Devolution as economic renewal
Andy Burnham has launched a bold campaign to reorganize English governance, aiming to transfer authority from London to regional leaders. In a comprehensive cabinet paper released last week, Burnham introduced a blueprint for a decentralized system, positioning mayors as central figures in managing regional economic development. The plan proposes mayors take the lead in areas such as transport, energy, investment, and industry, enabling them to address local needs more effectively.
The structure is flexible, giving regions without mayors the option to establish one or choose weaker governance models. Burnham argues that this decentralized approach is essential for addressing the long-standing economic imbalance between the prosperous south-east and the less developed parts of the country. He sees it as a necessary response to decades of underinvestment and structural decline.
Revenue and redistribution
A central part of Burnham’s proposal involves allowing mayors to retain a share of income-tax and business-rate revenues. The exact percentage they can keep is still under discussion and will be finalized in the upcoming budget and spending review. This financial empowerment is designed to foster local economic growth, while also ensuring fairness through national redistribution to support disadvantaged regions.
Without a system to equalize outcomes, the gap between regions could widen. To counter this imbalance, Burnham’s third policy pillar proposes a national equalization mechanism to maintain living standards across all regions.
Challenges and expansion
Ben Houchen, the Conservative mayor of Tees Valley, has suggested using devolved tax revenues for tax rebates. However, critics argue this strategy would shift the focus away from long-term investment in infrastructure and workforce development. Instead, it could lead to regional elections becoming contests over who can offer the most generous tax cuts, harming the stability of essential services.
Burnham’s devolution plans are still evolving. By 2027, new mayors will take office in Cumbria, Cheshire, and Warrington, with additional appointments in southern and eastern regions by 2028. In other parts of the country, communities will decide whether to adopt stronger mayoral systems or weaker, limited-function governance structures known as 'foundation bodies.'
According to a recent study from the Harvard Kennedy School and King’s College London, Britain's weak productivity is closely tied to persistent economic divides between the south-east and the rest of the country. These disparities are now greater than the economic gap between east and west Germany today. Burnham’s strategy aims to tackle this by uniting the central government and Treasury behind a common goal: regional economic growth.