Burnham’s Devolution Drive Risks Putting Britain on a Road to Disaster

The case for shifting power out of Westminster is almost always made in the language of fairness, but it is increasingly argued in the language of necessity. Britain’s economy has spent much of the past two decades oscillating between disappointment and fragility, while the political map has hardened into a geography of winners and losers that too neatly mirrors its transport links, university endowments and concentration of private capital. Against that backdrop, Andy Burnham’s push for a new settlement between the centre and the regions does not present itself as a tidy constitutional flourish. It presents itself as an attempt to change the engine room.

Burnham, freshly returned to Parliament and widely described as the presumptive next prime minister, has made devolution the organising idea of his approach to growth. He argues that Britain is among the most over-centralised countries in the world, and that this centralisation has become self-defeating: an administrative heart that no longer pulls the country in one direction, but in several competing ones. His prescription is to move money and authority out of Whitehall and into cities and regions, on the premise that those closest to local labour markets, skills gaps and industrial clusters are best placed to act quickly and intelligently.

In one sense, the idea is familiar. Devolution has been a recurring promise since the 1990s, and not only on the Labour side. Metro mayors in England owe much to George Osborne’s experiments with city deals and the creation of the Manchester mayoralty in 2014, the platform from which Burnham built a national profile. Yet Burnham’s agenda is pitched as something larger than another set of negotiated powers over transport or planning. It points towards fiscal devolution on a scale that would have been treated, until recently, as politically reckless. The mooted destination includes responsibility for business rates and, more controversially, some share of income tax.

Lord O’Neill of Gatley, tipped to become a central economic adviser in a Burnham government, has spoken publicly about business rates devolution as a strong probability, and about exploring elements of income tax as a serious possibility. If that sounds technocratic, it is in fact a rearrangement of political accountability. Income tax sits at the centre of the British state’s claim to redistribute, to stabilise and, in theory, to equalise. Once it becomes something that mayors and local authorities can point to as their own revenue stream, the arguments about spending quickly become arguments about who pays, and why.

Even among Labour MPs sympathetic to Burnham’s instincts, there is unease about the speed and symmetry of change. Liam Byrne, the Birmingham Hodge Hill and Solihull North MP and a former Cabinet minister, has warned that income tax may be a step too far, not because devolution is wrong in principle but because England’s patchwork institutions are not ready. Large parts of England are not covered by mayoral areas, and some of the authorities that do exist have not yet built the staffing, analytical capacity and political maturity that fiscal autonomy demands. A programme that assumes uniform readiness would risk creating precisely the unevenness it claims to correct.

Those warnings matter because the most persuasive case for devolution is not sentimental but empirical. Andrew Paterson, a devolution specialist at the OECD, argues that there is convincing evidence that devolved governance can improve productivity, but he is careful to attach a condition that is often waved away in British debate. Devolution is not measured simply by how much power is moved, but by how it is moved and what accompanies it. It works only where there is the right geography, the right capacity and the right funding. Stripped of those supports, it is not an accelerator but a transfer of risk.

That risk is most obvious when the conversation turns to tax. Britain’s economy is sluggish and its national debt large. Local authorities are already struggling with rising costs and brittle budgets, and some have come close to collapse. If councils and mayoral administrations are made more dependent on revenues that swing with local economic fortune, the burden of a downturn will not fall evenly. Poorer areas, with smaller tax bases and higher structural need, would face sharper contractions precisely when they require more support. Devolution can be a route to dynamism, but it can also be a route to embedding hardship, if the equalising mechanisms are politically weak or administratively complex.

The historical record is a further complication. Devolution in the United Kingdom has often been treated as a constitutional good, and constitutional goods are rarely asked to submit to detailed performance reviews. Yet where responsibilities have been transferred, the results have been mixed, and in some cases grimly instructive. Northern Ireland’s assembly, granted powers in 1999 after the Good Friday Agreement, was celebrated as an instrument of stability and growth in a region emerging from conflict. A generation later, Northern Ireland is left with strained public services, including the longest NHS waiting lists in the UK and an overstretched police force. In vital areas, the political incentives have not encouraged sustainable revenue raising. They have encouraged the avoidance of unpopular decisions.

