The standard narrative surrounding regional growth in Britain has become entirely predictable. A commentator looks at Greater Manchester Mayor Andy Burnham, notes his political capital, and declares that if he simply acts with enough bravery, tackles planning laws, and builds a few tram lines, the north of England will suddenly transform into a high-productivity powerhouse.
It is a comforting, consensus-driven fantasy. It is also fundamentally wrong.
The assumption that regional mayors hold the keys to unlocking national growth misdiagnoses why the UK economy has stagnated for nearly two decades. The popular consensus argues that localized political will can overcome structural macroeconomic failures. In reality, giving a regional mayor more power over local bus routes or zone-level planning applications while the national fiscal architecture remains broken is like rearranging the deck chairs on the Titanic and calling it a maritime strategy.
I have spent years analyzing regional development data and watching local authorities burn through millions in public funds on vanity regeneration projects that yield zero net increases in productivity. The harsh truth nobody wants to admit is that regional devolution, in its current British format, is not an engine of growth. It is a political lightning rod designed to deflect blame from Westminster.
The Myth of the Local Productivity Engine
The prevailing argument insists that local leaders understand their regional economies best and can therefore allocate capital more efficiently than central government bureaucrats.
This sounds reasonable until you look at how modern economies actually generate high-value growth. True productivity gains do not come from localized boutique tech hubs or municipal enterprise zones. They are driven by massive, systemic factors: national tax policy, international trade agreements, central bank interest rates, and large-scale state investment in foundational infrastructure like nuclear power and deep-water ports.
When a regional authority builds a new enterprise park or offers local tax incentives, it rarely creates new economic activity. Instead, it triggers a zero-sum game of intra-national displacement.
The Displacement Reality: Imagine a scenario where a digital media firm moves its headquarters 30 miles from a town in Lancashire into central Manchester because of a localized grant scheme. The mayor claims a victory for regional growth. The national economy, however, has gained absolutely nothing. Capital has simply shifted from an underfunded area to a slightly more marketable one, leaving the surrounding region even more depleted.
The center-left think tanks love to point to cities like Munich or Boston as evidence that regional hubs can drive national economies. But they ignore the underlying mechanics. Munich thrives because Germany possesses a deeply rooted, decentralized banking system (the Sparkassen) and a massive, federally backed network of applied research institutes (Fraunhofer). Boston relies on the massive gravity well of federal research funding via the NIH and DARPA.
Andy Burnham has none of these levers. He controls a fragmented local transport network and a tiny fraction of the region's tax revenue. Expecting him to drive national growth under these conditions is an exercise in futility.
The Flawed Premise of Local Planning Reform
A central pillar of the "brave Burnham" argument is that local leaders must aggressively deregulate the planning system to allow for massive infrastructure and housing booms. The theory goes that if you build enough houses and logistics parks, growth naturally follows.
This is a classic inversion of cause and effect.
Deregulating planning without fixing the underlying credit and capital incentives does not lead to high-productivity infrastructure. It leads to speculative land banking and low-margin, low-wage warehouse developments. Walk through the outskirts of any major northern city and you will see the results of this strategy: vast tracts of fulfillment centers staffed by low-wage, insecure labor. This is not the high-skill, high-wage economy the UK desperately needs; it is a low-productivity trap wrapped in the language of economic regeneration.
Furthermore, the idea that local politicians can simply override local opposition to major infrastructure projects ignores the brutal reality of British political geography. In a centralized system like France, Paris decides where a high-speed rail line goes, and it gets built. In the UK's hybridized, semi-devolved system, local leaders are trapped between Westminster’s funding whims and local voters who will fire them if a new rail line cuts through a green belt. Devolution hasn't removed the political roadblocks to growth; it has multiplied them.
The Capital Allocation Blunder
To understand why local growth strategies fail, we must look at where the money actually goes. Under the current framework, local leaders are forced to compete for a patchwork of ring-fenced, short-term central government funds.
To win these pots of money, local authorities hire expensive consultants to write glossy bids for projects that match whatever buzzword is currently fashionable in Whitehall. One year it is "levelling up funds" for town center beautification; the next it is "green innovation grants."
This process guarantees sub-optimal capital allocation. It prioritizes highly visible, politically convenient aesthetic projects over dull, long-term, high-yield economic foundations.
- Aesthetic Spending: Paving over high streets, building speculative office spaces that remain empty, and creating local culture hubs.
- Economic Foundations: Fixing the chronic electricity grid constraints that prevent new factories from connecting to the power supply, or completely overhauling technical education to match industrial needs.
Because mayors operate on short electoral cycles and lack genuine fiscal autonomy, they cannot make the multi-decade bets required to transform an economy. They are incentivized to build things they can cut a ribbon on before the next election.
The Brutal Truth of Fiscal Centralization
The UK remains one of the most fiscally centralized nations in the OECD. Around 95% of all tax revenues are collected centrally by the Treasury in Whitehall. For all the talk of devolution, Andy Burnham and his peers are essentially running on an allowance handed down by central government.
True economic autonomy requires fiscal responsibility. If a regional leader cannot raise their own taxes or issue their own bonds on international markets to fund massive infrastructure projects, they are not a governor or a premier; they are a manager of decentralized state expenditure.
| Country | Sub-national Share of Total Tax Revenue | Economic Mobility Index |
|---|---|---|
| Germany | ~30% | High |
| United States | ~45% | High |
| United Kingdom | ~5% | Stagnant |
The data does not lie. You cannot decouple economic growth from fiscal reality. Until a mayor can set local corporate tax rates, retain the full upside of regional income tax growth, and borrow independently to fund high-risk, high-reward industrial strategies, their ability to shift the national growth needle is effectively zero.
The downside to this contrarian view is obvious: granting true fiscal autonomy to regions would mean accepting that some areas will win while others lose catastrophically. If Greater Manchester were given the power to slash corporate taxes to attract global investment, it would inevitably drain capital from neighboring Liverpool or Leeds. No British government has the stomach for that level of brutal regional competition. Instead, we settle for a toothless compromise: the illusion of local power without the financial mechanisms required to make it meaningful.
Stop Asking Mayors to Fix Macroeconomics
The public, the media, and politicians themselves are asking the wrong question. We ask, "What should Andy Burnham do to get the economy moving?" when we should be asking, "Why are we pretending a local mayor has the tools to fix a national productivity crisis?"
The UK's economic sickness is systemic. It is driven by an over-reliance on a financialized services sector concentrated in a single corner of the country, a chronic lack of private sector capital investment, and an energy policy that has made British industry uncompetitive on the global stage.
None of these issues can be solved from a mayoral office in Manchester, no matter how bold or brave the incumbent chooses to be.
Stop looking to regional devolution as a cheap shortcut to national renewal. If the national government wants the north of England to grow, it needs to stop outsourcing the responsibility to underfunded local leaders. It must deploy the full weight of the national balance sheet, fix the energy grid, reform corporate governance to encourage long-term investment, and accept that real growth requires central coordination, not municipal patchwork.
The current strategy of praising local mayors while starving them of structural economic power is not leadership. It is an evasion of duty.
