Suggestions Redcar “could become the Nashville of England” have sparked fresh pleas for more business rates powers to be handed down.

Levelling Up Secretary Michael Gove hinted that northern cities could one day have similar powers to those granted to Scotland, Wales, and Northern Ireland during a select committee this week.

And he told MPs that increasing fiscal devolution could help “Redcar become the Nashville of England” by allowing Tees Valley Mayor Ben Houchen to bring in tax cuts similar to those being introduced in Tennessee.

“I’m very keen to see our move towards greater fiscal devolution,” said Mr Gove. “What I strongly believe is that, the experience of the United States and the experience of Germany shows that if you have a measure of fiscal devolution, sooner or later people recognise if you want to stimulate economic activity, that you reduce taxes.

The Northern Echo: Michael Gove Michael Gove

“I was in the United States last week looking at urban regeneration, but one of the points that was made to me is that Nashville is booming. Why? It’s because Tennessee has gone for a low tax approach which has seen talent flow into that state and that city.

“Similarly, if Ben Houchen were able to do everything he wants in taxation terms, then it would be the case, undoubtedly, that Redcar would become the Nashville of England.” Teesside’s new freeport is designed to have less stringent customs procedures where businesses also benefit from tax incentives.

Tees Valley Combined Authority (TVCA) officials say it will drive billions into the region’s economy by encouraging long-term inward investment without sacrificing environmental protections, or workers’ rights.

Responding to Mr Gove's ambitions, the Tees Valley mayor said: "The Nashville of England! I prefer Singapore on Tees… but whatever the name - fiscal devolution with the ability to cut taxes for my area would be a game changer boosting jobs, business growth and investment."

The Northern Echo: Tees Valley mayor Ben Houchen Tees Valley mayor Ben Houchen

But there have been some doubts about the economic benefits freeports could bring – and whether they just move economic activity rather than stimulating it. Labour plans to scrap business rates and replace it with a form of business property taxation.

Last year, Shadow Chancellor Rachel Reeves told the Local Democracy Reporting Service how the business rates system was “not fit for the 21st century”. “It’s not a level playing field and that’s got to be fixed,” she added.

When it came to powers over business rates, Mr Houchen believed the jury was still out on whether the government would change tack. The Conservative mayor said: “I had lobbied Michael Gove and the Treasury to look at devolving setting business rates to the regions to help us be more competitive, but it hasn’t been taken up in the levelling up and regeneration bill.

“I’ll continue to push the point as business rates are a real problem for businesses large and small and that’s costing jobs in areas like Teesside. It also puts people off starting their own business because of the astronomical costs.

“Maybe this is a sign that government thinking is changing but it remains to be seen.”

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