Labour could give councils power to spend income tax locally

Labour could give councils power to spend income tax locally as part of a “great rebalancing” of devolution, Lisa Nandy has said.

Ms Nandy confirmed her party will examine proposals that could give metro mayors and other local leaders an extra £6 billion per year.

She is looking at an idea first suggested by Onward, a centre-right think tank, that would allow mayors to retain one per cent of basic income tax revenue to fund the devolution of more local services.

Gordon Brown will review plans

Ms Nandy, shadow levelling up secretary, is understood to have asked former Labour prime minister Gordon Brown to review the plans as part of his commission on the future of the UK.

Speaking at a Labour fringe event organised by Onward on Monday, she urged a “great rebalancing of wealth and power in this country” and vowed to end the “Hunger Games system” of devolution that sees mayors competing for funding.

“We’re looking seriously at proposals from organisations [such as] Onward, [which was] the first to say that we should devolve a proportion of income tax to local areas so that people can make financial decisions for themselves,” she said.

“[Councils must] not work to the priorities that are set by people hundreds of miles away, who have never set foot in the places that we call home, who have no stake in the outcome and no skin in the game.”

Almost three-quarters (74 per cent) of capital spending in the North West is still controlled by Whitehall, the Give Back Control report found when it was published in June.

The paper received cross-party support from Andy Burnham, Labour Mayor of Greater Manchester, and former Tory chancellor George Osborne.

Could free up extra £250 million

It showed that giving mayors a penny in the pound could free up an extra £250 million for regional authorities in West Midlands and Greater Manchester, while promising extra scrutiny, responsibility and accountability for mayors in return for their increased powers.

Ms Nandy also appeared to criticise Sir Tony Blair’s push for half of all children to go to university while in government.

She said while Labour had done “amazing” work in opening up university education, people found there was “too little to return to” on going back home.

“It’s the equivalent of trying to fly a jet using only one engine,” she said. “We believe that all places and people have something to offer and have a stake in the future of this country.”