury.
Background
Devolution is the transfer of powers from central government to elected regional and local bodies. Since the late 1990s, the UK has gradually created devolved administrations and, more recently, combined authorities with directly elected mayors across parts of England. The Autumn Budget plans extend that model to most of the country.
Key Perspectives
John Healey: The chancellor said the plans give "new powers to the people who know their areas best" and represent "the biggest wave of devolution in a generation", driving "good growth in every postcode".
Sadiq Khan: London's mayor said the capital's allocation would go towards delivering the West London Orbital.
What to Watch
- Confirmation of the ten devolution agreements, which the government says are in their final stages.
- The unconfirmed percentage of income tax revenue growth that growing authorities will be assigned.
- The introduction of the overnight visitor levy by March 2028 and the 2027 changes to business rates retention, followed by full 100 per cent retention by 2030.
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12 claims in this story checked against 1 source: 11 supported.
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- SupportedTen new devolution agreements are in their final stages as the government seeks to transfer more power to local regions.The Independent UK: “Plans to devolve more power to local regions have been revealed by the government, with a pledge to cover 90 per cent of England’s population in the coming years. Alongside its Autumn Budget, Labour has shared more details on how it will transfer power from Whitehall to local leaders in a bid to deliver “good growth in every postcode”. Ten new devolution agreements are in their final stages as part of the plan.”
- SupportedHealey described the plans as “the biggest wave of devolution in a generation”.The Independent UK: “Delivering the Budget, chancellor John Healey said this would mean: “New powers to the people who know their areas best, not sentimentality but supply-side economics. The biggest wave of devolution in a generation, driving good growth in every postcode delivered to the British people by this Labour government.””
- SupportedThe government pledged to cover 90 per cent of England’s population in the coming years.The Independent UK: “Plans to devolve more power to local regions have been revealed by the government, with a pledge to cover 90 per cent of England’s population in the coming years.”
- SupportedOnce the plans are established, England will have 22 regional authorities, up from 12.The Independent UK: “Once established, there will be 22 regional authorities operating across England, up from the current 12.”
- SupportedFrom April 2028, authorities with directly elected mayors will receive a uniform rate of local basic-rate income tax.The Independent UK: “From April 2028, authorities with directly elected mayors will receive a uniform rate of local basic-rate income tax.”
- SupportedMayors will not set tax rates or bands, but will retain the income-tax revenue for local infrastructure, transport and housing.The Independent UK: “Mayors will not set tax rates or bands, but will retain the revenue to fund local infrastructure, transport, and housing.”
- SupportedEach mayoral authority will initially receive a bespoke allocation, with an unconfirmed percentage of income-tax revenue assigned in later years as a reward for growing local economies.The Independent UK: “Each mayoral authority will initially receive a bespoke funding allocation. In the years after that, each authority will be “rewarded for growing” their local economies by being assigned an unconfirmed percentage of revenue from income tax.”
- SupportedEvery mayoral authority will be given the power to implement an Overnight Visitor Levy by March 2028.The Independent UK: “Every mayoral authority will also be given the power to implement a new ‘Overnight Visitor Levy’ – commonly called a tourist tax – by March 2028.”
- SupportedStarting in 2027, mayoral authorities will receive a 20 per cent share of retained business rates and a 20 per cent share of local business-rate growth.The Independent UK: “Starting in 2027, mayoral authorities will receive a direct 20 per cent share of retained business rates, alongside a 20 per cent share of local business rate growth.”
- SupportedBy 2030, the government plans to allow regional and local tiers to retain all business rates, ending the historic 50 per cent split with the Treasury.The Independent UK: “By 2030, the government plans to allow regional and local tiers to retain 100 per cent of business rates, ending the historic 50 per cent split with the Treasury.”
- Partly supportedHealey revealed £285 million in funding for mayors and local leaders to invest in local projects.The Independent UK: “At the Budget, chancellor John Healey also revealed plans to give £285 million in funding to mayors and local leaders to invest in local projects in their areas.”
- SupportedThe £285 million will back projects including the Black Country Metro extension and the reopening of Doncaster Airport.The Independent UK: “He said that this will back projects like the Black Country Metro extension in the West Midlands and reopening of Doncaster Airport in South Yorkshire.”