While Andy Burnham’s call for Fifa President Gianni Infantino to lose his job (not content with one deposition in July) will grab the headlines, the more consequential news this week was yesterday’s announcement that mayors will be apportioned a share of income tax. More detail emerged today in a statement from the Cabinet entitled Rewiring the State.
From 2028, central grants to mayors will be replaced with a share of local income tax, so regions that grow their tax base keep the increased receipts. Alongside this, councils and strategic authorities will retain more business rates, with areas without mayors keeping some too. Strategic authorities also get powers to introduce an Overnight Visitor Levy. Details of both retained shares are due this autumn. The business rates share will be set out alongside the Budget, together with a fiscal devolution roadmap; the income tax arrangements will be confirmed at the Spending Review.
Business rates retention begins in April 2027, when mayors also gain the power to introduce an Overnight Visitor Levy; new mayors will be elected in Cumbria and in Cheshire and Warrington in May 2027; income tax retention starts in April 2028, with a further wave of mayoral elections in spring 2028. A September meeting with all mayors, permanent secretaries and the Cabinet Secretary will review progress.
Every area in England is to have a strategic authority, or will be establishing one, by the end of 2027, with full coverage by the end of 2028. Mayors won’t be imposed, but mayoral areas get greater powers. Four further areas have been conferred established mayoral strategic authority status: Cambridgeshire and Peterborough, East Midlands, West of England, and York and North Yorkshire.
There will be a broad transfer of functions to mayors, to be completed this Parliament under a “devolve by default” principle under which secretaries of state must justify keeping any function centrally. Mayors will gain control of the 16–19 skills budget and new technical and vocational pathways, along with devolved employment support, including for the long-term unemployed. On transport, they get faster bus franchising, integrated ticketing, a deeper Great British Railways partnership on commuter rail, and the approval threshold for transport schemes raised to £500 million. Housing powers come through a devolved Social and Affordable Homes Programme and stronger development corporations. They will also take a larger share of later-stage innovation funding, along with greater local control over cultural and sporting investment, which could include funding currently held by Arts Council England and Sport England. Police, fire and Integrated Care Board boundaries will be aligned to strategic authorities by the end of the Parliament, with new deputy mayor roles for key public services.
This is ambitious stuff. As we’ve argued previously, devolution comes in two forms. The first transfers funds, on the assumption that decisions made closer to the ground will be better ones. The second lets places keep the proceeds of growth, and bear the cost when it doesn’t come. It is only this latter model that alters the incentives at play.
However, allowing places to keep what growth generates necessarily allows them to pull apart from one another, which may run up against the Government’s tagline of “good growth in every postcode”. We will have to wait to see whether places will really bear the downside.
For entrepreneurs, the practical upshot is that more of the state you deal with will be run from your own region. That cuts both ways: a founder selling into several regions will have several sets of rules to learn, and not every strategic authority will start with the commissioning capacity to make good use of what it’s been handed.
But the direction is right, and procurement is the clearest case. Tussell and the British Chambers of Commerce found England’s public sector spent a record £45.2 billion with SMEs last year, with local government considerably better at buying from smaller firms than central government.
The point isn’t that mayors will spend your money better — though being closer to the action should help — but that for the first time they have more reason to care whether you make any.
Portal Combat
If I were writing a history of the downfall of former Prime Minister Keir Starmer’s Government, I would open with his first Budget, in October 2024. It soured business sentiment in a stroke. Despite subsequent Budgets being much better — a turn that correlated with the appointment of Alex Depledge as the first-ever Entrepreneurship Adviser — the damage was already done.
The date of the next Budget has just been released: Wednesday, 28 October. We will, of course, be feeding in our research and the insights many of you have shared through our survey work with Public First. But you may want to share your views too. A portal has just been opened where you can make a written submission to HM Treasury, commenting on government policy and suggesting ideas for the Budget. It closes on Wednesday, 9 September.
Fen Club
We’re supporting Liberti Club’s Dinner and Debate on scaling science and tech firms, at Downing College, Cambridge, on 23 September. Our Adviser Alex Evans, who directs Liberti Club, has assembled panellists from across finance, marketing and fractional leadership to debate what’s unlocking growth for the sector right now — access to capital, talent and the partner ecosystems and fractional hires that let scale-ups punch above their headcount. If you’re building or advising in the sector, register your interest here.
It’s not the only reason to be in Cambridge this autumn: our Adviser Geeta Sidhu-Robb is hosting the first Bootstrappers’ Breakfast there on 14 September, a free morning for female founders building their first £1 million, at The Glasshouse. Geeta built Seven Rungs to back women scaling without external investment, and this session puts founders in front of others who’ve done it — including VET.CT’s Victoria Johnson and Francesca Hodgson of King’s SPARK. Register here.