Will Andy Burnham's devolution plan raise economic growth?

Image source, Getty ImagesByBen ChuPolicy & Analysis Correspondent, BBC VerifyPublished8 minutes agoAndy Burnham promised the "biggest rebalancing of power our country has seen" as part of his plans for the UK if he becomes the next prime minister.In his first major policy speech, Burnham said on Monday he would seek to take power away from Whitehall and devolve it to all parts of the UK. This would include Greater Manchester and other city regions in England.

But the former Mayor of the Greater Manchester Combined Authority also said he would further extend devolution in Scotland, Wales and Northern Ireland - though not giving detail - and also promised to give Greater London more devolved powers.Burnham, who was sworn in as the new MP for Makerfield last week, said this radical devolution of power was essential for delivering higher economic growth in all parts of 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 said.

BBC Verify has looked at what impact further devolution could be expected to have on economic growth across the UK.What powers are devolved?Scotland has had extensive devolution, with the Scottish parliament now holding powers covering health, education, local government, environment, justice and policing.

Holyrood also has powers to set most income tax rates (although not the level of the tax-free personal allowance) and has some control over welfare.The Welsh Senedd's devolution powers are more limited compared with Scotland, though it does include running the NHS in Wales, education, local government and housing.The Senedd also has some tax powers, including the ability to to vary income tax rates.

But, unlike Scotland, it has no justice or policing powers.Under the terms of the 1998 Good Friday Agreement, the Northern Ireland Assembly has significant devolved powers, including over health, education and housing.There has also been some devolution, external to English city regions over the past decade, albeit less extensive than for Scotland, Wales and Northern Ireland.

Manchester has some of the most extensive devolved powers of any of the English city regions, with some authority over transport, housing, skills and health spending.Has devolution helped growth in the nations?Most economists who have studied the impact of devolution have not identified any significant increase in overall economic growth rates in Scotland, Wales and Northern Ireland over the past quarter of a century.

There is also no clear evidence of those nations catching up with the UK average, although it's important to stress the UK average is heavily influenced by the performance of London and the South East of England.Official statistics show that the GDP per capita - a measure of productivity - of Scotland, Wales and Northern Ireland in 2023 was broadly similar relative to the UK average as it was in 1998, with Scotland at around 93%, Northern Ireland at 83% and Wales at 74%.However, analysts say this does not mean that devolution has been an economic failure, external, as it is possible that the nations might have experienced economic decline relative to the rest of the UK if they had still been centrally governed.

Events like Brexit might also have had a disproportionate effect, external on some parts of the UK, making it harder to separate out the impact of devolution.And some Scottish nationalists argue full independence is required for Scotland to realise its underlying economic potential. Some Welsh nationalists argue similarly for Wales.

Has Manchester grown faster due to devolution?Burnham has argued that Greater Manchester is a case study in how devolution can lift economic growth.The city region has been progressively granted more powers in successive devolution deals since 2009.

When George Osborne was chancellor in 2014 the city region was granted an uplift in powers over transport, housing and strategic planning., externalOfficial statistics suggest that Greater Manchester has grown faster than other English city regions, including London, since 2015.And those statistics point to impressive productivity growth, external in the city of Manchester and the greater Greater Manchester region since 2020.

Some analysts have questioned whether those recent productivity figures are reliable, in part, because some of the high growth spots are in residential areas, and that they could be explained in part by errors in the data, external.Nevertheless, many economists do think Greater Manchester has performed better than other UK city regions over the past 15 years - and they argue it's justified to partially attribute this to the devolution of powers, particularly on transport, planning and housing.Devolution has helped to deliver this record on housing because the Greater Manchester mayoralty is empowered to set the city-region's housing strategy, direct housing investment funding and co-ordinate affordable housing programmes.

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