No tax powers for mayors under a Labour government, says Lisa Nandy

It comes after Jeremy Hunt last week confirmed that the Government would not be giving away new tax powers, effectively shutting the door on the prospect of the radical shake-up of taxation in England.

Last year the Onward think-tank called for mayors to be allowed to retain 1p from income tax so that they can reinvest it locally to grow their economy, while George Osborne, the former chancellor, called for mayors to retain some money raised from National Insurance earlier this year.

Asked if there was any appetite from the Labour leadership to explore the policy, Ms Nandy said: “No, there isn't on our side.

“The reason for that is that we're really concerned that were you to try to devolve fiscal powers to a more local level, you get one of two things: You either get much higher taxes on working people at a time when the tax burden on working people is at its highest rate in a generation; or you get areas that were already pulling further and further ahead, continuing to pull further and further, while those places that have suffered from a chronic lack of investment in their infrastructure over recent decades, fall further and further behind.

“That's the problem in a nutshell that we're all trying to crack. What we're much more interested in is giving local places economic devolution, the tools to be able to grow their own economy.”

It comes after Labour faced accusations that it is not being bold enough with its policy proposals ahead of the next election, instead focusing on matching the Conservatives on many areas of public spending.

Sir Keir Starmer said yesterday that he has had to be “really ruthless” in making sure his party stays on-message on the economy and spending commitments, which has in recent days seen him come under criticism for not pledging to end the two-child benefit cap, which his own shadow work and pensions secretary had described as “heinous” and “absolutely keeping children in poverty”.

Ms Nandy said that Labour’s offer on devolution was different to the Conservatives.

“I think the fundamental difference is that we think you can't continue to power this country, using only a handful of people in a handful of sectors, in a few parts of the country.

“If you're going to create strong economic growth, and be able to fund your public services and do all the things that you can imagine the Labour government would like to do, we're going to have to respect the contribution that people have to make in every part of the country again, and that's why our program is very focused on handing over the tools of economic evolution: the housing, the skills, policy, and the planning so that people can actually get that done.”

Adam Hawksbee, deputy director of Onward, told The Yorkshire Post: "Labour's promise to give back control to communities will ring completely hollow if they won't back it up with genuine financial firepower for mayors.

“The Government now has a chance to steal the advantage and accelerate the path they're already on - creating more mayors with deeper powers, striking more county deals and empowering local communities."

In the Chancellor’s budget earlier this year Mr Hunt announced next-stage devolution deals for both Greater Manchester and the West Midlands.

Both West Yorkshire and South Yorkshire are expected to continue with negotiations over getting similar powers and funding over this year.