Rachel Reeves sets out plans to hand mayors a share of tax revenue

Regional mayors could be given control of their share of income tax to invest in their areas under plans laid out by Rachel Reeves.

The chancellor said the move would not increase the tax burden but existing tax revenues would be shared with regional leaders rather than the Ministry of Finance, which controls the money.

He said officials have been asked to prepare plans that will be set out in the fall budget.

Delivering the annual Mais Lecture at Bayes Business School in London, he said: “I have asked my officials to work with mayors and businesses to develop a roadmap for future financial devolution to be published in this year’s budget.

“This will set out plans to give regional leaders some control of some of the national taxes that have been allocated by central government for too long.

“They will look at income tax as well as other taxes, and the reforms will initially target places with the greatest capacity to deliver those taxes and the greatest potential for benefits.”

The Chancellor has also drawn up plans for “city investment funds”, backed by a £2.3bn fund focused on the North of England and the West Midlands, giving regional leaders control of “long-term, self-sustaining capital” for investment, with a commitment to protecting business rates.