The End of England?
Devolution finally comes under scrutiny
Towering Columns
In The New Statesman, Andrew O’Brien writes that devolution is the sign that Westminster and Whitehall have given up on governing.
The truth is that Westminster and Whitehall have experienced a crisis in confidence. The destructive forces they unleashed to create a “dynamic”, global, service-based economy have deindustrialised and demoralised communities across the United Kingdom through a lack of support for industry and underinvesting in infrastructure. These forces have already seen Scotland and Wales turn their back on the metropole. Now the same forces are ripping through England, particularly the North, creating a new revolt against the centre. Instead of confronting this challenge and forging a new political economy, Westminster has convinced itself that the solution is to give up. Worse, in many cases the plan is to continue the failed economic policies of the past several decades but push political responsibility down to a regional level, in the hope that this will spare the centre from relentless criticism…
If London, with all its agglomerative power, could not withstand the impact of the financial crisis and generate momentum for a recovery, how is the North East supposed to overcome decades of deindustrialisation? How will providing control over 2p of income tax help the Greater Lincolnshire Combined County Authority save the region’s steel industry or set up new industrial clusters? Even the federalised and much vaunted German states with their Mittelstand of specialised manufacturing businesses are struggling to resist Chinese overproduction.
In many ways devolution is a strategy for yesterday’s economy, an economy that benefited from a stable global order, a temporary boom in financial services and relatively free trade. Ironically, the same was true for the “golden age” of Victorian municipalism in the mid-19th century. However, in the world of cutthroat great power competition and a battle for production, devolution is irrelevant.
For The Telegraph, Ben Houchen says that Burnham will fail if he tries to govern the country like a Mayor.
But the Burnham story has a structural flaw that his admirers have never properly examined. He has governed, for nearly a decade, in a role that is built to shield you from the hardest decisions in public life. I know that, because I’m a regional mayor too. We control devolved budgets for transport, skills and economic development. We attract investment, announce funds and champion our places on the national stage. We rarely make the calls that lose you friends, crater your poll ratings and keep you awake wondering whether history will forgive you. We don’t control welfare, set tax rates or face the bond markets when a fiscal commitment unravels. The architecture of the role keeps you, by design, once removed from the genuine brutality of true governing.
Burnham has exploited that reality brilliantly. We saw it during the Covid pandemic, when all he had to do was criticise the Government – and there was no shortage of material. His mayoralty has become the politics of perpetual announcement: new funds, new projects, new ambitions, all received with something approaching reverence in Greater Manchester. He even held formal responsibility for the region’s police force – one of the largest in the country – while delegating operational oversight to his deputy mayor.
The difficult calls, in other words, were managed away. And for nearly a decade he inhabited a political environment in which the answer to most problems was bashing Westminster, a new fund, and another platform appearance at which people cheered. That environment has no equivalence in Downing Street, and the habits it breeds are precisely the wrong ones for the job he is about to take on.
For The Times, William Hague argues that decentralisation is no substitute for taking tough decisions on the economy.
The new PM will need an iron chancellor to cut welfare spending and central government departments, without increasing tax burdens, if local power is to stand a chance of success. He should make his choice with that in mind, quietly and ruthlessly. At the moment, leaks and rumours about who is in the running risk leading to a power struggle over the job that will make it harder to choose the right person.
The second and perhaps greatest challenge is that the technological revolution sweeping the world threatens to swamp all these hopes and good intentions. Burnham recognised the pressing need for government procurement to support innovative UK businesses. But the “reindustrialisation” he advocates will happen only if we are at the forefront of robotics and entirely new manufacturing techniques. The jobs for young people will only be there if we are home to digital industries. Rewiring the British state for both the opportunities and dangers of AI is the most vital rewiring of all. Yet AI did not feature in this defining speech. The political, ethical and economic issues it raises will insert themselves into every hour of his premiership.
After this speech, the hope that Andy Burnham is trying to offer is clear enough. Devolution of power is his central mission. He should add financial discipline and rapid adaptation to new technology as equally vital missions. If not, they will overwhelm him.
In The Spectator,Stephen Daisley says that we need to learn from the failure of devolution to stop the decline of Scotland and Wales.
Indeed, Burnham has already let it be known what he thinks of the efficacy critique of devolution: in Scotland and Wales, he is proposing to devolve more powers to local authorities, rather than Edinburgh and Cardiff, because ‘the people of Dundee and Bangor feel just as distant from Holyrood and the Senedd as they do from Westminster’.
To anyone else, this would be an indicator that something had gone wrong; to the devolutionist, every failing of devolution is proof that more devolution is needed.
A truly radical government would accept that the devolution experiment has failed and resolve to reverse course rather than allow this constitutional malady to fester further. Saving Britain from national decline will require a national government, made up of men and women of ability, united around a common purpose, not the fractured nation-state Britain has devolved into, with power fragmented across rival seats of political authority which share no vision for the future. Why does Andy Burnham want to be prime minister if he would rather give power away than use it?
For The Critic, Charlie Napier warns against the condescending ‘Northernism’ that sees the North of England as different to the rest of the country.
The Burnham phenomenon is the most extreme example of Northern memetic power yet; it also reveals the more condescending side of Westminster’s obsession with the place. Burnham has the right accent. He “talks like a normal person” and so seems like he “gets it”. He was successful in Manchester because he threw lots of taxpayer money (mostly from the South) at showy infrastructure projects. He is, for the Labour Party, the perfect candidate — he can win over the North, without actually having to deal with the grievances of those who live there. But the lazy Westminster fixation on this imagined “North” is profoundly unhelpful. It starts from the wrong place, and reaches the wrong conclusions.
