Why Andy Burnham’s devolution pledge will be tricky to deliver
Andy Burnham has pledged to shift power from Westminster to England's regions, with a key proposal being to let regional mayors keep a share of income tax raised locally to fund economic development. The plan, first floated by Rachel Reeves, is widely welcomed by economists as a way to tackle Britain's deep regional inequalities, since the UK remains one of the most fiscally centralised developed economies, but implementing it will be complex and slow, testing a prime minister keen to show quick results.
The Centre for Cities estimates only around 5% of UK tax revenue currently stays with mayors and councils, compared with 14% in France and 22% in Japan, while the Institute for Fiscal Studies reckons 6–9% of local income tax would be enough to replace existing central grants to mayoral authorities. Risks include wealthier, fast-growing areas such as London and Greater Manchester pulling further ahead of slower regions like the West Midlands and South Yorkshire, potentially entrenching inequality rather than reducing it. The income tax plan would not take full effect until 2028, by which point dozens of new mayoralties, including in Essex, Stoke-on-Trent and Warrington, are also meant to be established, and the OECD has warned that years of austerity have left local government ill-prepared for such an expanded role.
- Burnham wants mayors to keep a share of local income tax
- UK is highly fiscally centralised versus France, Japan
- Risk richer areas like Manchester pull further ahead
- Full rollout not expected until 2028
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England is governed through a highly centralised system: most tax revenue goes to the UK government, which then funds councils and regional authorities. Devolution means transferring some decisions and funding from Westminster to elected leaders in England’s regions, including mayors such as Andy Burnham of Greater Manchester.
Mayors and councils already oversee local services and economic development, but rely heavily on central government grants. Giving them a share of locally raised income tax could give them more control over spending and investment, while changing how regional authorities are funded.
The challenge is making the system work fairly across places with very different economies and resources. It would also require capable local authorities and the creation of new mayoralties, so the transfer of power could take years to put in place.
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The strongest fair case each way — we don't pick a winner.
The case for
Devolution advocates argue that the UK's extreme fiscal centralisation—with only 5% of tax revenue staying local compared to 14% in France and 22% in Japan—demonstrates that English regions can handle greater fiscal autonomy as peer democracies do successfully. Giving mayors control over locally-raised income tax creates genuine incentives for economic growth and investment, allowing regions to develop their particular strengths rather than depending on Westminster grants. Economists widely support the approach as a principled mechanism for tackling inequality by empowering areas through subsidiarity, the notion that decisions are best made closest to those affected.
The case against
The genuine risk is that fiscal devolution could entrench rather than reduce inequality. Wealthier, fast-growing regions like London and Greater Manchester will generate more tax revenue and attract further investment, whilst economically struggling areas like the West Midlands lack the base to compete, creating a vicious cycle of divergence. The OECD's warning that years of austerity have left local government unprepared for expanded responsibilities compounds the concern, and the complex implementation timeline—with dozens of new mayoralties launching simultaneously and full effect delayed until 2028—risks rolling out enhanced fiscal powers precisely when local institutions are weakest and least equipped to manage them.