Andy Burnham appears to make U-turn as Tory mayor set for powers to give local residents tax refund

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Ben Houchen is said to be in talks with Treasury officials over use of powers to issue tax rebates

Andy Burnham has appeared to perform a U-turn as the Conservative mayor of Tees Valley gears up to hand millions of locals a tax refund.

Ben Houchen is said to be in talks with Treasury officials and is hopeful flocks of his voters will be able to pocket the rebate under new guidance.

His criticism echoes others' disgruntlement with Labour after Mr Burnham's "cost-of-living Government" insisted its plans to allow regional mayors to keep a hold of their income tax and business rates cannot be fed back to the taxpayer.

The former mayor of Greater Manchester said the new system will dole out powers to metro leaders to invest funds to boost public services in the community.

But Lord Houchen insisted it was "not beyond the wit of man" to create a system to offer the rebate to locals across the country.

He claimed it would not be "overly complicated", adding: "I think the Prime Minister and what this government is doing on fiscal devolution is a move in the right direction, but for it to be real devolution we've got to have local decision-making and choose what's best for the people we represent.

"The Prime Minister has said he wants to alleviate the cost of living and give people room to breathe - what better way to do that than allow them to keep more of their own money?"

The proposal was initially dismissed by Louise Haigh, the Cabinet Office minister responsible for devolution, who said last month that the scheme was “certainly” not possible with current HMRC limitations.

Now, Lord Houchen says the power will be available – unless ministers specifically decide to revoke it.

He would not detail how much residents would receive should it be an option, or whether a rebate would go to individuals, businesses or both.

It would likely depend on the final shape of fiscal devolution – whether it covers income tax alone or business rates as well and how much new money is ultimately transferred to the regions.

The idea has won support from Luke Campbell, the Reform mayor of Hull and East Yorkshire, and Andrea Jenkyns, the Reform mayor of Greater Lincolnshire, who are understood to be exploring similar proposals.

Mr Burnham said the plans were not about turning mayors into “a sort of mini-chancellor of the exchequer" nor allowing them to rewrite national tax policy.

This sentiment was echoed last month by Ms Haigh, who said mayors would not be able to set their own regional or local income tax rates.

She said at the time: “There’s not a system that would currently allow that, and they certainly wouldn’t be able to set tax rates locally or regionally, but we’ll consider what proposals are put forward.”

Caroline Simpson, deputy chief of staff working from the new No10 North in Manchester, appeared this week to leave some room for flexibility however.

She told Politico: “The PM is absolutely right – there’s going to be no ability to sit outside of the tax framework at a local level. That’s not what fiscal devolution is about.

“But flexibility about how that money is spent in a local area is going to be there – the absolutely technical 'What does that flexibility look like?’ is going to have to be worked through.”

The Government is due to explore the details of its fiscal devolution plans at the Autumn Budget on October 28 – the first of Mr Burnham's premiership.