Rachel Reeves sets out plans to hand regional mayors a share of tax revenue
It could mean people in parts of Yorkshire getting more of a say over where their tax money will be spent
Last updated 18th Mar 2026
Regional mayors could be given control of a share of national taxes including income tax to invest in their areas under plans announced by Rachel Reeves.
The Chancellor said she would set out a “road map for future fiscal devolution” at her next budget in the autumn.
The move would not increase the tax burden, she said, but would share existing tax revenues with regional leaders, rather than the Exchequer controlling the cash.
Both West and South Yorkshire have regional mayor, who already have powers over local transport links and a budget to spend every year.
Giving the annual Mais Lecture at Bayes Business School in London, the Leeds West MP said: “I have asked my officials to work with mayors and businesses to develop a road map for future fiscal devolution to be published at this year’s budget.
“This will set out plans to give regional leaders control of a share of some national taxes which have, for too long, been allocated by central government.
“They will look at income tax alongside other taxes, with reforms initially targeted at those places that have the greatest capacity to deliver them and the greatest potential to benefit.”
She said the move represented a “genuine break” with the past and a “generational opportunity for Britain’s regions to make their own future”.
Ms Reeves vowed that “this is not about new taxes” and that she would not ask taxpayers to pay more.
“Reforms will be fiscally neutral,” she said, with region leaders able to spend a proportion of the income tax raised in their areas.
The Chancellor also set out plans for “city investment funds” backed by £2.3 billion of funding, focused on northern England and the West Midlands, giving regional leaders control of “long-term, self-sustaining capital” to invest, with a commitment to the retention of business rates.
Ms Reeves also announced the Government would consult on a development corporation for Greater Oxford, similar to the one launched for Cambridge earlier this year.
She doubled the funding commitment – initially £400 million for Cambridge – to £800 million for both Cambridge and Oxford to grow through upfront land acquisition and infrastructure.
The Chancellor also backed compulsory purchase powers for the regions surrounding the two university cities, the so-called Oxford-Cambridge corridor.
She said: “I want to see deals done quickly, but where landowners are intransigent or insist on unreasonable demands, we are ready to acquire land using compulsory powers, either directly or by standing by local leaders.”
Driving growth in every part of Britain is one of three “big choices” the Chancellor set out in her Tuesday lecture, along with closer alignment with the European Union and accelerating adoption of artificial intelligence.
“In an unbalanced Britain, we all lose out,” she said, criticising previous governments for merely paying “lip service to regional potential”.
“What most distinguishes Britain from our closest peers is the relative underperformance of our major cities outside of London compared to their European counterparts,” Ms Reeves said.
“There are huge gains to be made if we can only close that gap, if we back Manchester and Liverpool and Leeds to match and overtake Stuttgart, Turin and Lyon.”
Andrew Carter, chief executive of Centre for Cities, said her commitment to help the UK’s large cities to overtake G7 peers on productivity was “very encouraging”.
“As the Chancellor noted and our research confirms, the UK’s big cities outside of London have relatively small city centres, low public transport connectivity, and too few equity-raising firms. There are too many bottlenecks on investment.
“The good news for the Chancellor is that there are ways to address these issues: by building more housing, delivering integrated transport to increase cities’ effective size, and improving the business conditions for the innovative business base in big cities.
“Plans to expand city centres and grant mayors more autonomy, especially through fiscal devolution, are key to enabling mayors to plan for the long term and direct growth and investment in their areas.”