Andy Burnham tells Ben Houchen he will not be 'mini chancellor of the exchequer' with tax rebate plans

The new Prime Minister announced that mayors will be able to retain a proportion of business rates from 2027 and income tax from 2028.

Andy Burnham has pushed back at plans from Tory and Reform mayors to hand back income tax through a rebate, saying “it’s not about creating a mini chancellor of the exchequer in every area”.

The new Prime Minister announced that mayors will be able to retain a proportion of business rates from 2027 and income tax from 2028.

It will mirror their current funding allocation and provide certainty to allow long-term planning.

According to the Centre for Cities, this will be just 3 per cent of South Yorkshire’s annual income tax and 2 per cent in West Yorkshire.

Announcing the policy at the Meadow Family Hub, in Sheffield, yesterday, Mr Burnham said it would allow for more central government funding to be directed towards areas with a lower tax take.

“If you free up the places that are more successful to do more for themselves and keep more of what they earn, what that does is allow you to concentrate more of national investment in the areas that really need that foundational investment in infrastructure and industry,” he told reporters.

However, Mr Burnham pushed back at plans from Conservative and Reform mayors to use the income tax to offer a rebate.

Lord Ben Houchen, the Mayor of Tees Valley, has spoken of this, while Hull and East Yorkshire Mayor Luke Campbell is thought to be considering it.

Lord Houchen 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.”

Government sources indicated that this would not be possible as mayors do not have access to HMRC data on how much tax each resident pays.

And Mr Burnham said firmly: “It’s not on offer.”

“This is not about allowing mayors to become a sort of mini chancellor of the exchequer or a local home secretary," he explained.

“Those issues around taxation and asylum are national policy matters.

“This is a policy that is about growth and investment, an area where the UK is currently underperforming quite significantly.

“It's the case that the cuts of the 2010s and onwards are a big part of that problem. If you don't invest, you don't get the growth.

“So I think they're kind of misunderstanding the purpose of this.

“It is about bringing infrastructure up where we know it's not good enough - Doncaster Airport, Manchester-Sheffield connectivity. It's about investing to get the growth.”

Lord Houchen accused Mr Burnham “holding on tighter” to power than any other minister he’s dealt with.

He said: “Ministers want to reward mayors for growing the local economy, but the most effective way to grow it is by letting people keep more of what they earn.

“That’s the difference between us and Labour: we trust people with their own money.

“Devolving a pot of cash and then keeping every real decision in Westminster isn’t real devolution. Andy Burnham spent a decade telling Whitehall to let go, but a few weeks into No10 and he’s holding on tighter than any minister I’ve I dealt with.

“I’d rather ministers just cut out the middleman and lower taxes. But if they’re handing me a share of the income tax raised on Teesside, true devolution means the decision where to spend it is for locally-elected leaders.

“I want to give every penny back to the workers who earned it through a rebate scheme. If people don’t like that, they can vote for someone else - that’s what real accountability looks like. But today Westminster decided it knew better, as it always does.”