Mayor Kim McGuiness responds to Labour taxes plan for mayors

The Prime Minister said by letting mayors keep a slice of income tax and business rates, he will “make good” on his pledge to “take power out of Westminster and carry it into every postcode in the country”.

North East Mayor Kim McGuinness welcomed the policy, saying “this is what taking back control really looks like”. Meanwhile The Times newspaper report that Tees Valley Mayor Lord Houchen was thought to be considering using the power to roll our tax reliefs.

Andy Burnham said the policy would be designed so that “every local leader will have the power and resources to improve public transport, build homes and create jobs.”

He said: “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.”

Details of the reforms are expected to be announced in a white paper, published when Chancellor John Healey presents his first budget in the autumn.

Ms McGuinness responded: “This is what taking back control really looks like, this is what we’ve been fighting for, for the people of the North East.

“For decades, whenever the North wanted something, it had to go to London each time, cap in hand, to beg a civil servant or a government minister to back us.

“We’re changing the North East for good, and much greater financial freedom is the first step.

“This means we can do more to support hard-pressed families through things like cheaper Mayor’s Fares and childcare grants; it means we can grow the Metro and rail network, build more council homes and open youth clubs to give young people the opportunities they deserve regardless of their background.

“Now we can step up and market the North East to the world as a visitor destination and a place to invest, creating new jobs as we do so by helping our people and businesses thrive and grow.

“The days of asking Whitehall’s permission are over. We can now just get on with the job and improve the lives of people here in the North East, now and for generations to come.”

Henri Murison, Chief Executive of the Northern Powerhouse Partnership, added: “Allowing regions to retain a share of income tax revenues will go one step further.

“Under the proposals, individual workers and employers would not pay more income tax or National Insurance, unlike under the Scottish system, but mayors would still be able to borrow against or commit future revenues to help finance privately built and delivered infrastructure.”

The rate of income tax which bill-payers face will not change as a direct result of the reforms, according to the Government.

Ministers will retain an equalisation system, so areas where less tax is collected continue to receive financial support.

Chancellor John Healey said: “The people who best understand what skills employers want, what transport an area needs and where investment can make the biggest difference are those who live there.

“For the first time we’re giving mayors a share of income tax, so communities directly benefit when their economy grows – passing power out of Westminster and driving growth in every postcode.

“This is the way we start to build new hope and advance the working people of this country.”

Housing, Communities and Local Government Secretary Angela Rayner said the announcement would put “an end to the begging-bowl culture of the past”, instead giving locally elected leaders “the tools they need to drive the change that communities have been crying out for.”

Some mayors are thought to be considering using their powers to roll out tax reliefs, including Conservative Tees Valley mayor Lord Houchen of High Leven and Reform UK’s Greater Lincolnshire mayor Dame Andrea Jenkyns, according to reports in The Times newspaper.