The proposal is not the same as giving mayors full tax-setting power. Business rates are a tax on non-domestic property, and the question under consideration is how much locally raised revenue should be retained, pooled or redistributed. The Guardian reported that business rates raised GBP26.4 billion last year and that ministers were examining safeguards so poorer regions would not lose out under a more devolved model.
The official policy base is a reset of the existing retention system. The government's Transforming Business Rates interim report says ministers are delivering a full reset of the Business Rates Retention System in 2026-27 as part of a fairer and simpler local-government funding system that targets money where it is most needed.
A separate GOV.UK document on resetting the system from April 1, 2026 says all local authorities will be assigned new Business Rates Baselines, Baseline Funding Levels and top-up or tariff positions. In plain terms, that means the government recalculates each authority's expected rates income and funding need, then uses top-ups and tariffs to move money between places.
The House of Commons Library says the 2026 revaluation also changes bills by introducing three new multipliers in England from April 1, creating five multipliers in total. A multiplier is the pence-in-the-pound rate applied to a property's rateable value. That reform is separate from the devolution question, but it affects the same tax base businesses and councils are watching.
The political appeal of fiscal devolution is that mayors and councils argue they can connect tax revenue more closely to local growth, transport and town-centre policy. The Local Government Association has previously argued that clarity over business-rates retention is needed and that councils should have more certainty over the local-government funding system.
The counter-perspective is equalisation. If areas with strong commercial property bases keep more growth, weaker tax-base areas may need larger top-ups or a different formula to avoid falling further behind. The government's own reset document recognises this by linking retained rates income to relative need and resources.