For a start, the North of England is a fairly diverse place, with varied economic interests and cultural orientations. The Irish Catholic, working class cities of Liverpool and Manchester are quite different to the uplands of North Yorkshire, and both are quite different to leafy Cheshire. Many in Newcastle wouldn’t even consider Manchester to be part of the north, being some three hours away by road; for those on the banks of the Tyne, Edinburgh is physically closer. But, more importantly, the North is just not that different from the rest of the country, and certainly not as far as politics is concerned.
When asked whether immigration has been too high over the last decade, 72 per cent of people in the North say that it has been according to YouGov’s latest tracker. But, 73 per cent of people in the non-London South, and the same number in the Midlands, agree with them. 73 per cent of people in the North say that the Government is handling the economy badly — the exact same proportion as in the non-London South.
The average salary in the North West is higher than that in the South West. The North East may have the lowest salaries in the country, but it isn’t much behind the East Midlands. According to the ONS, a town like Blackpool, where 35 percent of people are “deprived” in one way or another, is doing better than many coastal communities in the South — places like Torbay, Gosport, Thanet, and Clacton.
Wonky Thinking
Onward has launched new research on how to get London building housing again. The report identifies three areas for new mayoral development corporations including Southern Tower Hamlets, Old Kent Road and Park Royal which could add nearly 500,000 additional homes, as well as estate regeneration to double the density of London’s low-rise post-war council estates that can add hundreds of thousands of new properties. The report also proposes:
Give homeowners greater choice over their properties, permitted development rights should be expanded to allow for full-size loft and rear extensions. Local authorities should create design guides for acceptable extensions within conservation areas. The Housing Secretary should also issue a statutory National Development Management Policy to create a national ‘yes unless’ route for household extensions that require a planning application, and should pass the necessary secondary legislation to implement ‘street votes’.
The conversion of existing commercial properties into homes should be made easier through the removal of regulations that prevent conversions, stricter limits on councils creating Article 4 directions that stop easy conversions, and the introduction of a statutory National Development Management Policy that explicitly encourages conversions and bans councils from introducing onerous barriers.
Around £18bn a year is spent subsidising people to live in London via the benefits system. This distorts the housing market and favours people who are out of work over working Londoners – at the taxpayer’s expense. We need to end absurdities like million-pound council homes and encourage more win-win transactions. The Housing Secretary should use existing powers to encourage councils to sell off expensive social housing when it becomes vacant, with the proceeds used to fund the construction of more homes. There should be a national cap on housing benefit and the Universal Credit housing component set at the median national rent for each house size for future claims. Finally, we should revive and improve the Right to Buy and expand it by including housing association properties.
On his Substack, Neil O’Brien lays out the options for tax rises under Andy Burnham. Compared to the last Conservative Budget, spending will be £152 billion higher in 2028/29 and taxes will be £105 billion higher and borrowing will be £47 billion higher. To make the numbers add up, Labour will likely raise taxes and Neil looks at five potential tax areas, including a new land and property value tax:
Burnham criticised the current council tax system and called for a land tax. In his leadership launch speech he said: “It’s a highly regressive tax, and I think it’s not justifiable based on those 1991 valuations. I see a big case for land and property and business taxation to be changed”
Specifically, he signed up to support the ‘Fairer Share, The Proportional Property Tax’ campaign. The proposed tax is a ‘flat rate of 0.48 per cent on the current value of your property’. In the version the “Fairer Share” campaign advocates, the government would use this money to scrap Council Tax and Stamp Duty, and the whole thing would even out. But Burnham needs tax revenues, and it is particularly hard to see him copying Kemi Badenoch’s commitment to abolish Stamp Duty. So he might focus on just the property tax element: the takeaway part without the give-back part.
A 0.48 per cent annual property tax would raise about £44 billion3. Council taxes across the UK raise about £50 billion. So Burnham could do the property tax bit, cut council tax a lot (perhaps abolish it for lower bands) and still raise some money overall.
The argument against this is that you would have a massive and very visible new tax on people, potentially on top of Council Tax. The proposal is basically the old domestic “Rates”. Though no-one now remembers it now (because of the Poll Tax disaster) the old “Rates” were very unpopular. In particular they hit older people who wanted to stay put in areas that had become more expensive over time4. Even a shift from council tax to rates would create huge redistribution, with some really massive losers in areas with expensive property. This would be a sort of “core vote” strategy, except that it would also wallop the seats Labour hold in London…
Conclusion
I have already met a couple of people who are changing their plans because of this tax speculation. Either trying to dispose of assets before a CGT hike, or thinking about where to locate business.
Burnham needs to realise that tax speculation is itself damaging - as Reeves’ experience last year showed. The UK economy is really limping along already, and youth unemployment has gone from being lower than the eurozone to higher under Labour.
I obviously think that we need to cut spending and cut tax and get the economy moving.
But if Burnham is going to raise our taxes even more (please don’t) then he should make up his mind fast and end the damaging speculation. But what are the chances of that? Anyone’s guess…
Podcast of the Week
On his podcast this week, Economist Professor Dieter Helm looks at the nationalisation debate. Using buses, rail, water and electricity as examples, he argues that public ownership and public control are not the same thing, and that different sectors require different models of organisation, regulation and investment. While the nationalisation debate is useful, Helm says that we need move beyond rhetoric towards detailed questions about ownership, regulation, incentives and the proper role of the state.
Quick Links
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