Andy Burnham's Devolution Vision for UK Economic Growth
Andy Burnham has pledged the "biggest rebalancing of power our country has seen" as part of his agenda for the UK if he becomes the next prime minister.
In his first major policy speech on Monday, Burnham outlined plans to transfer power from Whitehall to all regions of the UK, including Greater Manchester and other English city regions.
The former Mayor of the Greater Manchester Combined Authority also indicated intentions to expand devolution in Scotland, Wales, and Northern Ireland, though without detailed specifics, and promised to grant Greater London additional devolved powers.
Burnham, who was sworn in as the new MP for Makerfield last week, described this extensive devolution of power as critical for achieving higher economic growth across the UK.
"We will never get growth up to the level Britain needs unless every single postcode in the land is set up to contribute to it,"he stated.
BBC Verify has examined the potential impact of further devolution on economic growth throughout the UK.
What Powers Are Devolved?
Scotland has experienced extensive devolution, with the Scottish Parliament holding authority over health, education, local government, environment, justice, and policing.
Holyrood also controls most income tax rates, excluding the tax-free personal allowance, and has some welfare powers.
The Welsh Senedd has more limited powers compared to Scotland but manages the NHS in Wales, education, local government, and housing.
The Senedd can vary income tax rates but lacks justice or policing powers.
Under the 1998 Good Friday Agreement, the Northern Ireland Assembly holds significant devolved powers, including health, education, and housing.
In England, some devolution has occurred outside city regions over the past decade, though less extensive than in Scotland, Wales, and Northern Ireland.
Manchester stands out with some of the most comprehensive devolved powers among English city regions, including authority over transport, housing, skills, and health spending.
Has Devolution Helped Growth in the Nations?
Most economists studying devolution's impact have not found significant increases in overall economic growth rates in Scotland, Wales, and Northern Ireland over the past 25 years.
There is no clear evidence these nations have caught up with the UK average, though the UK average is heavily influenced by London's and the South East's performance.
Official statistics show that GDP per capita in 2023 for Scotland, Wales, and Northern Ireland remains broadly similar relative to the UK average as in 1998: Scotland at around 93%, Northern Ireland at 83%, and Wales at 74%.
However, analysts caution this does not imply devolution has failed economically, as these nations might have declined relative to the UK if still centrally governed.
Events such as Brexit may have disproportionately affected some UK regions, complicating the assessment of devolution's impact.
Some Scottish nationalists argue full independence is necessary for Scotland to realize its economic potential; similar views exist among some Welsh nationalists.
Has Manchester Grown Faster Due to Devolution?
Burnham has cited Greater Manchester as a case study demonstrating how devolution can enhance economic growth.
The city region has progressively gained more powers through successive devolution deals since 2009.
In 2014, under Chancellor George Osborne, Greater Manchester received increased powers over transport, housing, and strategic planning.
Official statistics indicate Greater Manchester has grown faster than other English city regions, including London, since 2015.
These statistics also show notable productivity growth in Manchester city and the wider Greater Manchester area since 2020.
Some analysts question the reliability of recent productivity figures, noting that some high-growth areas are residential and that data errors may partly explain the results.
Nonetheless, many economists agree Greater Manchester has outperformed other UK city regions over the past 15 years, partly attributing this to devolved powers, especially in transport, planning, and housing.
Devolution has supported housing achievements by empowering the Greater Manchester mayoralty to set housing strategy, direct investment funding, and coordinate affordable housing programs.
Devolution has also facilitated increased investment, as the mayor's role includes encouraging companies, particularly multinationals, to invest locally to create jobs and stimulate growth.
Economists highlight the Bee Network of buses, which brought the system under mayoral control, and the promotion of private sector investment in Manchester city centre.
"There's been a recognition [among the Greater Manchester leadership] that the future of Manchester is a big city that is offering lots of different opportunities, but particularly to higher value added activity,"said Andrew Carter of the Centre for Cities think tank.
"They're prepared to do what is required - build the housing, support the expansion of the university, support research and development, try to introduce a transport system which really supports all of that kind of stuff. And as a result you become more attractive to investment, whether it's foreign or domestic."
Would Devolution Help the Wider UK Economy to Grow Faster?
Many economists argue that the UK's economic growth has been constrained by the concentration of economic activity in London, while cities in the Midlands and North, such as Manchester, Birmingham, Leeds, and Newcastle, have lagged.
Evidence from other European countries like France, Germany, Spain, and Italy shows their second-tier cities have productivity levels closer to their capitals.
For example, output per worker in French cities such as Toulouse and Lyon is considerably closer to Paris's levels than Birmingham's and Manchester's are to London.
Similarly, major German cities like Munich and Frankfurt and Spanish cities such as Barcelona and Madrid have productivity levels more aligned with their capitals, avoiding the extreme disparities seen in the UK.
Analysts attribute this to higher levels of devolution in those countries.
The Resolution Foundation has argued that closing the productivity gaps between London and other UK cities would not only boost jobs, incomes, and prosperity regionally but also enhance the national economy's performance by raising overall economic activity and long-term growth potential.
How Much Would Devolution Cost?
Burnham is not the first politician aiming to stimulate growth in the North and Midlands.
Boris Johnson's Conservative government pursued "levelling up" the UK economically.
Some analysts contend Johnson's initiative failed partly due to insufficient state resources and investment.
The government established a £5bn levelling up fund aimed at regenerating high streets and upgrading local transport.
However, analysts note that Germany's post-reunification plan to raise East Germany's productivity to West Germany's level cost approximately €2 trillion in state spending between 1990 and 2014, equating to about £70bn annually.
Burnham pledged on Monday
"to strive for equivalent living conditions in all parts of Britain"and said this would draw from Germany's "basic law," which contains similar wording.
He also stated he would adhere to "current fiscal rules" and the existing Labour manifesto, likely limiting borrowing or tax increases to finance devolution.
Additional reporting by Aidan McNamee
