The North East is set to gain unprecedented financial powers after Prime Minister Andy Burnham announced plans to allow metro mayors to retain a share of locally raised income tax and business rates. Downing Street has described this as the biggest transfer of power and money out of Westminster for a generation.
The reforms, due to be formally launched on 31 July, are designed to give local leaders greater control over investment and decision-making This will allow them to fund priorities such as affordable housing, transport improvements, skills programmes and job creation without repeatedly seeking approval from central government.
For North East Mayor Kim McGuinness, the package represents a significant expansion of devolved powers and follows her recent calls for greater financial autonomy for the region.
Prime Minister Andy Burnham said the reforms would “bring power home” by ensuring more of the taxes raised in local communities remain there. “I said we’d take power out of Westminster and carry it into every postcode in the country. Today, we make good on that promise,” he said.
“Under our plans, more of the taxes raised in a community will stay in that community. Soon, every local leader will have the power and resources to improve public transport, build homes and create jobs. I know what it’s like to be ignored by politicians in Westminster. I’m not going to make that same mistake now I’m PM. The whole of government will now pull together behind the people and places that desperately need our support. This is how we’ll bring back hope and bring power home to you.”
The Government said further details of the financial settlement will be announced in the Autumn Budget, with metro mayors expected to begin retaining a share of locally generated business rates from next spring.
The reforms will be driven through the Prime Minister’s new No 10 North office in Manchester, which has been tasked with accelerating regional growth and removing barriers that have delayed infrastructure and regeneration projects.
Alongside greater fiscal freedom, the Government has pledged to hand metro mayors wider powers over:
- Bringing rail and bus services under greater local control, including integrated ticketing.
- Stronger planning powers and funding to accelerate housebuilding and unlock stalled developments.
- Greater control over education funding for 16 to 19-year-olds and employment support.
- Faster approval processes for transport projects, including potential future expansions of the Tyne and Wear Metro.
Welcoming the announcement, North East Mayor Kim McGuinness said the changes marked a turning point for the region. “For decades, whenever the North wanted something, it had to go to London each time, cap in hand to beg a civil servant or a Government minister to back us. We’re changing the North East for good, and much greater financial freedom is the first step,” she said.
“This means we can do more to support hard-pressed families through things like cheaper Mayor’s Fares and childcare grants; it means we can grow the Metro and rail network, build more council homes and open youth clubs to give young people the opportunities they deserve regardless of their background.”
“Now we can step up and market the North East to the world as a visitor destination and a place to invest, creating new jobs as we do so by helping our people and businesses thrive and grow.”
“The days of asking Whitehall’s permission are over. We can now just get on with the job and improve the lives of people here in the North East, now and for generations to come.”
The announcement follows McGuinness’ letter earlier this week to Chancellor John Healey, in which she called for greater devolution of tax revenues, housing powers and employment funding to help address decades of industrial decline and underinvestment across the North East.
