Andy Burnham’s devolution announcement is a strong start on his priority agenda

Friday’s ‘cabinet statement’ announced that mayors will gain new powers and, more radically, will be able to retain a portion of locally raised income tax and business rates, replacing grant funding and so giving mayors a longer-term funding stream with fewer Whitehall constraints on how the money is spent. These are big changes to the devolution settlement in England.

Burnham is right to have prioritised this announcement in his first two weeks. Cabinet buy-in for the agenda is critical if levers across central government are to be devolved. And his longer-term ambition – of a slimmed-down Whitehall focusing on “the responsibilities that are best exercised at a national level” with more active mayors and local government – is a compelling vision to organise the agenda around. 

The next steps are critical as Burnham fleshes out his agenda in an autumn white paper. Covering all of England with well-equipped strategic authorities and designing an effective local accountability system are especially important if he is to take his opportunity to rewire the state in England.

An early statement of intent on devolution was needed

As a cabinet statement, today’s announcement represents agreement across the most senior ministers in government that it will devolve according to these principles. That includes some specific commitments but also a deeper change: the question should be “why can this not be devolved” rather than “why should it be devolved”. 

This matters. Governments’ devolving zeal often wane as they get used to holding power at the centre. New Labour introduced Scottish, Welsh and London devolution in their first term but did little more, especially in England, beyond then. Recent attempts to devolve more powers have also been partially stymied by the reluctance of some departments to give up control of powers in their area. 

This has sometimes been for understandable reasons – for example a perception that ministers will still be on the hook for local policy decisions – but has led to less effective devolution. Mayors’ relatively limited powers are one example of this. The whole cabinet signing up to this statement can leave no doubt that devolution is a priority. 

Burnham’s initial priorities for devolution have a sound logic

We learned some specifics about this government’s devolution programme. Mayors will be given more flexibility to decide big local transport investments, such as trams. And where mayors have previously only had responsibility for post-19 education they will now also control 16–19 technical routes. This builds on existing mayoral devolution, which has focused on economic levers, and aligns with past IfG recommendations.

The government also set out a positive vision for a more local, joined-up model of public services. The details are still vague – although the nascent Greater Manchester ‘prevention demonstrator’ could provide a starting blueprint – but the commitment to aligning services’ boundaries, giving mayors more control over employment support, pooling budgets to incentivise spending on prevention and, stabilising local government’s finances are all steps that we have recommended in previous research.

Fiscal devolution could unlock new freedoms but only via difficult trade-offs

Funding mayors through retaining a share of income tax and business rates was the other concrete announcement in today’s statement. Even though Rachel Reeves was already working up plans for some tax devolution, this could represent the most radical part of Burnham’s agenda. Shifting from grants to tax revenue as the main funder of regional government would be a big shift from the past and bring England closer to other countries.

Getting the model right will be crucial, and will require confronting difficult trade-offs. Our past work has highlighted the possible benefits of this shift – from longer-term funding allowing mayors to plan more strategically, to their areas benefiting directly from local growth-enhancing policy, to their being freed from Whitehall constraints on how money is spent.

But there are risks too. Some form of equalising grants will be needed to partially compensate poorer areas, which could undermine some growth incentives while still leading to more public spending in fast-growing areas and less in those falling behind. In the short-term, mayoral budgets will be more volatile than if they were grant funded, and they may need grant top-ups during national crises. And accurately identifying where income taxpayers live will be an administrative challenge.

The new model of tax sharing will be a test of Burnham’s radicalism

Beyond specific trade-offs, which the white paper will need to address, fiscal devolution will also be a clear test of this agenda’s radicalism in two respects.

First, how much funding will flow through tax revenue, and broadly will the new model apply? Had Reeves still be in post, it is likely she would have begun by devolving taxes in a few of the most developed areas first, while waiting for other places to catch up.

Today’s announcement indicated a commitment to give fiscal devolution to all mayors, and possibly to strategic authorities without a mayor too. If this is realised, it will be a decisive break from the past approach and will indicate a re-assessment of the risks of devolving too quickly against the policy failures caused by excessive central control.

Second, how much freedom will mayors have to spend this money? Currently, even the most developed mayoralties must spend ‘flexible’ funds according to a detailed outcomes framework set at the centre. Will fiscal devolution be accompanied by a similar, even if higher level, outcomes framework so that Whitehall is still setting priorities and mayors are empowered delivery partners? Or will mayors have more freedom to spend how they see fit within their functional responsibilities? Reform UK and Conservative mayors’ stated desire to provide ‘rebates’ to citizens with this money demonstrates this tension.

Accountability will be key

This is closely related to how mayors are to be held accountable. The announcement proposes strategic authority chief executives should be local accounting officers, bypassing the Whitehall system. It also prioritises local accountability to voters. This is the right long-term approach, but the local scrutiny system has been a notable weakness of the mayoral model to date, and while the previous government announced some improvement there is not yet a robust system to fully replace Whitehall oversight. The low turnout rates in mayoral elections – only 25% in this week’s Greater Manchester by-election – also suggests voters are not yet fully au fait with the mayoral model.

The statement proposes a stronger role for the Local Audit Office, which could replicate some of the functions the National Audit Office plays in scrutiny of Whitehall. Any new model must resource local scrutiny committees sufficiently to allow them to attract good people and provide genuine challenge, while retaining a mechanism for central government to step in in exceptional circumstances. In practice, the shift to local accountability may need to be more gradual as these organisations are set up.

An incomplete and messy map is a major barrier to realising the long-term vision

The cabinet statement promises a “smaller and more strategic civil service” as powers are devolved. Central government focusing more of its time on policies and responsibilities it is well equipped to discharge is an important benefit of further devolution. But currently when powers are devolved to mayors, Whitehall retains responsibility for the approximately 50% of England (by population) that does not have one. This makes scaling back central government more difficult and the whole system more complicated.

The government wants new authority boundaries decided by 2027 and strategic authorities up and running everywhere by the end of 2028. That is a stretching timetable, especially when much of non-mayoral England is grappling with local government reorganisation. Even where new bodies are established, they often start small and take time to develop capacity. Combined with the ambition to align NHS, police, and fire boundaries to MSA footprints and it could also push out their reorganisations processes, bringing with it extended uncertainty.

To make progress, then, the government will need to prioritise building capacity and capability in strategic authorities, as the statement acknowledges. It will also face similar challenges to the Starmer government, which struggled to get all places to agree on appropriate geographies for regional bodies. It does not currently have the power to compel councils to form strategic authorities, so it will need to make the offer sufficiently attractive without a big fiscal outlay.

A cabinet with a clear vision and common purpose

Today’s cabinet statement represents a clear vision and common purpose for the prime minister’s flagship agenda, and one that far surpasses previous governments in ambition and pace. But now all eyes turn to the white paper to show just how radical the agenda will be – and how this government proposes to overcome the barriers that have slowed previous devolution efforts. The government must have a credible plan to complete the map with new strategic authorities, develop new local accountability institutions, and increase capacity in both if Burnham is to realise this vision.