Can Burnham's devolution plan succeed?

Andy Burnham has not been afraid to ruffle Westminster feathers, and his first big structural move as Prime Minister is true to form: England's regional mayors could keep a share of income tax and business rates, with the detail promised at the Budget. Many have called for fiscal devolution for decades, and with reason: England remains one of the most centralised advanced economies in the world. Everyone in local government knows the cost: a decade of one-year settlements, competitive bidding rounds that consume officer time whether or not they pay out, and a begging-bowl culture that makes long-term planning an act of faith.More funding for local leaders should mean more scrutiny of local leaders and real consequences for failure, and neither is in the plan as yet. Nor is there much for the councils beneath the mayoral tier, who deliver the services residents actually notice. Few in local government would quarrel with the ambition. The difficulty is that the plan hands local leaders revenue without saying what the money is for. That is a choice about how the system works rather than a detail to be filled in at the Budget, and it is the wrong choice. Funding with no stated purpose may look like trust in local leadership, but it leaves the purpose to whoever defines it first, and sure enough the vacuum was filled within a fortnight. Conservative Tees Valley mayor Ben Houchen announced plans for a rebate scheme to hand his share back to taxpayers, and Reform mayors in Hull and Greater Lincolnshire are reportedly exploring the same. The sums involved are too small to transform a region, but large enough to fund a political gesture.The plan has so far been thin on who exactly is accountable, and on what happens when things go wrong. Ever since the North East voted down its regional assembly in 2004, the case against devolution has been that Whitehall passed responsibilities down without the money to act on them, and after two decades of social care pressures and Section 114 notices that critique still resonates. Its mirror image is just as bad: money passed down without accountability for what it must deliver. More funding for local leaders should mean more scrutiny of local leaders and real consequences for failure, and neither is in the plan as yet. Nor is there much for the councils beneath the mayoral tier, who deliver the services residents actually notice. February's settlement was a genuine step forward, delivering fair funding reform at last and the first multi-year allocations in a decade, but the numbers for 2027/28 and 2028/29 are not yet fixed and the final allocations for those years will be confirmed in their respective years. That is progress rather than permanence.There is a better version of this reform, one that fixes a third problem along the way. Replace council tax and stamp duty with a single national property tax at 1% of value, and return the revenue to councils through a formula set in statute rather than renegotiated at every Spending Review. Because that formula funds a guaranteed baseline of local services in every council area, purpose is built into the funding rather than added afterwards, and a defined baseline makes accountability measurable at last: residents know what their council must deliver, failure is visible, and local leaders compete on what they build above the baseline rather than on who can hand the money back fastest.In Prosperity 2030 we costed exactly that: a 1% proportional property value tax would raise around £73bn a year, against the £55bn that council tax and stamp duty raise between them. Council tax is still charged on 1991 valuations, and a flat percentage of current value ends that holdover. Abolishing stamp duty removes a tax on moving that has frozen the property market, freeing families to right-size and workers to follow work. Phased in over three years, with allowances for recently paid stamp duty and deferral for anyone who wants it, the switch would generate an additional £18bn a year for local services.Rather than rewarding places where incomes are already high, a statutory settlement funds every area, and defining what services that funding buys holds leaders to delivering them. That is the difference between a handout and a governing system, and it would end the ritual that has defined local government finance for a generation, a settlement confirmed year by year with the gap closed by reserves and hope.Burnham has the right instinct: power and money belong closer to the people in every part of the country. If the Budget puts a service baseline and a statutory formula at the centre of the settlement, this reform can succeed. As it stands, it will be remembered as the moment the rebate wars began. Andrew Percy is co-chair of the Social Prosperity Network at the UCL Institute for Global Prosperity and lead author of Prosperity 2030.

Title

FISCAL DEVOLUTION

Can Burnham's devolution plan succeed?

By Andrew Percy | 02 September 2026

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