MINISTERS CONSIDER DEVOLVING BUSINESS RATES TO REGIONAL MAYORS

The government is examining plans to transfer billions of pounds collected through business rates to regional mayors as part of a significant overhaul of England's tax system. Steve Reed, the local government secretary, confirmed that ministers are working on proposals to devolve the tax, which has recently faced protests from pubs and hospitality businesses. The initiative forms part of a broader strategy to shift tax revenue towards local leaders, with details expected to be unveiled by Chancellor Rachel Reeves at this year's budget.

The devolved system would not permit regions to retain all revenue generated locally, as this could worsen regional inequality. Instead, Reed stated that an equalisation mechanism would remain in place to prevent economically disadvantaged areas from falling further behind. The reformed structure would incentivise and reward areas that expand their economies more rapidly or provide better business support. Reed noted that devolution of elements of income tax has also been discussed as part of the wider plans.

The proposals form part of a comprehensive shift in power towards local areas across justice, health and education sectors. Reed described the business rates devolution as currently under consideration. The plans are anticipated to be pursued regardless of changes at the highest level of government, given the commitment to devolution from potential successor administrations.