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Chronicle Live
Chronicle Live
National
Dan O'Donoghue

Chancellor Rishi Sunak urged to give the North East tax raising powers

Rishi Sunak has been urged to allow metro mayors to keep the full tax revenue from the jobs created by their mayoral administrations, as part of a new devolution package for the North.

In a letter to the Chancellor, seen by ChronicleLive, North of Tyne Mayor Jamie Driscoll has said the move would transfer almost £40m to the North East to reinvest in job creation.

Mr Driscoll has also written to Shadow Chancellor Rachel Reeves and Shadow Levelling Up Secretary Lisa Nandy calling on Labour to back the reforms.

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The North of Tyne Mayor has said the offer would be a significant step in helping Labour to win back support in the Red Wall.

In his letter to Mr Sunak, the mayor said: "In the three years since setting up the North of Tyne Mayoral Combined Authority (MCA) from scratch, according to our agreed targets we should have a pipeline of 1,000 jobs. The actual number is 4,586 new jobs.

"We’re over 10 years ahead of schedule, despite the pandemic. With the right tools, I could do more.

"I propose an Earnback deal. In addition to core funding, give the North of Tyne the equivalent of the first year’s payroll taxes and benefit savings for the jobs we create, and half of the second year’s. It’s a good deal for UK PLC, and a good deal for the North of Tyne."

He added: "It solves a political problem caused by devolution to the English regions – the question of accountability. I am not asking for more funding – I am asking for payment by results.

"Under this proposal, MCAs are directly rewarded for leveraging private sector investment into job creation. No one has to pay more tax. The mechanism enables MCAs to invest with ambition, knowing there is an income stream to repay success."

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