Devolution Revolution: Mayors Gain Tax Powers and Local Control

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The Biggest Transfer of Power in a Generation

Let us be honest. Centralized control from Westminster has produced an investment rate lower than any other G7 country over the past three decades. Between 1997 and 2025, UK whole economy investment averaged 17.3% of GDP. That is not a statistic. It is a verdict on three decades of decision-making that ignored local realities.

This week, the Prime Minister launched the largest transfer of power, funding, and responsibility from Westminster to local communities since devolution began. Mayors will retain a share of income tax revenues for the first time. Starting next spring, they will also keep more of the locally generated business rates. If you strip away the noise, this changes the fundamental relationship between Whitehall and the regions: when a place grows, it now keeps more of the reward.

What Mayors Will Control

The real question is not whether devolution is a good idea. It is whether the powers match the rhetoric. In this case, they do. Mayors gain control over:

• 16-19 education and skills funding — allowing local leaders to align training with employer needs.
• Employment support — tailored programs for people out of work.
• Housing — stronger planning powers and funding to unlock stalled development sites.
• Transport — including rail, buses, trams, integrated ticketing, and faster approvals for new projects.
• Local industry and investment — backing innovative businesses and attracting new capital.

That is where things get interesting. When power is devolved, Whitehall resource will follow. The Civil Service will become smaller and more strategic. Departments will operate under a “local first” principle: ministers must justify why powers should stay in Westminster rather than being handed to communities.

Revenue Retention and Fiscal Discipline

I have very little patience for reforms that promise autonomy but deliver only unfunded mandates. This is not that. Financial details for business rates and income tax retention will appear in a roadmap at the autumn Budget. The government insists on fiscal discipline. That means the transition away from central grants will be gradual, but the direction is clear: funding that rewards local growth, not dependence on Whitehall handouts.

For areas without an elected mayor, the government will support the creation of strategic authorities with similar powers. The ambition is national. Every community should eventually benefit from stronger local decision-making.

What This Means for Education and Skills

This is not complicated, but it is demanding. Devolution of 16-19 funding transfers a £9.5 billion program serving 1.275 million students across 2,500 institutions. The potential is large. The risk is real.

David Hughes, Chief Executive of the Association of Colleges, welcomes the vision but cautions that the system is complex. Pepe Di’Iasio, General Secretary of the Association of School and College Leaders, points to the lack of detail and timescale pressure. Both are right. The government must pilot changes before full rollout. It must remove restrictions that currently stifle local responsiveness. It must invest in college infrastructure and staff pay. And mayors must engage employers far more deeply than they have done so far.

If these elements fall into place, young people in every postcode will have pathways that actually lead to jobs. If they do not, this becomes another headline with underwhelming follow-through.

Evidence That Local Control Works

Most people get this wrong: they treat devolution as an untested experiment. The results are already visible.

• West Yorkshire: a Housing Investment Fund of £334 million unlocked land for thousands of new homes.
• Liverpool City Region: Tap and Go ticketing on Merseyrail, bus network under local control, rail services returning to public ownership.
• North East: 65,000 residents gained qualifications for jobs in construction and childcare.

These are not pilot programs. They are proof that local leaders, when trusted with responsibility, produce measurable outcomes.

The Bigger Picture: Spreading Opportunity

The United Kingdom cannot rely on success concentrated in a small number of places. Reforms that spread opportunity to every postcode raise living standards for people who have been overlooked. And they reduce the political resentment that centralization breeds.

A White Paper alongside the autumn Budget will set out the full timetable. Further details on the income tax mechanism will follow. The prime minister has made this the first major initiative of his second week in office. That signals seriousness.

The real test is implementation. Devolved power is only as good as the resources, capacity, and accountability behind it. I have seen too many reforms that sound bold and land weak. This one has the architecture to be different. Whether it will be depends entirely on the details that will emerge over the coming months.

What Industry Voices Say

The Association of Colleges points to five key issues: a national framework to reduce risk, immediate removal of restrictive regulations, long-term capital investment, greater employer engagement, and mayoral oversight of schools to collaborate with colleges.

The Association of School and College Leaders notes that headteachers and principals have raised concerns about timescales and workload, given the “mountain of policy changes already underway.” The test will be whether young people see more opportunities in the postcodes that need them most.

These are valid cautions from people who will have to deliver on the ground. The government would be wise to listen more than it speaks over the next six months.

Final Thought

This reform ends the Whitehall-first culture that has dominated British governance for decades. It forces departments to justify centralization. It rewards places that grow. It gives every region the tools to build its own future.

That is worth taking seriously. Now the work begins.