On home ground: The future of devolution

The Labour government has made an impressive start on devolution. More places have devolved powers to deliver on their regions’ priorities, more mayors have control over spending to invest in their places, and Whitehall is coming around to the idea that local leaders should have a larger role to play in driving economic growth.

In just two years it has introduced the English Devolution and Community Empowerment Act setting out a clear framework for devolution, given some mayors single spending pots through integrated settlements for Mayoral Strategic Authorities (MSAs), established the Council of Nations and Regions and the Mayoral Council to bolster multi-level collaboration, and signalled a willingness to go further on fiscal devolution.

Yet there remains a nagging sense that the agenda lacks a clear end destination. 

From its beginnings well over a decade ago, the devolution agenda in England has been piecemeal and incremental. Change has been positive but often slow and uneven. Places have been empowered, but the centre still dominates decision-making. The result is a programme that is welcome, but incomplete.

With Andy Burnham set to become the new prime minister, there is an opportunity to change this. 

Burnham remade his political career as mayor of Greater Manchester and has seen first hand the benefits of empowered local leadership as well as the continued challenges of overcentralisation. Now, on coming to Downing Street, devolution will be central to his agenda. In his first major speech following his victory in the Makerfield by-election Burnham pledged to deliver “the biggest rebalancing of power the country has ever seen”.

The key task for the new government is putting this into action. To deliver on this promise means going further and faster on devolution: handing new powers and fiscal responsibilities to local leaders, accepting that this means some loss of control for the centre, and spreading the benefits of devolution more broadly. But crucially, it must also involve a more compelling vision of what a genuinely devolved country should look and feel like.

Here, we make the case that for a vision for devolution that rests on three key foundations:

1. driving economic growth and reducing regional inequalities
2. democratic renewal and rebuilding trust in politics
3. rewiring the state and embedding devolution.

Within each of these strands there are key policy actions that the next government should take to go further and faster on devolution.

1. Driving economic growth and reducing regional inequalities

England remains one of the most centralised countries in the developed world. Despite the progress on devolution, many of the decisions affecting key drivers of economic growth such as transport, skills, employment and investment remain concentrated in Whitehall. 

This means that investment decisions are often delayed, trapped in Whitehall and Treasury approval processes. That the wrong investment decisions are taken, shaped by central frameworks and targets and misaligned with local priorities. Or that there is ongoing uncertainty over investment decisions with short-term settlements and frequent spending reviews failing to give local leaders the certainty they need to invest over the long term. As a result, economic regional disparities in England remain entrenched and the whole country pays the price. 

A successful and bold approach to devolution can begin to change this. 

Burnham has rightly argued that “growth cannot be ordered from the top down” but must instead be “nurtured from the bottom up” by local leaders who are better placed to understand the needs of their economies and delivery on their place's priorities. He has framed devolution as one the key tenets of an agenda to boost economic growth around the country, one capable of unlocking the potential of every place. 

To do so, we must go further and shift the dial to ensure that devolution can drive economic growth and play a key role in reducing regional inequalities. Four things matter most.

More powers for mayoral strategic authorities 

The next stage of devolution should aim to provide mayoral strategic authorities (MSAs) with a comprehensive baseline of powers while ensuring that the pathway towards deeper responsibilities and institutional maturity can be sped up. This should be a key priority in the coming years.

Wider responsibility for transport integration is vital. Although some MSAs have acquired important transport responsibilities, powers remain fragmented and uneven. The ambition should be for every strategic authority to exercise integrated control over local transport networks comparable to the powers available in London.

The same logic applies to skills. Local economies frequently face shortages that national programmes struggle to address effectively. Local leaders are better placed to understand the skills gaps in their local economies and convene stakeholders to address them. Beyond adult skills, devolving greater control over 16–19 education and employment support would allow local leaders to tailor provision to employers' needs while giving young people across the country, including those who do not opt for the university route, a chance for a better job and better wages.

Planning, regeneration and elements of preventative health policy are also areas where more powers could be devolved. Ultimately, the long-term vision must be that England's regional level of government should enjoy powers that more closely resemble those exercised by more empowered regional governments across Europe such as those in France, Germany, or Spain. 

Increasing local capacity: level up regional institutions

However, transferring responsibilities without strengthening institutions would risk setting devolution up to fail. As MSAs assume greater responsibilities they will require substantially greater capacity. Whitehall should actively support this transition through secondments, specialist expertise and investment in institutional capability. Rather than viewing devolved authorities either as competitors or as less important arenas of government that deliver departmental agendas, Whitehall departments should regard them as essential drivers of change in their places.

Fiscal devolution: let mayors build

Perhaps the greatest weakness in England's current devolution settlement is MSAs continued financial dependence upon Whitehall. The government's decision to enable MSAs to introduce visitor levies is an important first step, while recent commitments to expand fiscal devolution suggest that there is growing recognition of the limitations of the current model.

