Every postcode? Burnham devolution and inequality

English devolution · Argument

Prime Minister Andy Burnham says devolution will deliver good growth in every postcode. The fiscal and institutional design of the programme points the other way: places will compete, and starting gaps in tax base and governing capacity will shape who wins.

Question

Does Prime Minister Andy Burnham’s English devolution programme — including assigning mayors a share of locally raised income tax and business rates — support his claim that every postcode will benefit, or is the more accurate outcome greater competition between places and more unequal economic results?

Direct answer. The universal claim does not follow from the policy design. Fiscal assignment and asymmetric devolution reward places that already have a strong tax base, a mayor, and institutional capacity. That is competition between places. Without a legally binding equalisation system strong enough to offset those starting gaps, economic outcomes are more likely to diverge than to equalise.

The claim that every postcode will benefit

The language is not casual. Before taking office, Burnham argued that Britain would not reach the growth it needs “unless every single postcode in the land is set up to contribute to it,” and he framed devolution as carrying power into every postcode. He pledged “good growth in every postcode.” In office he presented tax-sharing as fulfilment of that promise.

“I said we’d take power out of Westminster and carry it into every postcode in the country. Today, we make good on that promise. Under our plans, more of the taxes raised in a community will stay in that community.”

Sources: The Guardian, 28 June 2026; Guardian live coverage of the Manchester speech; GOV.UK, 30 July 2026.

The instrument is not universal

Mayors of strategic authorities are to retain a greater share of locally generated business rates from 2027 and a share of income tax from 2028. The stated purpose is that communities “directly benefit when their economy grows.” That is an incentive for the place that already raises the tax. It is not a guarantee that a thin-tax-base town, a rural district, or a late-devolved area keeps pace.

See: Prime Minister’s announcement; BBC News on income-tax sharing; House of Commons Library briefing CBP-10937.

England’s tax geography makes the incentive unequal from day one

The Institute for Fiscal Studies notes that income-tax revenue per person is more than 3.5 times higher in Greater London than in the West Midlands, and that some form of equalisation is vital if the reform is not to worsen regional inequality. Centre for Cities estimates that retaining 1 per cent of local income tax would raise about £92 a year per person in London and about £23 in Tees Valley.

Illustrative models of a small assigned share of the basic rate give London billions while Hull and East Yorkshire, Tees Valley or Greater Lincolnshire receive a fraction of that. Even if opening grants are swapped pound-for-pound, subsequent growth accrues to the stronger base. That is the point of assignment. It is also why weaker places start behind.

See: IFS response to tax-revenue sharing; Centre for Cities on replacing mayoral grants; The i Paper mapping of winners and losers.

Equalisation and the growth incentive pull in opposite directions

The government says there will be equalisation so that “areas benefit from local growth while funding remains fair across the country.” Those aims conflict. The more the system equalises, the less extra a successful mayor keeps. The more it rewards local growth, the more lagging postcodes fall behind.

The Liberal Democrats warned of a postcode lottery that would leave millions in rural areas short-changed. The Local Government Association welcomed more local control but asked how distribution would be equitable regardless of geography or governance structure. Conservative critics said areas with weaker economies could lose out.

See: BBC report of opposition and LGA reactions; Commons Library summary of LGA and Liberal Democrat warnings; BBC follow-up on London and equalisation.

Devolution in England is already asymmetric

English devolution was built by deal, not by a uniform constitution. Coverage, powers and institutional maturity still differ. The government’s own English Devolution White Paper recorded that over 90 per cent of the North of England was covered by devolution arrangements, against 46 per cent in the South, and that mayoral powers varied between places.

Academic work on a “devolution periphery” — parts of the East Coast, the West Country, and rural West Midlands — finds places weak in both productive capacity and governance capacity. Giving stronger fiscal tools to stronger institutions widens that gap rather than closing it. Rural analysis has also warned of a metropolitan bias in the programme.

See: English Devolution White Paper; Newman and Hoole on the devolution periphery; Regional Studies Association on unequal devolution.

Past city-region deals did not automatically spread gains

Analysis of combined authorities after the Cities and Local Government Devolution Act 2016 finds that devolution did not reliably accelerate growth and, in several areas including Greater Manchester and the West Midlands, richer districts grew faster than expected while poorer districts fell behind. Growth concentrated where agglomeration already worked.

That pattern matches a wider English fact: opportunity is already hyper-local. Neighbouring postcodes in the same city-region have very different pay, schools and networks. Assigning more tax to the combined authority does not, by itself, force that revenue into the weakest neighbourhoods.

See: Sweeney, Urban Studies, on devolution and growth in city regions; University of Salford on intra-city postcode divides; Government analysis of England as a postcode lottery for life chances.

Aspiration versus instrument

Burnham has invoked Germany’s Basic Law and a duty to strive for equivalent living conditions. The operating tool enacted so far is different: keep more locally raised tax so local success is self-reinforcing. That can raise growth in some places. It does not establish that every postcode benefits. It establishes that places will compete, and that starting inequality in tax base and institutional power will shape who wins.

See: Financial Times on “rewiring” the state and the German comparison; BBC analysis of whether the devolution plan would raise growth; Reporting of the “equivalent living conditions” mission.

Conclusion

The slogan says every postcode benefits. The mechanism says places keep more of the tax they raise. The facts are that tax bases and devolution capacity are highly unequal, coverage is still incomplete, and earlier English deals often reinforced rather than reduced within-region gaps. Competition between places is not a side-effect of this model. It is the model. Unless equalisation overrides the incentive — in which case “stay in that community” is no longer true — the likely economic outcome is divergence, not a uniform gain across every postcode.

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