Andy Burnham Devolution Pledge: Challenges Ahead for UK Mayors 2026

Andy Burnham's devolution pledge to transfer power from Westminster to every postcode faces significant hurdles, as the UK's fiscal centralization complicates local economic development. With the autumn budget approaching, the details of his plan to share income tax with regional mayors are under scrutiny, highlighting the gap between political promises and practical delivery.

The UK's Fiscal Centralization Problem

The United Kingdom remains one of the most fiscally centralized developed nations, with only about 5% of tax revenue retained by mayors and local authorities, according to the Centre for Cities. In contrast, France retains 14% locally, and Japan 22%, illustrating the scale of the challenge. This centralization means that local leaders have limited financial autonomy, often relying on central government grants that can be unpredictable and ringfenced.

Historical Patchwork and Its Consequences

British devolution has evolved as a messy patchwork, with Westminster retaining control while nations like Scotland, Wales, and Northern Ireland push for independence. In England, successive governments have adopted a piecemeal approach, creating dozens of ringfenced funding pots that fostered a 'begging-bowl culture.' Austerity further eroded local funding, making it difficult for mayors to plan long-term investments.

Burnham's Income Tax Devolution Proposal

Andy Burnham's proposal to allow mayors to retain a share of locally generated income tax revenues is widely seen as a step in the right direction. Economists argue that this could help tackle Britain's deep regional inequalities by giving local leaders more control over their economic destiny. However, the Institute for Fiscal Studies estimates that between 6% and 9% of local income tax revenues would be needed to fully replace current central grants, a significant shift in fiscal responsibility.

Implementation Challenges and Timelines

Introducing income tax devolution will take time and requires careful planning. Key challenges include determining the exact percentage of tax revenue to be devolved, ensuring equitable distribution across regions, and avoiding unintended consequences for public services. The autumn budget will be a critical moment for setting out the framework, but many details remain unresolved.

Comparison of Fiscal Devolution Across Countries

Key Takeaways for UK Devolution

• Income tax devolution could boost local economic growth but requires careful design.
• Current fiscal centralization limits the effectiveness of mayoral combined authorities.
• Replacing central grants with local tax shares may reduce dependency but also introduces new risks.
• Political will and cross-party support are essential for successful implementation.

Potential Benefits and Risks

Proponents argue that devolving income tax would incentivize local leaders to grow their economies, as they would directly benefit from increased tax revenue. This could lead to more tailored policies for housing, transport, and skills. However, critics warn that regions with weaker economies might struggle to generate sufficient revenue, widening existing inequalities. The government must ensure that a safety net is in place for less prosperous areas.

Next Steps and Political Realities

Burnham's team is working on the details, but the complexity of the UK's fiscal system means that changes will not happen overnight. The autumn budget will provide some clarity, but full implementation may take years. Moreover, political resistance from central departments and potential opposition from wealthier regions could delay progress. The success of this devolution pledge will depend on sustained commitment and robust policy design.

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