Cornwall set to be the biggest loser in Burnham’s income tax overhaul

Andy Burnham risks creating a “two-tier” country with plans to hand a share of income tax to mayoralties in England, MPs and economists have warned. The Prime Minister is expected to unveil plans next week to hand England’s 14 regional and metro mayors a share of income tax revenue to spend on local growth and infrastructure, marking a shift away from Treasury control of local funding. But around half of England’s population currently lives outside an area with an elected mayor, and there has been no confirmation of whether non-mayoral areas will get an equivalent route to the new funding. Cornwall is one part of the country that has long rejected the notion of a devolved mayoralty. Perran Moon, the Labour MP for Camborne and Redruth – the most southerly constituency in the country – warned that giving mayoralties control over income tax could force areas without the model to adopt it. He said imposing this on Cornwall against its wishes would “obliterate the Labour Party” there. “There’s a building fear across the Parliamentary Labour Party that the areas that are not covered by a mayoral combined authority are going to be significantly disadvantaged,” he told The i Paper. Cornwall Council has ruled out ever joining a mayoral combined authority, arguing that doing so would compromise its recognised national minority status. Moon said it would be “discriminatory” to force one on the county regardless. He said Cornwall had been left out of the wider devolution conversation entirely. “I am sick and tired of hearing about regeneration in the North of England, in Wales, in Scotland – not a single mention of one of the most deprived regions of the United Kingdom, which happens to be the furthest southerly one,” he said. Moon argued Cornwall’s track record undercut any case for withholding devolution until it adopted a mayor, having managed “hundreds of millions of pounds worth of economic development funding” successfully through EU and shared prosperity schemes. “The model is there,” he said. “It’s just ideology, as I see it, that is locking us out.” New devolution ‘just reinforces postcode lotteries’ It comes after a King’s College London and Harvard Kennedy School report, co-authored by the former Labour shadow chancellor Ed Balls, this month warned that fiscal devolution could exacerbate regional inequality, with some parts of the country having larger tax bases than others. The report warns that “too much devolution just reinforces postcode lotteries and regional disparities unless significant redistribution comes with it”, and adds that fiscal devolution is not a “silver bullet”. The document also raised doubts as to how city regions could avoid so-called “leakage” where economic activity crosses administrative boundaries, with commuters travelling from one city region to another. But the report insists that Burnham is now inheriting the “best opportunity in a generation” to devolve decision-making and finances to the regions. Reports over the weekend suggested Burnham could give a speech on greater devolution on Friday, with mayors expected to be given a share of income tax to help job development and economic growth, but not additional tax raising powers. A Government source said: “For too long, governments have acted as if the answer to every problem sits somewhere in a Whitehall ­filing cabinet. Power should sit as close as possible to the people it affects, because the people best placed to solve a problem are usually the people living with it every single day.” The overhaul will be led by Burnham’s new No 10 North, which he opened last week, describing the move as “possibly the best day of my life”. It is not clear whether the plans to hand regions a share of income tax would require primary legislation, but it demonstrates Burnham’s commitment to the devolution agenda. It comes after former chancellor Rachel Reeves signalled that the historic opposition to greater fiscal devolution from within the Treasury was coming to an end when she raised the prospect of mayors retaining a share of income tax in her Mais lecture in March.