Workers in Tees Valley could be in line for income tax rebates worth between £43 and £128 a year under a scheme proposed by Conservative metro mayor Ben Houchen, who is reportedly in discussions with No10 over the plan. The proposal follows a shift in position from the Labour government, which had previously ruled out such a scheme.
Mr Houchen, who serves as the Conservative mayor for the Tees Valley, has suggested a rebate of “1, 2, 3 per cent” of a worker’s income tax, provided they can prove they are employed by a Tees Valley business. The move comes as Prime Minister Andy Burnham gives local leaders and mayors devolved powers over tax.
Rebate values based on average salary
According to The Sunday Times, the average salary in Tees Valley is £33,850 a year, which generates a tax bill of around £4,256 annually based on the personal tax-free allowance. On those figures, a rebate would be worth £43 at 1 per cent, £85 at 2 per cent, or £128 at 3 per cent for eligible workers in the region.
Mr Houchen’s discussions with No10 come after Louise Haigh, a key ally of Mr Burnham, flatly denied that a rebate scheme was possible. In a previous statement, Ms Haigh said: “There’s not a system that would currently allow that.” However, Mr Burnham’s Labour government appears to have warmed to the suggestion, with talks now reportedly underway.
Business rates rebate also floated
In addition to income tax rebates, Mr Houchen has floated a business rates rebate, telling The Sunday Times: “[If you’re] a business in Tees Valley, you can apply to us to get, say, 5 per cent back on your business rates.” This would extend the proposed fiscal devolution benefits to local businesses as well as workers.
A Government spokeswoman told The Sunday Times that any mayor using the funds for “complicated and administratively burdensome grants” would have to be “upfront” that doing so meant “cutting investment in transport, housing and other services”. The warning highlights the trade-offs that could accompany such schemes under devolved powers.
Houchen confirms continued exploration
Mr Houchen said: “We continue to explore a tax rebate scheme for residents if the Prime Minister presses ahead with fiscal devolution.” His comments and the latest update fly in the face of Ms Haigh’s rebuttals last month, when she had poured cold water on the proposals.
The development marks a notable shift in the government’s stance on fiscal devolution, with the potential for similar schemes to be considered in other regions if the Tees Valley plan proceeds. The outcome of the talks between Mr Houchen and No10 will determine whether workers in the region see any rebate in their pay packets.
