{"id":668216,"date":"2026-07-01T16:10:09","date_gmt":"2026-07-01T16:10:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/668216\/"},"modified":"2026-07-01T16:10:09","modified_gmt":"2026-07-01T16:10:09","slug":"briefing-burnham-fiscal-devolution-centre-for-cities","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/668216\/","title":{"rendered":"Briefing Burnham: fiscal devolution | Centre for Cities"},"content":{"rendered":"

Andy Burnham is right that \u201cwe are one of the most over-centralised countries in the world<\/a>\u201d. In the UK, power and decision-making is uniquely concentrated in the offices of central government in Whitehall.<\/p>\n

In recent years, some progress has been made on the spending side, as metro mayors have been put in place and given new powers over transport, planning, and skills policy<\/a>. For example, new funding has been made available for adult skills initiatives, and new powers to franchise bus services have been devolved.<\/p>\n

But comparatively little progress has been made on the funding side. As Figure 1 shows, the UK remains the most fiscally centralised country in the G7: just 5 per cent of tax revenue stays with sub-national government (mayors and local authorities), while 95 per cent goes straight to Whitehall and is allocated by central government.<\/p>\n

Figure 1: the UK is the most fiscally centralised country in the G7\u00a0<\/p>\n

The main reason why so little tax revenue goes to sub-national government is because funding for mayors and local authorities in the UK is largely determined by central government grants. This is visualised in Figure 2.<\/p>\n

Just 19 per cent of sub-national government funding in the UK comes from local tax revenue. Nearly two thirds (62 per cent) of funding comes from grants determined by central government. This makes UK sub-national government the most grant-dependent of any G7 country.<\/p>\n

Figure 2: Mayors and local authorities uniquely rely on grants from the centre<\/p>\n

Grant dependency has implications for the devolution agenda because it means that funding is still determined by the centre. Central government gets to decide how much money mayors and local authorities have access to and what it is spent on. In the years following the 2008 financial crisis, this meant that suffered the brunt of national level austerity<\/a>.<\/p>\n

Giving mayors \u2013 and eventually local authorities \u2013 a share of the income tax and corporation tax generated in their area will be key to shifting power out of the centre and towards local policymakers. Currently, sub-national tax revenue is restricted to a combination of council tax and business rates.<\/p>\n

If a share of income tax and corporation tax were retained at the local level \u2013 alongside increased business rates retention \u2013 it would provide a locally sourced funding stream that links sub-national governments to their local economy. And because these tax revenues rise with economic growth, they would provide a strong fiscal incentive to help generate growth across the country<\/a>.<\/p>\n

There is a \u201cstark imbalance in resource between national government and local government<\/a>\u201d which \u201cis holding back growth<\/a>\u201d. Devolving further spending powers is part of the solution. But to maximise its impact and create a \u201crewired Britain<\/a>\u201d, it needs to be accompanied by sharing a portion of local tax revenue with mayors and local authorities.<\/p>\n","protected":false},"excerpt":{"rendered":"Andy Burnham is right that \u201cwe are one of the most over-centralised countries in the world\u201d. In the…\n","protected":false},"author":2,"featured_media":668217,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[59,57,58,50,56,54,55],"class_list":["post-668216","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-kingdom","tag-gb","tag-great-britain","tag-greatbritain","tag-news","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/668216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=668216"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/668216\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/668217"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=668216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=668216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=668216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}