Conservative and Reform UK mayors are planning to offer tax rebates to local residents as part of a broader devolution initiative. The Prime Minister is expected to announce plans on Friday that would grant mayors a share of income tax revenue for local spending. Proposals are also being considered to devolve aspects of business rates, potentially rewarding regions with faster economic growth.
Andy Burnham, the former mayor of Greater Manchester, has advocated for shifting power from Westminster to local communities. While his plans have been framed as a way to boost investment in infrastructure and public services, some mayors intend to use devolved powers to reduce the tax burden on their constituents.
Ben Houchen, the Conservative mayor of Tees Valley, stated his intention to use new fiscal freedoms to make his region more attractive for investment than major cities like Manchester and London. He told The Times that if the Tees Valley receives a portion of locally generated income tax and business rates, he would implement a rebate scheme to return money to residents.
Luke Campbell, the Reform UK mayor of Hull and East Yorkshire, and Andrea Jenkyns, the Reform mayor of Greater Lincolnshire, are reportedly exploring similar rebate plans. Houchen indicated he is in discussions with the Treasury regarding the structure of such tax relief, emphasizing that fiscal devolution should empower regions to act differently, support growth, and reward local economic drivers.
However, a government source expressed skepticism, suggesting that regional mayors might face difficulties in passing on additional funds to taxpayers due to existing budget pressures. This source recalled past promises by mayors to reduce council tax by cutting waste, which were later abandoned, and indicated a wait-and-see approach.
Alex Walker, a senior researcher at the Re:State think tank, commented that areas like Greater Manchester and the West Midlands have demonstrated the potential of retaining and reinvesting business rates growth. He suggested that other mayoral areas should have similar opportunities as part of a comprehensive fiscal devolution package to enhance flexibility and accelerate regional development.