Lancashire to lose out in Burnham mayor income tax payback

Mr Burnham is unveiling the largest change in local authority funding in over a decade, with some parts of the country being allowed to retain a portion of income tax paid by their residents – the largest revenue-raising mechanism at the government’s disposal.

But the plan will not benefit Lancashire one jot, as the change is only in effect for areas with an elected mayor.

Attempts to create a Lancashire mayor have dragged on for years with endless dithering and delays from council leaders against the idea.

Late last year, business leaders said the county has already missed out on billions of pounds in investment and thousands of jobs by not having a mayor, and this new change is the latest way the county will be held back by its lack of mayoralty.

In 2023, councils agreed to establish the Lancashire Combined County Authority, but without an elected Mayor as in similar parts of the country.

However, this compromise means that today’s announcement could result in a ‘significant loss’ for Lancashire, Blackburn with Darwen Council's boss fears.

Blackburn with Darwen Council's leader Cllr Phil Riley shared why the announcement was a 'significant loss' (Image: BwD council)

That is because only areas with an elected Mayor will be able to take advantage of this major devolution settlement, allowing them to spend their portion of income tax on vital public services like transport and housing.

Although the new administration did not state exactly how much this share would be, it could be a significant fundraising mechanism in Lancashire, which contributes roughly £4 billion to the Exchequer through income tax each year.

The leader of Blackburn with Darwen Council, Cllr Phil Riley, said of the announcement: “It's just another significant loss for Lancashire in the absence of a Mayor.”

Referencing the progression towards a mayoral system in other areas like the neighbouring Liverpool City Region and in West Yorkshire since 2015, he added: “This is the national direction of travel, and we will continue to lose out till we fix it.”

The ability for mayoral authorities to retain a portion of income tax is just one of the measures being taken to devolve power from the UK Government to local councils across England by Andy Burnham, who was Mayor of Greater Manchester prior to his return to Westminster and subsequent installation as PM.

Further powers to retain some of the funds raised by business rates are also being handed down.

The former Manchester Mayor and new Prime Minister is handing down more power than ever to local leaders

Prime Minister Andy Burnham said: "I said we'd take power out of Westminster and carry it into every postcode in the country. Today, we make good on that promise.

"Under our plans, more of the taxes raised in a community will stay in that community.

"Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs.

"I know what it's like to be ignored by politicians in Westminster. I'm not going to make that same mistake now I'm PM.

"The whole of government will now pull together behind the people and places that desperately need our support. This is how we'll bring back hope and bring power home to you."

The new Labour administration has stated that it hopes to shift power and decision-making closer to people’s lives, creating stronger local economies that will be able to improve public services.

Chancellor John Healey added: “The people who best understand what skills employers want, what transport an area needs and where investment can make the biggest difference are those who live there.

“For the first time we’re giving Mayors a share of income tax so communities directly benefit when their economy grows - passing power out of Westminster and driving growth in every postcode.

“This is the way we start to build new hope and advance the working people of this country.”

These powers are expected to come into effect from Spring next year, with a roadmap for this devolution coming in the Budget this coming Autumn.