Why this could change the local growth game
Here's the pitch: give mayors a direct financial reward when local businesses thrive, and they'll lean harder into development. That is core to Andy Burnham's agenda. He led Greater Manchester as mayor for nine years before taking over from Keir Starmer as Labour leader in July, and now he wants to hardwire local incentives into the funding system.
How the money would flow
Some existing grants to mayoral authorities would be swapped for a baseline funded by the property tax known as business rates. That swap is meant to be fiscally neutral at the outset. From there, mayors would keep 20% of any growth in business rates receipts, with more flexibility to decide how that investment is used.
Future funding would track overall business rates revenues rather than fixed grants, effectively tying mayoral budgets to local economic performance. Funding for local authorities would stay unchanged, with 30% of revenue continuing to be kept by the central government.
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Guardrails and timing
To prevent big divergences, growth above a certain level would face a levy. The proceeds would bankroll a safety net that guarantees a minimum income if business rates fall. The proposal has been put to local leaders, with a summary reviewed by Bloomberg, and it could start next April if it secures approval ahead of the budget. The Treasury said, "As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumor, speculation or proposals."
What it means for your money
If mayors get a cut of growth, expect more focus on projects that lift local business activity. That could influence where public money lands and how private capital partners with city halls after April, especially in places betting on development to boost their own budgets.
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