The consequences are not abstract. A crumbling sewage system, pushed to capacity, has stalled building in more than 100 towns. Political drift becomes infrastructural constraint, then economic constraint. Devolution did not create these problems alone, but it did not solve them either, and in some instances it gave them new places to hide. The Renewable Heat Incentive scandal, launched in 2012 as a green energy scheme without proper cost controls, became an emblem of how expensive inexperience can be. Because the tariff paid out more than fuel cost, participants could heat buildings for profit. Whistleblowers described empty sheds being warmed to generate cash. The eventual bill was estimated at £490 million.

Professor Richard Ramsey of Queen’s University Belfast has put the lesson bluntly: without the right people, no amount of money delivers effective outcomes. His emphasis on human resource, skills and leadership goes to the heart of the British problem. Westminster is criticised for hoarding expertise, but that expertise does not automatically appear once power is devolved. It must be built, recruited and retained, and that requires money and time, as well as a political culture willing to reward competence more than theatre.

Scotland offers a different kind of warning, less about basic capacity and more about decision-making under pressure. The Ferguson Marine ferry contract, placed in 2015 for vessels intended to serve the Isle of Arran, became a fiasco that ended in a bailout and a spectacular escalation of costs. Holyrood eventually had to rescue the shipbuilder after it fell into administration, with delays stretching for years and costs rising from £97 million to £460 million. The episode raised accusations of preferential treatment in the bidding process, and it remains a reminder that devolved institutions can be as susceptible to poor procurement, patronage and overconfidence as central government, if not more so.

Wales, too, has supplied examples that devolution’s critics reach for when they want to puncture the romance of localism. Cardiff’s blanket 20mph policy on roads in 2023 and the drawing up of a tourist tax have been blamed for harming hospitality businesses. Stephen Davies, the chief executive of Welsh whisky brand Penderyn, told The Telegraph last year that the messaging could feel like a nation telling visitors it did not want them. The details of that dispute will be argued for years, but the broader point lands: policies that may be popular in a political bubble can collide with the economic texture of a place.

Esmond Birnie, senior economist at Ulster University Business School and a former MLA, warns against treating devolution itself as a guarantor of better policymaking. It can do the opposite, he argues, by giving greater power to vested interests and stakeholder groups that are highly organised locally. Any serious devolution project, then, has to reckon with the reality that local politics is not automatically more virtuous. It is simply closer.

For all that, Burnham has a strong comparative argument. Internationally, the UK is strikingly centralised in tax and spend. Whitehall collects 91.8 per cent of tax receipts, while local authorities take 8.2 per cent. Among OECD countries, the average central share is just over half. France and Germany, often held up as highly managed states, are still far less centralised than the UK, raising around a third and a quarter of receipts centrally. If Britain wants Scandinavian levels of local agency, it cannot maintain a constitutional culture that treats local government as a delivery arm for decisions made elsewhere.

Burnham’s central claim is that this centralisation is connected to Britain’s regional inequality, among the highest in the rich world. Taking power out of the centre and giving it to people and places that can use it best, he argues, is the first step in closing that gap. Yet even fellow mayors, and not only those from opposing parties, point out a flaw that is almost embarrassingly obvious once stated. A fixed share of income tax yields very different sums in different places. Lord Houchen, the Conservative mayor of Tees Valley, has warned that if regional mayors were to retain 5 per cent of income tax, London’s 5 per cent would be vastly larger than Teesside’s. A policy sold as empowering the left-behind could harden their disadvantage unless there is a serious equalisation scheme, and equalisation schemes quickly become politically contentious.

Houchen is also sceptical about what any mayor can do when national headwinds are strong. He points to policies such as Rachel Reeves’s £26 billion National Insurance rise on employers and to increases in the minimum wage, both of which have been blamed for weakening hiring. A survey by S&P Global found private firms cutting staff every month since Reeves’s first Budget in 2024. In that climate, a mayor can make improvements at the margin, but cannot easily counteract the macroeconomic drag. As Houchen puts it, mayors add value when the country is working well. When it is not, they are left trying to build a local shelter in a national storm.

This is the uncomfortable tension inside Burnham’s pitch. Devolution can be a tool for more responsive government, but it is not a substitute for national economic competence. If it is presented as the answer in itself, the public will rightly ask why the same political class that failed centrally should succeed locally. Birnie’s criticism is sharper: he argues that the quarter century of devolution has not clearly uplifted economic performance in Scotland, Wales and Northern Ireland. Official figures show the gap in GDP per capita between England and the devolved nations remaining broadly similar between 1999 and 2024. That does not prove devolution fails, but it undermines the claim that it automatically delivers growth.