Genuine devolution requires much more than modest new revenue streams. An ambitious approach to fiscal devolution would give mayors the fiscal powers and resources they need to boost regional economic growth through investing in things like transport, housing and regeneration.

To achieve this, MSAs should have revenue devolution with an assigned share of tax receipts that grow with local economic success, encouraging investment in infrastructure and productivity; borrowing powers with the ability to borrow against these assigned revenue streams – such as a share of local income tax – to unlock upfront investment; and genuine autonomy to apply local knowledge about where revenue is best spent to drive growth.

Different places will require different fiscal tools, reflecting their economic circumstances, but every strategic authority should possess meaningful incentives to grow its local economy and there should be a clear path to progress and take on greater fiscal responsibilities. We will be published more detailed work on exactly what this should look like in the coming months. The government should make its ambition on fiscal devolution clear at the next budget.

Fixing local government funding: avoiding the ‘plugging gaps’ trap

At the same time, fiscal devolution cannot become a substitute for fixing local government finance. 

England's councils remain under severe financial pressure after more than a decade of constrained funding. If MSAs are forced to divert devolved resources simply to keep constituent councils financially afloat, devolution risks becoming a mechanism for managing decline rather than driving renewal.

As Burnham has argued, councils struggling to maintain basic services have little capacity to deliver ambitious regeneration or economic transformation of things like town centres and high streets.  He noted that the stark difference in resources between national government and local government is holding back growth, adding “if councils can’t fix potholes, what chance have they got to deliver major regeneration schemes”.

The government's recent increases in local government funding are welcome, but while challenging in the current economic climate, restoring councils' long-term spending power must remain central to any credible programme of regional growth. Reforming adult social care financing must form an essential part of that settlement.

2. Democratic renewal and rebuilding trust in politics

The UK faces a crisis of political trust. Almost half of people (46 per cent) now say they “almost never” trust governments of any party to act in the national interest ahead of their own party interests. Confidence in political institutions has fallen over many years, voter turnout in local elections remains low, and too many people feel that politics is something done to them rather than with them. 

Local and regional government is more trusted than Westminster, but public awareness of regional government remains uneven, and many citizens still struggle to see how they can influence decisions that affect their communities.

Parties across the progressive spectrum have argued that Westminster is “broken”, that politics has become too distant from people's lives, and that power needs to move closer to communities if citizens are to regain a sense of hope, agency and ownership over the future of their places. The next phase of English devolution must also be about rebuilding our democracy from the bottom up.

This points towards an important shift in how we think about devolution. Too often, the debate focusses almost exclusively on a wrangling of power from Whitehall to regional government. But genuine devolution should not stop at the mayor’s office. It should continue downwards into neighbourhoods and communities themselves.

Community power: agency all the way down

The government's growing interest in community empowerment is welcome. There are provisions within the Devolution Act to enhance community powers, and the Pride in Place programme is a positive first step in giving struggling communities much needed agency and resources. Nevertheless, the community agenda and the devolution agenda have too often run on parallel tracks when they should reinforce one another. 

The most significant change in putting communities at the heart of devolution involves strengthening hyperlocal government, either through the expansion across the country of reformed parish councils or the creation of new neighbourhood boards across England with meaningful responsibilities, adequate resources and at least 50 per cent community representation. 

These bodies should be embraced by local authorities and MSAs to help shape decisions about the future of their places and should have the rights to seek powers from MSAs and councils where they can demonstrate the capacity to exercise them effectively. Beyond this, exploring how the community right to buy provisions in the Devolution Act can be strengthened, with communities having the resources needed to take control of local social infrastructure is crucial.

These reforms would make devolution feel tangible in everyday life. Rather than viewing regional government as simply another layer of administration, citizens would increasingly experience power flowing towards their own neighbourhoods.

Democratic innovation: experimenting with participatory democracy

Devolution should also give places the opportunity to do democracy differently and experiment with new forms of democratic participation. These initiatives recognise that representative democracy alone cannot bridge the growing gap between institutions and citizens.

Some local authorities have already begun exploring approaches such as citizens' assemblies, deliberative forums and participatory budgeting. The next government should actively encourage these innovations. An early priority for the new prime minister should be giving MSAs and local authorities funding and guidance to embed participatory practices across policy areas, from climate action and transport planning to neighbourhood regeneration and public health. 

This approach would be popular with the public – our recent polling suggests that almost 60 per cent would be in favour of citizens assemblies – and could help rebuild confidence that decisions are being made openly, fairly and with communities rather than simply imposed upon them. Participatory democracy shouldn’t just be used on a one-off basis, but over time, should become embedded in local democracy through practices such as standing citizens assemblies.

