First Secretary of State Louise Haigh has voiced skepticism regarding a proposal by Tees Valley mayor Ben Houchen to implement a tax rebate scheme for local residents. The plan, intended to utilize new devolved powers, has been met with resistance from Haigh, who suggested such a use might not align with the intended purpose of the devolved funds.
Haigh stated in a recent interview that she was "not convinced" by Houchen's proposal and questioned its feasibility, citing the need for systems like those managed by HMRC to be in place. She emphasized that the intention behind devolving powers to mayors is to reinvest funds into local public services and economies, rather than offering direct rebates to households. "We'd have to see the details of that, but it certainly isn't possible at the moment," Haigh told Times Radio.
Mayor Houchen, a Conservative, had outlined his vision to use a share of locally collected income tax and business rates to put money back into people's pockets, aiming to make his region more attractive for investment. He expressed disappointment with Haigh's response, interpreting it as a contradiction to the government's stated commitment to devolution. "So devolution means getting people's taxes to spend but not being allowed to give it back to them," Houchen posted on X. "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."
Senior Conservative MP James Cleverly, the shadow local government secretary, criticized Haigh's stance, characterizing it as indicative of a flawed devolution model under Andy Burnham's administration. Cleverly argued that this approach limits local leaders' autonomy, allowing them only to implement a centralized agenda with regional variations.
The broader initiative, championed by Greater Manchester mayor Andy Burnham, aims to allow English mayors to retain a portion of taxes collected within their areas. The government has presented this as a means to empower local leaders to boost investment in infrastructure and public services. Houchen, however, has consistently advocated for fiscal devolution to include the flexibility for local leaders to implement schemes that directly benefit residents. He revealed earlier in the week that he was in discussions with the Treasury about structuring his proposed tax relief.
The government has indicated that the rate of income tax will not change directly due to these reforms. An equalization system is expected to remain in place, ensuring that areas collecting less tax continue to receive financial support. Full details of the government's reforms are anticipated in a white paper to be published in the autumn.