That England is among the rich world’s most centralised countries underpins Andy Burnham’s critique of the economic history of the past 40 years. Only post-communist Europe deindustrialised as rapidly as Yorkshire and the Midlands did in the 1980s. Centralisation did not close every factory or pit, but left regions without the powers, finance or institutions to cushion the shock or build a resilient, replacement economy. Hence Mr Burnham’s radical and welcome plan to unbundle English government.
There are three facets to his devolution programme. The first are the detailed and concrete proposals contained in a cabinet paper Mr Burnham released on Friday. This appears to be a blueprint to create a decentralised state organised around mayors as the key regional economic actors, while jointly governed pan-regional agencies could emerge, say for transport, energy, investment and industrial systems, that cross mayoral boundaries. Regions without mayors will get a chance to have one – or limit themselves to weaker powers.
The second, outlined in the Guardian and later confirmed by No 10, is that mayors will be able to keep income-tax and business-rate revenues, with the forthcoming budget and spending review deciding on how much. Before entering No 10, Mr Burnham proposed a third pillar: a duty, modelled on Germany’s Basic Law, requiring English regions to pursue equivalent living conditions nationwide.
Following this logic, a mayoral authority would receive a share of tax revenues and benefit when its economy and tax base grow. But the national government would continue redistributing resources so that poorer places can provide comparable services and possess meaningful investment capacity. Without such an equalisation measure, disparities would widen. One thinktank pointed out that if mayors received 2.5% of the 20p basic rate of income tax, London would get £2.3bn in 2026-27 while Hull and East Yorkshire would get £135m.
Ben Houchen, the Tory mayor of Tees Valley, wants to turn devolved income-tax revenues into new powers to offer tax rebates. That mistakes a regional investment settlement for a tax-cutting competition: poorer places would forfeit the cash needed to rebuild transport links as well as skills and industrial capacity. What some rightwingers seek is to turn regional elections into tax-cutting auctions over who can return the most public money. But cash giveaways now would just mean the bill of the underinvestment would land later.
England’s devolution map remains incomplete, but Mr Burnham wants to finish it. New mayors are due in Cumbria, and Cheshire and Warrington, in 2027, followed by ones in southern and eastern regions in 2028. The rest of the country will be asked to choose between mayoral strategic authorities with stronger powers or non-mayoral “foundation” bodies operating with more limited controls.
A new Harvard Kennedy School and King’s College London paper, co-authored by the former Labour minister Ed Balls, argues that Britain’s weak productivity stems from persistent regional divides, with the gap between south-east England and the rest of the nation wider than that separating east and west Germany today. One reason this has not been tackled is that Britain has never had both No 10 and the Treasury committed to regional growth. Now it does. The country may finally discover what happens when the centre pulls in the same direction.
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