Treasury officials are considering how the idea of devolving powers to local government to retain a share of income tax revenue could work, The MJ understands.

The Government has publicly said it has ‘no plans to hypothecate revenue from national taxes to local or combined authorities' because the current system allowed ‘funding priorities to be more closely aligned with need, rather than depending on where the revenue is raised' while shadow chancellor Rachel Reeves is understood to be cautious about handing tax powers to councils.