Mayors allowed to keep share of taxes collected in their area as part of Burnham’s devolution revolution

English mayors will be allowed to keep a share of the taxes collected in their area, Andy Burnham has said as part of his pledge to “take power out of Westminster and carry it into every postcode in the country”.

The prime minister’s plans to let mayors keep a slice of income tax and business rates come as part of his bid to incentivise regional leaders to promote economic growth in different parts of the UK.

However, the plan falls short of the suggestion that he would allow mayors to raise taxes themselves by devolving control over income tax, as it has been handed to the Scottish and Welsh parliaments.

Details of the reforms are expected to be announced in a white paper, published when chancellor John Healey presents his first budget in the autumn.

But Mr Burnham, who was mayor of Greater Manchester for about nine years, said the policy would be designed so that “every local leader will have the power and resources to improve public transport, build homes and create jobs”.

The rate of income tax which billpayers face will not change as a direct result of the reforms, according to the Government.

Ministers will retain an equalisation system, so areas where less tax is collected continue to receive financial support.

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 parts of England have a mayor, including Greater Manchester, the Liverpool City Region, Cambridgeshire and Peterborough, and South Yorkshire including Rotherham and Sheffield.

They have powers over issues such as transport, skills and infrastructure planning.

Mr Burnham hosted several 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.

Mr Healey said: “The people 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.

“This is the way we start to build new hope and advance the working people of this country.”

Housing, Communities and 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”.