Lancashire’s ‘significant loss’ as new devolution powers require elected mayor

Prime Minister Andy Burnham has announced the largest change in local authority funding in over a decade — but the county will miss out on income tax retention powers due to its lack of an elected mayor

Large parts of England are poised to benefit from a sweeping devolution of financial power under Prime Minister Andy Burnham, yet Lancashire will miss out for one straightforward reason.

Burnham is set to unveil the most significant overhaul of local authority funding in more than a decade, with certain regions permitted to retain a share of income tax – the single largest revenue-raising tool at the government’s disposal.

However, the former Manchester Mayor’s proposals will do nothing for Lancashire, owing to a number of district councils having rejected the notion of the county having its own elected mayor, despite repeated efforts over the past ten years to establish the role.

Instead, in 2023, councils agreed to form the Lancashire Combined County Authority, but without an elected mayor, as seen in comparable areas across the country. This compromise, however, means that today’s announcement could represent a ‘significant loss’ for Lancashire.

That is because only regions with an elected mayor will be eligible to take advantage of this landmark devolution settlement, enabling them to direct their share of income tax towards essential public services such as transport and housing.

While the new administration stopped short of specifying the precise sum involved, it could prove a considerable fundraising mechanism for Lancashire, which contributes roughly £4bn to the Exchequer through income tax each year. The leader of Blackburn with Darwen Council, Cllr Phil Riley, responded to the announcement by stating: “It’s just another significant loss for Lancashire in the absence of a Mayor.”

Highlighting the shift towards a mayoral model in neighbouring regions such as the Liverpool City Region and West Yorkshire since 2015, he continued: “This is the national direction of travel and we will continue to lose out till we fix it.”

The power for mayoral authorities to retain a share of income tax represents just one element of the broader push to transfer powers from the UK Government to local councils throughout England, with additional authority to keep some business rates revenue also being devolved.

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 government has indicated it intends to devolve power and decision-making closer to communities, fostering more resilient local economies capable of enhancing public services.

Chancellor of the Exchequer John Healey MP said: “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 measures are anticipated to take effect from spring next year, with a framework for the devolution set to be outlined in this autumn’s Budget.