Northern mayors, investors and agencies welcome fiscal devolution in Healey’s budget

Political, finance and agency leaders in the North have reacted to John Healey’s first budget as Chancellor under Prime Minister Andy Burnham, with plans to devolve tax to regional mayors drawing the most praise.

The budget extended the VAT reduction on energy bills, set out tax devolution to mayors and, the Chancellor said, will take 70,000 businesses out of business rates. The measures are to be funded by new taxes on banking and gambling, with vape shops excluded from the business rates reductions.

Mayors back the plans

The North’s mayors, most of them Labour, largely backed the budget. North East Mayor Kim McGuinness said: “After years of fighting for the investment we deserve, I’m delighted we now have a North East Good Growth Fund helping us to deliver projects like a new arena in Gateshead and film and TV studios in Sunderland and these will just be the start.”

She also welcomed mayors gaining more control over tax raised locally: “We will also get new powers to keep tax raised from these major developments and others,” she said. “It’s about time we stopped sending all of our tax to Westminster and instead use it right here in the North East. It’s good to see the Government agrees. This will be used for initiatives that directly cut the cost of living like cheaper fares on public transport in years to come.

“We need to see more good jobs in our region too. That’s why we insisted in September the International Investment Summit should be held in the North. And now thousands of investors from across the globe will see what we have to offer when they come to Gateshead in the Spring. We will make sure this directly leads to opportunities for people on their doorsteps across the whole of the North East.

“I’m delighted to see the vast majority of households in the region will receive £100 to go towards energy bills and hundreds of our high street businesses will no longer pay business rates.”

West Yorkshire Mayor Tracy Brabin took a similar line. “This is a budget for working people that will give families across West Yorkshire some much needed breathing space, from the scrapping of standing charges on energy bills and £100 in people’s accounts, to money off the weekly shop and fairer parental leave,” she said.

“The Government is backing our ambitions with £300 million to transform Leeds station and investment in the Leeds College of Building, the use of Artificial Intelligence across our public and private sector alongside community protections around data centres, and for our bid to bring the Olympics to the North of England.”

Brabin also backed the devolution of tax: “Radical devolution of income tax will mean we no longer have to go cap in hand to Whitehall, and the changes made to business rates means we’ll keep more of the West Yorkshire pound here in West Yorkshire,” she said.

“These new financial flexibilities will help to drive the development of Leeds South Bank and Bradford Southern Gateway to deliver thousands of homes, create a better-connected region, and build a region of learning where everyone has the skills they need to succeed.”

Think tank wants income tax devolution to go further

Reaction from outside the Labour party was also broadly positive. Zoë Billingham, director of IPPR North, the region’s leading think tank, welcomed the devolution plans: “This Budget is a vote of confidence in our regional and local leaders,” she said. “We’ve taken a jump ahead on devolution, but to keep up with our peers this will need to be the beginning of radical change to rewire the state.

“The government has stuck to its promise to speed up progress on fiscal devolution with commitments on devolving business rates and a share of income tax to England’s mayors. Additional regional investment through £285million of good growth funds, funding for places without a mayor, alongside £1.5billion borrowing facilities for building infrastructure backs up the government’s words with actions.”

Her main concern was the scale of the fiscal devolution. “IPPR North urges the government to ensure that income tax devolution is ambitious enough to truly make a difference in peoples’ lives,” she said. “Five per cent of income tax devolved to mayors would see an additional £4billion held by mayors. When the devolution agenda is felt by our communities across the country we know it will have succeeded.”

Investors and advisers

Dave Foreman, chief executive of PXN Group, which backs fast-growing businesses in Scotland and the North of England, welcomed the devolution measures alongside the support for founders.

“Today’s Budget puts real weight behind growth beyond Westminster, and that’s great to see. New powers and funding for mayors, alongside a bigger British Business Bank, give founders and investors the kind of long-term commitment they can plan around. Scotland and the North are already producing companies that can compete globally, and getting equity into the hands of those founders should now be a priority,” he said.

“The new founders’ relief is exactly the right instinct. Every successful exit is a chance to fund the next generation of businesses, and keeping that capital circulating in the regions that produced it is how strong ecosystems are built. The new scale-up programme for women founders will help widen that pipeline too.”

Angela Cross, regional managing partner for the North West at accounting and business consultancy BDO, said most businesses in the North had gone into the budget feeling optimistic: “Confidence, stability and investment is what the region’s businesses were looking for today. According to BDO’s Mid-Market Tracker, 87% of the North West’s businesses went into this Budget with confidence that the Government would reflect the current and future needs of their business in today’s statement.”

The devolution measures were again the main source of optimism. “In the North West, 87% were also upbeat on the positive impact on their business over the next three years about giving regional mayors and local authorities greater control over locally raised tax revenues, through a share of income tax and business rates,” Cross said.

“As the Chancellor announced ‘Good Growth Funds’ for mayors, and ‘incubator capital’ for areas without mayors to support local communities, North West business leaders will welcome this news.”

She said more was needed, however: “As well as investment in the region, access to capital to expand, and new announcements such as the founder’s relief, entrepreneurs need the government to build on today’s announcements and simplify taxes so they can focus on delivering innovation and driving growth.”

Agencies cautiously positive

Agency leaders were cautiously optimistic. Joe Procter, co-founder of Manchester agency Open Partners, said the budget held no major surprises but welcomed the devolution news: “With a Northern HQ, we also welcome efforts to spread economic opportunity more evenly across the UK. Long term, that means more opportunities for young people to build careers in the creative industries beyond London,” he said.

Jessica Scott, co-founder of Notorious, called it a “7/10 budget”, with devolution again the highlight: “More good news about decentralisation being the foundation of a more vibrant, more productive economy. A few interesting incentives for employment and businesses. And some welcome relief on household budgets. Good. It should help people feel a bit better and hopefully give consumer confidence a welcome notch up.”

She also questioned whether the plans were ambitious enough: “Without a bit of this vision being matched to bold ideas, the potential for a local power revolution is limited. We want to see more done to unlock the benefits of competition, productivity and personal spending power that would give consumer confidence far more than a nudge.”

She added: “A modest Budget suggests they still don’t have the ideas or confidence in their convictions to make the most of the rare opportunity – to deliver the big changes households, businesses and our cities alike are crying out for.”