Devolution is a hot topic as Andy Burnham puts it front and centre of his prime ministerial offer, but devolution lessons from Wales reveal critical pitfalls. As a journalist covering Welsh politics for a decade, I have seen what happens when devolution isn't done right. The UK remains the most fiscally centralised country in the G7, with over 90% of tax revenue controlled by Westminster. This imbalance must be addressed, but we need to learn from Wales.
Why devolution fails without proper tools
The Welsh government has responsibility for economic development, but key levers like borrowing capacity remain in Westminster. In fact, Wales has less borrowing power than a local council. Devolution without fiscal tools is set up to fail. Local authorities in the UK have prudential borrowing powers to fund capital expenditure without central consent, yet the Welsh government lacks this flexibility.
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Comparing devolution models: Wales vs. US states
| Feature | Wales | US States |
|---|---|---|
| Tax revenue control | Less than 10% | About 50% |
| Borrowing powers | Less than a council | Independent bond markets |
| Economic levers | Limited | Full control |
This table highlights the stark contrast. In the US, states control roughly half of government spending. In the UK, the central government dominates. The prime minister also serves as England's first minister, akin to the governor of Texas being US president. This centralisation is bizarre internationally.
Key takeaways for Andy Burnham
- Devolve tools, not just responsibilities – Without borrowing and tax powers, devolution is hollow.
- Learn from Welsh mistakes – Wales has 25 years of experience showing what not to do.
- Match rhetoric with reality – Sudden interest in devolution must be backed by structural change.
Andy Burnham's plan must include genuine fiscal devolution. The opportunity is immense, but only if we avoid the traps Wales encountered. Rationalised devolution can transform the UK's economic landscape.
FAQ
What is fiscal centralisation in the UK?
Fiscal centralisation means that over 90% of UK tax revenue is collected and controlled by the central government in Westminster, leaving limited financial autonomy for devolved nations like Wales.
Why does Wales have less borrowing power than a council?
The Welsh government lacks prudential borrowing powers that local authorities have, meaning it cannot fund capital projects without direct central government consent. This severely limits investment in economic development.
How can Andy Burnham improve devolution?
Burnham must ensure that devolved governments receive both responsibilities and the fiscal tools—such as borrowing capacity and tax control—to effectively drive growth, learning from Wales' mistakes over the past 25 years.
As the UK debates devolution, the lessons from Wales are clear. Without proper tools, devolution is a promise unfulfilled. Andy Burnham has a chance to get it right, but only if he listens to those who have seen the failures firsthand.
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