First Secretary of State Louise Haigh has indicated that a plan by Tees Valley Mayor Ben Houchen to offer local residents a tax rebate using newly devolved powers is not in line with the government's intentions.
Haigh, who serves as the Prime Minister's de facto deputy, stated on Friday that she was "not convinced" by Houchen's proposal to return a portion of collected taxes to households in his region. The government's devolution drive, spearheaded by figures like Andy Burnham, aims to allow English mayors to retain a share of taxes such as income tax and business rates to boost local infrastructure and public services.
However, Houchen, a Conservative mayor, had outlined plans to use these new freedoms to implement a rebate scheme designed to "put money back into people's pockets and let families keep more of the money they earn." He expressed a desire to make his region more competitive for investment compared to other major cities. Other Reform UK mayors, Luke Campbell and Andrea Jenkyns, are reportedly considering similar initiatives.
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Ms. Haigh told Times Radio that while she would need to see the specific details of Houchen's scheme, such rebate programs would require significant setup from Her Majesty's Revenue and Customs (HMRC), which she suggested is not currently feasible. She reiterated that the intended use of these devolved powers and resources is for reinvestment into public services and local economies, not for direct rebates to residents.
"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," Haigh stated. "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."
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Senior Conservative MP James Cleverly, the shadow local government secretary, criticized Haigh's remarks, characterizing them as indicative of a flawed approach to devolution. He argued that the current government does not intend to grant local leaders genuine autonomy to act differently, but rather to have them implement a centralized agenda with regional branding.
Earlier in the week, Houchen had indicated he was in discussions with the Treasury regarding the structure of his proposed tax relief. He emphasized that fiscal devolution should empower regions like Teesside to innovate, stimulate growth, and reward local economic drivers. The government's reforms are expected to be detailed in an upcoming white paper, to be released alongside the Chancellor's autumn Budget.
The government has stated that the reforms will not alter the overall income tax rate for individuals. An equalization system will remain in place to ensure that areas collecting less tax continue to receive financial support.