Plans are underway within Andy Burnham’s No 10 North office to introduce tax rebate schemes aimed at benefiting local workers and businesses, marking a potential shift in the government’s approach to regional fiscal devolution. This development represents a departure from earlier assurances that such rebates would not be feasible under the proposed framework.

Last month, Burnham, who leads the Northern Powerhouse initiative, announced that mayoral authorities would receive a share of income tax and business rates revenues for the first time. The government described this move as the most significant transfer of financial powers from Westminster to the regions in a generation, intended to support local investment in housing, transportation, and skills development.

Despite the initial announcement, ministers had downplayed the prospect of individual tax rebates, with Burnham himself emphasizing that the devolution plans were not designed to empower mayors as quasi-chancellors of the exchequer. Instead, the focus was framed around reinvesting shared revenues into public services and infrastructure.

However, Ben Houchen, the Conservative Mayor of Tees Valley, is collaborating closely with senior officials from No 10 North to develop a formalized tax rebate program. Under this proposal, workers employed by businesses within the Tees Valley area could receive a rebate equivalent to 1 to 3 percent of their income tax, contingent on proof of local employment. Additionally, the scheme envisions a business rates rebate, allowing eligible companies to apply for a refund, potentially up to 5 percent of their paid rates.

The introduction of tax rebates would represent a more direct economic benefit to individuals and businesses, diverging from the original concept in which shared tax revenues were primarily earmarked for broader public sector investments. While the government’s initial fiscal devolution policy outlined funding for housing, transport, and skills, the exploration of rebates signals an evolving approach aimed at stimulating regional economies through targeted financial incentives.

Details regarding the implementation timeline and the scope of these proposed rebates remain under discussion. Authorities are weighing the fiscal implications and administrative mechanisms needed to ensure effective distribution of funds. The evolving debate highlights the challenges of balancing regional empowerment with fiscal responsibility as the government seeks to reshape its approach to economic recovery and regional development.