Regional mayors like the North East’s Kim McGuinness and Tees Valley’s Lord Ben Houchen are to get a share of locally raised income tax and business rates in what Prime Minister Andy Burnham described as “the biggest transfer of power from Westminster in a generation.” Mayor McGuinness is expected to invest the money in economic development projects and improved public transport. Lord Houchen wants to use it to give tax rebates to local people.
Burnham’s statement
Prime Minister Andy Burnham 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. Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs.”
The Prime Minister, until recently Mayor of Greater Manchester, added: “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.”
Chancellor’s statement
Chancellor of the Exchequer, John Healey MP 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.”
Rayner’s statement
Secretary of State for Housing, Communities and Local Government Angela Rayner said: “This is the first step in our plan to rewire this country and build a better future, where power is no longer hoarded in Westminster but is put back in the hands of local people – where it belongs.
“Our devolution revolution is about bringing an end to the begging-bowl culture of the past, and instead making sure our local leaders have the tools they need to drive the change that communities have been crying out for. We need every region to be firing on all cylinders if we want good growth in every postcode, and we will do everything in our power to make that a reality.”
Less dependence on Whitehall grants
Mayors will begin retaining a greater share of locally generated revenues from next spring, starting with business rates, said No 10. Further details on this and on income tax retention would be set out in a roadmap at the Budget on 28 October and would be underpinned by the government’s firm commitment to fiscal discipline. Over time, local areas would move away from dependence on Whitehall grants and towards funding that rewards local growth.
This meant when places create jobs and grow their economies, they would keep more of the rewards – giving local leaders new powers to invest in what matters most locally, it added. It wanted every community to benefit from stronger local decision-making.
The plans would end the Whitehall-first culture that had held back local areas for decades, forcing departments to justify why powers should stay in Westminster rather than be handed to local leaders.
By shifting power, funding and decision-making closer to people, the changes would give every part of the country the tools to create strong local economies, improve public services and shape its own future.
Areas of greater local control
Local leaders would gain greater control over the services that shape people’s lives, including housing, transport, skills, employment support and public services, said the government. This included powers to:
- bring rail and bus services under greater local control, helping introduce integrated ticketing and more reliable services;
- build more homes where they’re needed and unlock stalled development sites by giving local leaders stronger planning and regeneration powers and more devolved funding;
- give more control over large local transport schemes, trams and metros to mayors by removing and streamlining Whitehall;
- give mayors control over 16-19 funding and employment support, so young people can train for the jobs local employers need and people out of work can get tailored support back into employment;
- back local industries and innovative businesses, and attract investment, creating more well-paid jobs; and
- bhere power is devolved, Whitehall resource will follow, giving devolved leaders the resources they need to drive change closer to home.
According to No 10: “The United Kingdom has invested less in its future than any other G7 country over the past three decades. Giving local leaders greater control over funding and investment decisions will help unlock opportunities that have too often been overlooked by a Whitehall-led approach. The Prime Minister believes the country’s towns, cities and communities can drive far more growth and opportunity if they are given the tools to do so.”
Already in the North East, 65,000 residents had been supported to gain qualifications, opening up new employment opportunities in sectors including construction and childcare.
Houchen’s statement
Tees Valley Mayor Lord Ben Houchen, first reported in The Times, 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.”
But the Prime Minister told the Northern Agenda newsletter that those wanting to turn the scheme into a tax rebate for their voters were “misunderstanding the purpose.” He said the plans are “not about creating a mini-chancellor of the exchequer in every area, that can start to decide tax policy. It’s about creating incentives for growth.”
*This report is based in part on a press release from the Prime Minister’s Office
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