Prime Minister Andy Burnham plans to let English city-region mayors and strategic authorities retain a share of locally raised income tax and business rates, as part of a wider effort to devolve power from Westminster. The proposal matters because it could give local leaders more reliable funding and greater control over housing, transport and skills, reducing dependence on central government grants.

The precise proportion of tax revenue has not yet been decided and is expected to be set out in Chancellor John Healey’s autumn Budget. Areas without elected mayors would also be eligible through strategic authorities, while authorities may gain the option to introduce an overnight visitor levy; the Conservatives warned that weaker local economies could lose out. The UK currently collects only 5.8% of national taxes locally, the lowest share in the G7, compared with 20.4% in France, 36% in Japan and 45.7% in the US.