On 31 July, eleven days after Andy Burnham became prime minister, his government announced that English regional mayors will begin retaining a greater share of the tax revenue generated in their areas.

Business rates go first, from next spring. Further plans for income tax retention are due in a roadmap at the Budget. Under a new "local first" principle, Whitehall will now have to justify keeping a power rather than devolving it, reversing the usual presumption.

For the North East, split between two combined authorities and two mayors of opposing parties, this is the change both have been asking for. Kim McGuinness, Labour mayor of the North East Mayoral Combined Authority, covering Northumberland, Tyne and Wear and County Durham, wrote to Burnham in his first days in office calling fiscal devolution the most important next step in the region's devolution story.

Ben Houchen, Conservative mayor of Tees Valley, welcomed the announcement in similar terms. "Fiscal devolution should be implemented as quickly as possible," he told Teesside Live.

The North East Combined Authority already controls transport, skills, planning and regeneration, funded through an annual investment fund agreed under its 2024 deeper devolution deal. Business rates retention works differently. It ties mayoral income to a share of local business growth, rather than to a fixed grant from Whitehall.

The first argument over what that actually means arrived the same day as the announcement. Houchen wanted to use the additional revenue to fund a rebate scheme, returning money directly to residents. First Secretary of State Louise Haigh told him no. "Devolving a pot of cash and then keeping every real decision in Westminster isn't real devolution," Houchen told Teesside Live. "Andy Burnham spent a decade telling Whitehall to let go, but a few weeks into Number 10 he's holding on tighter than any minister I've dealt with."

The disagreement cuts across party lines. Houchen is criticising a Labour government's delivery of a Labour manifesto commitment. It is a structural question any new fiscal settlement has to answer, does devolved revenue mean mayors get to decide how it is spent, or does it mean the money is redirected while Whitehall keeps the decisions. For businesses that pay business rates, the answer determines whether the change reaches them through lower rates, faster investment or other forms of local support.

Both McGuinness and Houchen have said they would use that discretion to support local business and the high street. The question is whether it does. The Budget is where the roadmap for income tax retention, and the actual limits on how mayors can spend business rate revenue, will be set out.

Until then, the North East has an unusually direct read on the question, not because of any special claim on the prime minister's attention, but because it already has two mayors, from opposing parties, pushing on the same door at the same time.