In this month’s Mais Lecture, the chancellor Rachel Reeves did her best to distract attention from the worsening global economic situation with a speech that focused on a variety of long-term economic priorities. Within it was a section on regional economic growth and productivity hailed by some  as among the most significant interventions on the subject for 50 years.

In it Reeves announced a package of measures for UK city regions that contained not just targeted funding, designed in a way to give them more control over their destiny, but also – for the first time – the promise cities could keep hold of locally raised tax receipts: so-called “fiscal devolution”.

Giving cities control of the tax income raised locally is something that economic development professionals have been long campaigning for  as an essential step to overcoming the UK’s stark economic inequality, which sees so much of the nation’s wealth created in London. In developed nations, the UK is a major outlier by having just 1.7% of GDP taxed locally, comparedwith an OECD average of 3.7%. France, by comparison, has 6.5% taxed locally, Sweden 15%.

Reeves said  any such move would be, initially, revenue neutral – meaning cities would not end up with more or less money due to it – and that it could involve income tax or potentially other taxes, “with reforms initially targeted at those places that have the greatest capacity to deliver them, and the greatest potential to benefit.”

The chancellor said she wanted the change to deliver a “permanent transfer of power and resources”, with “the proceeds of growth benefiting the places that generated that growth”.

However, with the exact form of the devolution now being worked up, she ruled out giving cities any powers over settings tax rates or thresholds themselves.

So, how might Reeves’ package of measures impact upon city plans for development and regeneration? Below Building answers the key questions.