Sadiq Khan handed more powers and income tax cash as Andy Burnham announces huge devolution drive

Sadiq Khan is set to be handed a slice of the taxes collected in the capital under the Prime Minister’s devolution drive. Under plans confirmed by Andy Burnham, the Mayor of London and other regional leaders in England will get to keep a portion of income tax and business rates to spend.Mr Burnham said the proposals were part of his pledge to “take power out of Westminster and carry it into every postcode in the country”.Details of the policy are expected to be announced when Chancellor John Healey presents his first budget in the autumn.Mr Burnham, who was mayor of Greater Manchester for almost a decade, said the plans were designed so that “every local leader will have the power and resources to improve public transport, build homes and create jobs”.Ministers are expected to retain an equalisation system, so areas where less tax is collected continue to receive financial support.Sir Sadiq Khan with Andy BurnhamPA ArchiveIncome tax rates will not change as a direct result of the reforms, according to the Government.Mr Burnham said: “I said we’d take power out of Westminster and carry it into every postcode in the country. Today, we make good on that promise.“Under our plans, more of the taxes raised in a community will stay in that community. Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs.“I know what it’s like to be ignored by politicians in Westminster. I’m not going to make that same mistake now I’m PM.“The whole of Government will now pull together behind the people and places that desperately need our support. This is how we’ll bring back hope and bring power home to you.”Several other parts of England also have a mayor, including Greater Manchester, the Liverpool City Region, Cambridgeshire and Peterborough, and South Yorkshire including Rotherham and Sheffield.Read MoreThey have powers over issues such as transport, skills and infrastructure planning.Mr Burnham hosted some of the local leaders at his inaugural No 10 North meeting in Manchester last Friday, when he told them: “What I’m trying to do here is make the UK one team where we’re all pulling behind you because your place is where growth happens or it doesn’t happen.”Voters in parts of the country will elect mayors for the first time over the coming years, including in Greater Essex and Hampshire and the Solent.Andy Burnham said the proposals were part of his pledge to ‘take power out of Westminster and carry it into every postcode in the country’PA WireThe Chancellor said the leaders who “best understand what skills employers want, what transport an area needs and where investment can make the biggest difference are those who live there”.“For the first time we’re giving mayors a share of income tax so communities directly benefit when their economy grows – passing power out of Westminster and driving growth in every postcode,” Mr Healey added.“This is the way we start to build new hope and advance the working people of this country.”Local Government Secretary Angela Rayner said the announcement would put “an end to the begging-bowl culture of the past”, instead giving locally elected leaders “the tools they need to drive the change that communities have been crying out for”.Some mayors are thought to be considering using their powers to roll out tax reliefs, including Conservative Tees Valley mayor Lord Houchen of High Leven and Reform UK’s Greater Lincolnshire mayor Dame Andrea Jenkyns, according to reports in The Times newspaper.The Conservatives said they doubted the tax reforms would help regions across England to flourish.Shadow Chancellor Mel Stride said: “This is another Andy Burnham announcement that makes big claims while being very short on the detail. “Unless Burnham is going to launch another tax raid elsewhere, borrow even more, or make cuts to central government grant, there is no new money being announced here. “If local areas which see stronger growth are to end up with more funding, that could mean those who lose out are precisely those areas which have seen weaker local economies over recent years - the opposite of what Andy Burnham claims he wants to achieve. “The Conservatives are the only party with a plan to make £50 billion of savings, reduce the deficit and cut taxes to get Britain working again.”