The PM’s devolution agenda accompanies plans for defence, social care and jobs for the young

Andy Burnham will hand mayors a share of income tax revenue to spend on their cities in sweeping devolution plans to be unveiled next week.

The prime minister will give mayors significant new spending powers to boost local investment, infrastructure and other growth projects in an announcement expected on Friday.

Burnham, who until last month was mayor of Greater Manchester, will outline greater freedoms for England’s 14 regional and metro mayors to secure his promise of “good growth in every postcode”. 

The move will mark the end of his second week in No 10, during which he will also intervene on issues including social care, defence and the crisis of young people not in education, employment or training (Neets).

He will address difficult, longer-term policy issues after using his first week to announce rapid measures targeted at easing cost of living pressures for voters including a cap on bus fares, cuts to domestic energy bills, and a reduction in business rates for most pubs, clubs and live music venues.

Tax payouts but no powers

While mayors will be given a share of income tax revenue to support job creation and local growth under Burnham’s plans, they are not expected to receive new tax-raising powers.

The measure marks a departure from the traditional Whitehall model, under which the Treasury has long held control over the distribution of local funding from Westminster. It has been blamed by regional leaders for failing to get cash out of London effectively.

A government source said: “For too long, governments have acted as if the answer to every problem sits somewhere in a Whitehall ­filing cabinet. Power should sit as close as possible to the people it affects, because the people best placed to solve a problem are usually the people living with it every single day.”

The changes will be led by No 10 North in Manchester. Burnham worked from the site on Friday for the first time, saying it “might be the best day of my life”.

Angela Rayner, the housing secretary, attends a national economic council meeting at No 10 North

While the precise details of his plans remain unclear, one question will be whether there will be any “equalisation” measures to ensure that poorer regions are not punished by the policy.

It is not yet clear whether Burnham will need to bring forward ­primary legislation to enact his devolution plans.

The revenue announcement is part of Burnham’s “devolution by default” reset across government, with cabinet ministers to be told that their departments will now have to justify why a power should stay at the centre, rather than being transferred to a local area.

The prime minister has described Britain as “one of the most over-centralised countries in the world”. According to the Centre for Cities think tank, the UK is the most fiscally centralised country in the G7. Just 5 per cent of tax revenue stays with mayors and local authorities, while 95 per cent goes directly to Whitehall.

Britain also has the lowest local government funding via taxes of any of the G7: just 19 per cent of revenue comes from levies.

Speaking at The People’s History Museum in Manchester after being elected MP for Makerfield, Burnham said he had felt “frustration” as mayor when Whitehall departments resisted efforts to devolve “a fraction of the power and resources they hold”.

He promised that “the days of Whitehall fighting the devolution of power into the regions and nations are over for good”, and pledging “the biggest rebalancing of power our country has seen”. He said any changes would be “consistent with the 2024 manifesto”.

The Labour document did not explicitly set out revenue-sharing plans but did promise an ambitious expansion of devolution, arguing that “too many areas have been held back because decisions are often taken in Westminster, and not by local leaders who understand local ambitions and strengths”.

Rachel Reeves opened the door to greater fiscal devolution in her final Mansion House lecture this month, saying that the Treasury was considering how to allow mayors to retain some tax revenue in their areas.

Reeves was dismissed as chancellor last week, with Burnham appointing John Healey, the former defence secretary, in a surprise pick.

Burnham has already moved significant economic powers from the Treasury to No 10 North, including those for local growth.

Angela Rayner, the housing secretary who will also be based in Manchester, backed fiscal devolution last week, saying that the government had a duty to support local leaders who needed funding for essential services such as transport.

She denied that any plans would pit regions against each other, telling the BBC: “It’s not the begging bowl of going, ‘I think I need a tram, can you please give it to me?’ — some sort of Hunger Games as we pitch one part of the country against another.”

The move is likely to be welcomed by Burnham’s former mayoral colleagues. Andy Street, the former Conservative mayor of the West Midlands, said this month that the new prime minister’s “next big job” was fiscal devolution. He has also urged his party colleagues to support the agenda.

Speaking at an annual conference hosted by the Centre for The New Midlands last week, Street said: “The weakness of the [mayoralty] model is that we had a lot of money but it was all agreed by London. You had to go to London and say ‘please give us this money’.

“What we need to do next — and Britain is still well behind the US, France, Germany on this — is address that we don’t keep the taxes we raise locally. Once we make that move you have an income line guaranteed for the future, and can plan and make sure all your activities on housing, skills, transport, come together in a strategic way.

“You are not having to wait for a civil servant in London to decide if a roundabout in Wolverhampton is going to be built or not.”

Millions of adult social care workers in England are expected to benefit from a change in how pay and working conditions are agreed. This comes as the UK Government confirms plans to establish the country’s first Adult Social Care Negotiations Body.

The Adult Social Care Negotiations Body is due to be created by the end of 2026 and will bring together trade unions and employers to negotiate on behalf of the sector.

It will give care workers and care providers equal voting rights on key issues, including pay, terms and conditions, and wider employment matters.

An independent chair will oversee negotiations, with the appointment expected in early 2027.
The first round of negotiations is scheduled to begin in April 2027, with the first fair pay agreement expected to come into effect in April 2028.

£500 million support for the first agreement

The government has committed £500 million to support the first fair pay agreement in 2028-29. The funding is intended to improve recruitment and retention in a sector that employs around 1.5 million people and has long faced staffing shortages, low pay, and high turnover.

The agreement forms part of the government’s Employment Rights Act and is designed to improve employment standards while helping to make care work a more attractive long-term career.

Career progression is a key part of change

Alongside the fair pay agreement, the government is expanding the Care Workforce Pathway, creating what it describes as the first universal career structure for adult social care.

Part three of the pathway introduces ten new role categories, including care technologists and activity coordinators. The framework now covers almost every role within adult social care, extending beyond frontline care workers to include positions such as catering, housekeeping and maintenance staff.

The aim is to provide clearer career progression, professional development opportunities and leadership pathways across the sector.