Andy Burnham has built his reputation on championing regional devolution – as Greater Manchester’s mayor he was celebrated as the “king of the north”. If, as now seems likely, he becomes prime minister next month, a “devolution blitz” is expected to follow. But it will only succeed if Burnham can bring the Treasury with him.
Burnham’s unique mix of experience in cabinet, shadow cabinet and as mayor may well enable him to achieve this. But the fundamental issue of the need for the Treasury to loosen its grip is a central, yet overlooked, challenge.
The commentary however is focused on who Burnham might appoint as chancellor of the exchequer. Getting the relationship between a prime minister and chancellor right is, of course, vital. As chief secretary to the Treasury, Burnham witnessed at firsthand the fractious dynamic between the then prime minister, Gordon Brown, and his chancellor, Alistair Darling, and the damage that such tensions cause.
And conversely, George Osborne’s early devolution agenda – in which Burnham played a significant role as Manchester mayor – was possible only because then-PM David Cameron trusted his chancellor to pursue reform.
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But if Burnham wants to turbocharge his ambitions by prioritising fiscal devolution – specifically giving tax-raising powers to local government – he must do more than choose the right chancellor. He must win over a Treasury that has long been sceptical of increased autonomy for regional and local government.
As we show in our new book, The Myth of Treasury Control, the Treasury’s guiding principles have barely shifted, despite a decade of English devolution. It still treats greater fiscal autonomy as something to be earned, not a governing principle. This sits uneasily alongside Burnham’s ambitions, which place local flexibility at the heart of economic and social reform.
While recent years have seen tentative steps towards limited financial flexibility, including the 2023 “trailblazer” deals that devolved more powers over things like transport and skills to certain mayors, Burnham’s vision is more radical. “Manchesterism” is about delivering economic growth and social progress. But to extend this to a national programme built around the strengths of individual places, Burnham and his chancellor will need to challenge deeply embedded Treasury orthodoxies.
As interviews in our book reveal, the Treasury’s approach to date has generally been to limit the scale and pace of devolution
Burnham understands this feature of the Treasury better than most. He knows both the value of constructive partnerships and the constraints of a system that is centralised, siloed and short-term in its approach to public spending.
Changing the Treasury culture
When in 2024 we interviewed Burnham for the book, he was clear about the need to reform how the Treasury manages public spending. His starting point is to argue that the Treasury needs to be the best friend of devolution.
Why? Burnham identifies the lack of a place-based mindset – an approach to economic development and reform of public services that builds outwards from the distinctive characteristics of a local area, rather than a top-down, one-size-fits-all model – as a fundamental flaw in the British state.
Treasury orthodoxy, he suggests, prioritises fiscal targets. But this hampers the flexibility to allow public money to be spent in more productive ways. According to Burnham, combined authorities have demonstrated they can deliver joined-up, efficient public services that are focused on outcomes more than Whitehall departments can.
Burnham points to something known as Total Place – a 2009 Treasury-backed initiative to map all public spending in an area and redraw services around place-based outcomes. His point was that this provided a glimpse of what a redesigned British state might look like.
But at the time, with austerity on the horizon, it challenged too many aspects of the Westminster system – hierarchical accountability, rigid Treasury rules, departments protecting their own budgets and short-term funding cycles. It was quietly abandoned.
EPA/ADAM VAUGHAN
For Burnham, the core problem is that neither the Treasury nor Whitehall is sufficiently programmed to think in a place-based way. He has long criticised the regional biases embedded in Treasury thinking and the “Green Book” that provides the framework for evaluating public spending decisions.
He told us that, in his view, Treasury orthodoxy and the Green Book had contributed to the country becoming less equal. “The Treasury hasn’t laid the foundations for [regionally balanced growth], and this is over decades, it’s not just recently,” he said. For Burnham, changing economic policy to deliver growth will require a herculean effort – and devolution should be central to it.
The team advising Burnham on economics – former Bank of England chief economist Andy Haldane, ex-chair of spending watchdog the Office for Budget Responsibility Richard Hughes, and former Treasury minister Jim O’Neill – understand the scale of the challenge. Changing the culture and orthodoxy of the Treasury is essential if more radical devolution is to take root.
Whether this can be achieved remains uncertain. But fiscal devolution – an important part of place-based reform of the public sector – is more likely with Burnham as prime minister.
Whoever Burnham appoints as chancellor will need to confront these challenges from day one and embody Burnham’s vision fearlessly. Burnham will need the Treasury as an ally rather than an opponent of devolution, otherwise his radicalism will struggle to get off the ground.
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