Those doubts have surfaced in the political messaging around Burnham. Miatta Fahnbulleh, the MP for Peckham who has helped prepare him for government, was pressed on the BBC about why English devolution would deliver what Scotland and Wales did not. Her answer, essentially that power must be devolved further within the devolved nations, captured a belief that more localism is always better localism. She also gestured towards the idea of partnership between the national state, local government and the private sector, which is likely where the more pragmatic version of Burnham’s programme would end up. The question is whether that pragmatism is treated as the core design or as a retreat once the hard parts appear.

There is also the question of democratic consent. Burnham’s proposals are sweeping, but the public has not been invited to vote on them. The English mayoral model itself has always had a complicated mandate. In the 2012 referendums held in 11 cities on whether to introduce mayors, only Bristol and Doncaster supported the idea, and Bristol has since abolished its directly elected mayor role in 2024. Burnham may be popular, and the general frustration with Westminster may be deeper than it has been for decades, but popularity is not the same as permission for a constitutional rewire.

Burnham has added an emotional layer to the argument, promising to bring the country together so that it faces the same way and pulls in the same direction. He has spoken of spending much of his time in Manchester, establishing a “No 10 of the North”. Yet there is a fine line between symbol and provocation. Lord Turnbull, a former Cabinet secretary under Tony Blair, has dismissed the idea as arbitrary and potentially alienating, asking why government should follow the prime minister’s personal geography. Britain’s complaint about London is not simply that ministers live there. It is that the state behaves as if its national interests are synonymous with a few square miles around Whitehall.

The politics of growth add another layer of friction. Burnham’s renewed focus on the North sits uneasily alongside the more recent Labour growth strategy associated with Keir Starmer and Reeves, which emphasised Oxford and Cambridge innovation and the attraction of artificial intelligence firms to London. There are signs that approach has delivered some results, with AI companies clustering around King’s Cross. Burnham’s supporters would argue that it merely deepens existing patterns, reinforcing the very concentration of high-value work that produces regional inequality. His critics will warn that a heavy-handed redistribution of resources from the most productive parts of the economy risks slowing the national rate of growth, leaving less to share out in the first place.

The international models most often cited in favour of devolution are also those most likely to frighten British politicians. Dorothée Allain-Dupré, an OECD expert on regional development, points to Nordic countries as the most successful unitary states that have decentralised. Their strength is not only in assigning responsibilities locally, but in balancing local revenue and investing in the capabilities of staff working in cities and regions. Sweden is held up as particularly innovative, with responsibilities that vary depending on local capacity. Yet Sweden’s model also involves local authorities taxing income at around 32 per cent on average, with an additional central tax on higher earnings. It is difficult to imagine British taxpayers calmly accepting councils or mayors with that kind of rate-setting power, particularly in places already angry about council tax and service decline.

That is why the real test of Burnham’s programme will be less about rhetoric and more about institutional design. Paul Swinney, chief economist at The Data City, has warned against the easy promise of “growth in every postcode”, which can become a way of avoiding prioritisation. Governments announce growth, spread money thinly, and then claim the concept failed when nothing changes. Devolution could become a more elaborate version of that habit, a larger machine for conditional grants and political bargaining, unless it involves genuine autonomy and a willingness to accept that not every place will be transformed at the same speed, or by the same policy mix.

Turnbull’s question is therefore not procedural but fundamental: will big city regions have income sources they control and are accountable for, or will the centre simply devolve responsibility while retaining real power through funding rules and performance targets? Britain has a talent for building structures that look like decentralisation while operating like delegation. The risk for Burnham is that he either creates a patchwork of underpowered institutions that cannot deliver, or pushes through fiscal powers that expose weaker regions to shocks they cannot absorb.

Devolution, in other words, is neither a magic cure nor a guaranteed calamity. It is a wager on whether Britain can build capable local government at pace, maintain fairness between tax bases, and accept more visible variation in policy outcomes across the country without descending into grievance politics. Burnham is betting that the alternative, another decade of centralised management and regional resentment, is the larger danger. The country will discover soon enough whether the machinery of the state can be rebuilt without breaking the bonds that hold it together.