The Patchwork of Power: Can Andy Burnham’s Devolution Pledge Deliver?

The UK’s devolution plans have long been mired in complexity and controversy. Britain has become one of the most fiscally centralized countries in the developed world, despite its history as a patchwork of nations. This arrangement has led to a situation where mayors and local authorities rely on Westminster for funding rather than having control over their own finances.

Andy Burnham’s pledge to transfer power from Whitehall to local leaders is an ambitious attempt to break this cycle of dependency. His proposal to hand England’s regional mayors a share of income tax revenues is a step in the right direction, but it won’t be easy to implement. The sheer scale and complexity of this project are becoming increasingly clear, with estimates suggesting that as little as 5% of tax revenue currently stays with local authorities.

For context, 14% of tax revenue stays local in France, while Japan manages a staggering 22%. This disparity highlights the stark reality: Britain’s devolution plans have been piecemeal and ineffective, with successive governments clinging to power rather than empowering local leaders. The creation of dozens of ringfenced funding pots has fostered a culture of begging, while central government grant funding cuts under austerity have left many areas struggling.

Burnham’s plan is not without its risks. Estimates suggest that between 6% and 9% of local income tax revenues would be sufficient to fully replace the so-called integrated settlements, or central government grants, currently received by mayoral authorities. However, this raises concerns about how weaker local economies will fare in a system where winners are likely to get more funding.

The danger is that the current fastest-growing mayoral authorities – typically those with the highest populations and wealthiest economies – will reap most of the benefits. London and Greater Manchester are already in pole position, while other areas like the West Midlands and South Yorkshire struggle to catch up. This self-fulfilling cycle of weak growth could exacerbate regional inequalities rather than alleviate them.

One of the biggest challenges facing Burnham’s devolution agenda is the legacy of Tory austerity. English local government has been decimated since 2010, with a workforce plummeting from 2.2 million to around 1.1 million. Many town halls lack the staff and expertise to use their new powers effectively, making it difficult for them to collect bins or fill potholes.

The OECD notes that Britain’s starting point makes devolution challenging. Several vital building blocks need to be put in place before Burnham’s agenda can succeed. Repairing the damage caused by austerity and establishing sophisticated analytical, policy, and delivery teams will be crucial steps towards creating a more effective system.

However, making bad spending decisions is a significant risk, as evidenced by recent examples of financial mismanagement in Tees Valley, Birmingham, and the multibillion-pound debts amassed in Woking, Warrington, and Thurrock. Labour’s plans to strengthen the role of the new Local Audit Office and lean on the National Audit Office are a step in the right direction, but more needs to be done.

Despite these challenges, devolution could have transformative effects on the economy. Local leaders are best placed to understand how to support growth in their area, as highlighted by measures to integrate bus, tram, and train networks in England’s largest cities outside London. These initiatives have the potential to connect 1.2 million people to their nearest city centre, generating productivity gains worth an estimated £17bn.

Ultimately, Burnham’s devolution pledge is a risk worth taking. While there will be challenges along the way, the path towards transferring power from Westminster to local leaders is well worth pursuing.