Residents could receive tax rebates from some metro mayors under devolution powers set to be announced by Andy Burnham on Friday. The Prime Minister will confirm that mayors will receive a share of income tax revenues for the first time.
The Labour leader plans to tell his Cabinet ministers that it is time to “launch a new era of devolution”.
Lord Houchen's rebate plans
Lord Houchen, the Tees Valley mayor, said he planned to use fiscal freedoms to make his region "a more attractive place and a more competitive place to invest in than Manchester and London". The Conservative, who has led the Tees Valley region since 2017, covering 700,000 residents across towns such as Darlington, Hartlepool and Middlesbrough, claimed that most of his mayoral peers would use the new funding for infrastructure.
He said: "Every mayor is backing fiscal devolution because they want more money to spend in their area. However, if the Tees Valley is handed a slice of local income tax and business rates generated locally, I'll create a new rebate scheme to put money back into people's pockets and let families keep more of the money they earn. Fiscal devolution must be about giving places like Teesside the power to do things differently, back growth and reward the people that drive our local economy instead of squeezing every last penny out of them."
Lord Houchen said that he was in discussions with the Treasury over how best to structure the tax relief.
Implementation timeline
From next spring, mayors will begin retaining a greater share of locally generated revenues, starting with business rates. Further details on this and on income tax retention will be set out in a roadmap at the Budget and will be underpinned by the Government’s firm commitment to fiscal discipline. Under a new "local first" principle, ministers will be expected to justify why powers should remain in Whitehall rather than being devolved.
Burnham's statement
Mr Burnham, the former mayor of Manchester, will say: "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."
Reaction from opposition
Sir James Cleverly, the shadow local government secretary, said: “Andy Burnham is right to want to encourage growth in all communities. But his top-down Manchesterism will lead to higher taxes, with no guarantee of better outcomes for local people. Devolution cannot be imposed from above – it can only work if it’s done in co-operation with local people. But Labour’s regionalist approach takes power away from local communities, sidelining local councils and ignoring local identities. What works in Manchester won’t be the same for Essex, Cornwall or Cumbria.”