Renewing local democracy: driving up turnout

Turnout in many local and mayoral elections remains stubbornly low, undermining both democratic legitimacy and political equality. If devolution is to become a central feature of England's constitutional settlement, greater attention should be paid to increasing participation in local and mayoral elections.

Steps to do so could include aligning council and mayoral election cycles, replacing elections by thirds with whole-council elections every four years, and giving local government and MSAs more opportunities to pilot innovations such as early voting, multi-day voting or mobile polling stations.

At the same time, our increasingly fragmented party system has exposed weaknesses in first past the post system at both the national and local levels. Given the national multi-party political context as well as Burnham’s  support for electoral reform, the debate about changing the voting system is likely to become more salient. This should include local government as well as Westminster, including considering whether a more proportional electoral system would produce councils and MSAs that better reflect the political opinion within communities they serve.

3. Rewiring the state and embedding devolution

Taken together, these economic and democratic reform should point towards something more than further incremental progress on devolution. 

The future expansion of devolution must be part of a wider programme to fundamentally transform governance and rewire the way the state operates, ending the status quo of Westminster and Whitehall centralisation. 

Andy Burnham’s commitment to establishing a new Number 10 North that “will be the nerve centre of a rewired Britain… the conduit through which we redistribute powers and resources across the UK” is positive. To be truly effective, this work must ensure every place benefits from local control and embed devolution as a core part of UK democracy and the political constitution.

Completing the map: rolling out mayors everywhere

Although substantial progress has been made, over one-quarter of the population are still not covered by an MSA. The new government should ensure that every part of England benefits from agreeing a devolution settlement before the end of this Parliament, stepping in if required to help tackle local gridlock. Leaving large gaps risks creating a two-tier England in which opportunities and the benefits of devolution depend on geography rather than need.

The conversation on regional devolution shouldn’t stop at England's borders. Greater regional devolution within Scotland and Wales for cities like Glasgow, Edinburgh and Cardiff could complement national devolution by strengthening cities and local economies while reducing the concentration of power within the devolved governments themselves. A genuinely multi-level UK should recognise that decentralisation is valuable at every level of government. 

Looking further ahead, there may also be a case for reviewing whether the current geography of all strategic authorities remains appropriate. As powers deepen and fiscal responsibilities expand, some existing authorities may prove too small to exercise responsibilities comparable to scale of regional governments elsewhere in Europe. While local identity should remain important, future reforms may require greater emphasis on strategic geography and institutional capacity.

The organisation of the state also needs to catch up with devolution. Many public services continue to operate across boundaries that bear little relationship to mayoral geographies. Aligning agencies and service boundaries more closely with strategic authorities would enable genuinely place-based policymaking.

Embedding devolution: a written constitution? 

A weakness of England's devolution settlement is that it largely remains politically rather than constitutionally entrenched. Although a significant statutory basis has been established thanks to the government’s Devolution Act, the agenda’s long-term success and sustainability still rests too much on goodwill or the priorities of the government of the day. In many cases, a future administration could seek to reverse reforms that have taken years to establish. This makes constitutional reform increasingly essential.

For one, the Mayoral Council has emerged as a more practical forum for dialogue between central and regional government, as has The Council of Nations and Regions. Placing these bodies on a statutory footing would be an important first step in helping to embed regular intergovernmental working as a permanent feature of the UK’s constitutional architecture. 

Ultimately though, we should begin asking a bigger constitutional question. Not whether devolution should continue to evolve gradually, but what kind of state devolution is ultimately creating and potentially whether the longer-term destination is a more explicitly federal UK. This question should be considered alongside the broader question of whether British democracy and human rights would be best served and protected through a codified written constitution. 

A chamber of the nations and regions: reforming the Lords

There is also a need to ensure that local and regional voices are considered within any other potential constitutional reforms. This should include within a longer-term ambition to significantly reform the second chamber; an issue Burnham has reiterated his support for recently. 

Previous Labour backed proposals have argued for replacing the House of Lords with a chamber of nations and regions. While reforming the Lords should be done through a democratic and public convention including citizens assemblies to determine both the form and function of a renewed second chamber, the option of a new second chamber with strong territorial representation through local and regional leaders having a role at the centre of government and national legislation could be a positive step in strengthening cooperation between different layers of the state. 

Looking forward

Devolution must become the organising principle of a rewired, forward-looking UK – one that drives economic growth and reduces regional inequalities, renews democracy and rebuilds political trust from the bottom up, and becomes firmly established within the governance of the country.

Achieving this means moving beyond incrementalism. It means giving regions not only more responsibilities but the powers, resources and democratic legitimacy to exercise them well. It means empowering communities as well as mayors. And it means embedding these changes constitutionally so that they endure. 

The incoming prime minister has clearly signalled his ambition on this agenda; he now has the opportunity to deliver it.