Andy Burnham has U-turned on local income tax 'rebates', it has emerged. Fiscal devolution was intended to finance projects such as housing and infrastructure but it will instead let mayors hand money back to workers and local firms.
Ben Houchen, the Conservative Party mayor of Tees Valley, said he was working with senior staff at No 10 North on a “tax rebate” scheme for companies and workers as a result of the devolved powers. The Reform mayor Luke Campbell is also reported to be interested in “rebates” for Hull and East Yorkshire.
U-turn on fiscal devolution
Last month, Makerfield MP Mr Burnham announced that English mayors will be allowed to keep a share of the income tax and business rates collected in their area. This led to several mayors saying they would create schemes to put money back into the pockets of taxpayers instead of investing in public services.
But Labour Party figure Louise Haigh, who is also chancellor of the Duchy of Lancaster, later said she is "not convinced it would be possible" for Houchen to set up a rebate scheme. Speaking to Times Radio, she said: "We'd have to see the details of that, but it certainly isn't possible at the moment."
Houchen's claim and government response
But on Saturday (August 29), Mr Houchen claimed senior civil servants had accepted it would be possible to provide the region’s businesses and their employees with tax rebates.
A government spokeswoman said: “If a mayor wishes to use public funds to set up complicated and administratively burdensome grants, they’ll have to be upfront that it means cutting investment in transport, housing and other services. We’ll work collaboratively with mayors on the design of fiscal devolution and how we can ensure their increased freedoms and powers are accompanied by transparency."
Haigh's concerns and intended purpose
Last month, Ms Haigh added: "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 work is to reinvest the money into their public services, into their local economies. It's not possible at the moment. We'd have to see, obviously, plans and a scheme put forward by Ben Houchen, but that's not how these powers and resources are intended to be used."
Ms Haigh added: "There's not a system that would currently allow that, and they certainly wouldn't be able to set tax rates locally or regionally, but we'll consider what proposals are put forward."
The real purpose of this though is to allow areas to benefit when they create growth, when they create new jobs, and to keep investing in their local areas, in public services, in transport, and to keep that virtuous circle of investment.
