Combined Authorities: Powers
The question
To ask the Chancellor of the Exchequer, whether mayoral combined authorities will be able to reduce the level of income tax.
Answered by Ministry of Housing, Communities and Local Government
As set out in the ‘Rewiring the State’ Cabinet Statement, the government will replace grants from central government with a share of local income tax for every mayor beginning in 2028, such that where a region grows its tax base, it benefits from the increased receipts.
This reform gives local areas greater control over existing funding by assigning mayors a share of local income tax revenues. Mayors will not be able to change income tax rates or thresholds. These powers will remain with the UK Government.
Mayors will need to make their own choices for their area, but this funding will replace existing grants already used to deliver services like transport, housing and economic growth. This means they will need to consider the trade-offs involved in providing grants to individuals or businesses rather than investing in local services and growth.
The government will work collaboratively with mayors on the design of fiscal devolution and how we can ensure their increased freedoms and powers are accompanied by the transparency that is essential to democratic accountability and delivering value for money.
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