Row Erupts As Ministers Refuse To Give Mayors Tax Rebates

Andy Burnham’s new plan to offer metro mayors a greater proportion of income tax to spend on their local communities has already hit a stumbling block.

In his push for devolution, the prime minister promised that “more of the taxes raised in a community will stay in that community” in plans to be outlined in his autumn Budget.

Conservative mayor of Tees Valley, Lord Houchen, then suggested giving that extra cash back to taxpayers.

But first secretary of state Louise Haigh slapped down the proposal this morning, telling Times Radio: ”Mayors have the ability to spend the money almost as they want now, especially in advanced mayoral authorities like Tees Valley.

“To my knowledge, Ben hasn’t developed a rebate scheme and it’s not in their gift to set income tax or business rates.

“So we would anticipate that the money would be invested into public services and into growth schemes that benefit the community as a whole.”

She added: “Mayors don’t have the ability and won’t have the ability under these plans to set income tax rates at a regional level …

“Those kind of schemes necessitate HMRC to set up full schemes. That’s just not possible at the moment.

“The way that the mayors are set up and to work is to reinvest the money into their public services, into their local economies.”

Houchen later replied on X claiming the proposals do not “sound much like devolution” to him.

He wrote: “So devolution means getting people’s taxes to spend but not being allowed to give it back to them.

“Last time I spoke to the PM, devolution was about Whitehall not dictating what areas can or can’t do.

“Doesn’t sound much like devolution to me? Just an excuse for a tax grab.

“They want to reward mayors for growing the economy but the best way to grow the economy is to let people keep more of what they earn.”

Chancellor John Healey later hit back at the mayor, telling broadcaster: “If mayors want to cut investment, like Ben Houchen says he wants to do, then he’s got to answer for the fact that bus services don’t improve, that jobs aren’t available…

“And I hope he’ll see, like most other mayors see, that this is a big opportunity for them, big opportunity for the businesses in their area and a big opportunity for the people in their area.”

The Conservatives also expressed concerns over the plan, as shadow local government secretary James Cleverly said it would just lead to higher taxes.

He 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 cooperation 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.”

Liberal Democrat leader Ed Davey also claimed: “The need to move power into our communities is undeniable, but this must benefit communities right across the country — not just those with the right postcode.

“The government’s own figures show areas without a strategic mayor are already receiving a fraction of the funding available to mayoral authorities and adding income tax powers on top of that would make a bad situation worse.

“The Liberal Democrats will continue fighting for every community across the country – whether that’s in cities like Hull, seaside towns like Cromer and Torquay, or in suburbs, market towns and villages across England.”

Meawhile, the deputy leader of the Green Party Rachel Millward, said it was a “welcome step” but “fiscal devolution cannot become an excuse for the government to ignore the deep funding crisis facing local councils”.

Reform’s home affairs spokesperson Zia Yusuf said: “Burnham must fully devolve the power to stop the housing of illegal migrants in local communities by the Home Office.

“Time to find out if Burnham means what he says or is just Starmer in jeans.”

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