Andy Burnham outlines devolution push as he prepares City economy speech

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Burnham outlines devolution push

Highlights

Andy Burnham plans a significant devolution strategy, proposing more powers and financial autonomy for regional authorities while adhering to current fiscal rules.
He consults economists like Andy Haldane and Jim O'Neill, considering structural reforms such as splitting the Treasury and prioritizing growth-focused projects within fiscal constraints.
UK 10-year government bond yields remain near their lowest levels since April, reflecting easing investor concerns amid Burnham's reassurances on fiscal discipline.

Devolution agenda and fiscal message

As reported by the Financial Times, Burnham is drawing up an aggressive programme of devolution as he positions himself for a key speech to the City of London next week. He is signalling that, if he becomes prime minister, he wants to shift more power from Westminster to local communities while keeping his economic policy within the government’s self-imposed fiscal rules.

Allies say the speech is expected to focus on building an economy that works across the country, with communities outside Westminster given a larger role in driving growth. Advisers have discussed assigning a government department responsibility for identifying powers that can be transferred from Whitehall to regional authorities.

The proposal would add to work already under way inside the Treasury to give localities greater control over their own finances, allowing them to retain more benefit from local economic expansion. Supporters of Burnham say the emerging policy strands include both wider devolution and more creative thinking on infrastructure spending.

Market implications and structural options

Burnham is also seeking to reassure the City that he is not planning to let borrowing rise unchecked, after criticism over earlier remarks about the bond markets. His insistence that he will not rewrite the fiscal rules, which require day-to-day spending excluding investment to be covered by tax revenues by the end of the parliament, is helping to ease some concern in gilt markets.

He is taking advice from economists including former Bank of England chief economist Andy Haldane, former Goldman Sachs chief economist and ex-Treasury minister Jim O'Neill, and former Office for Budget Responsibility chair Richard Hughes. Some could join a future government, while Haldane has previously argued for splitting the Treasury into a finance ministry and a separate growth-focused department, potentially based at the Treasury's Darlington campus.

O'Neill is urging Burnham to be ambitious while staying inside the fiscal framework, particularly by preserving room for borrowing aimed at growth-enhancing projects. In the bond market, 10-year UK government bond yields on Tuesday are hovering near their lowest levels since April, a sign that investor concerns over the latest political upheaval are moderating.

Our earlier coverage of Andy Burnham’s looming transition to government examined the unresolved policy choices behind his headline pledges, especially the tension between sticking to existing fiscal rules and expanding public control in areas such as utilities, housing, and welfare. We noted that many proposals would require substantial upfront spending or new funding sources, leaving open questions about delivery, trade-offs, and how a future administration would make the numbers add up.

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