The political class is obsessed with a fairy tale. It is the comforting myth that the UK’s deep economic divide can be cured by packing up government offices, shipping a few hundred civil servants to the North, and letting regional mayors announce another "strategic masterplan."
Andy Burnham’s latest proposal to shift power from London to the regions is just the latest iteration of this lazy consensus. It sounds wonderful on a campaign leaflet. It wins easy applause from local business consortiums. But it misses the economic reality completely.
Moving administrative power does not create wealth. It redistributes bureaucracy.
I have spent two decades analyzing regional development budgets and public sector relocations. I have seen municipal leaders waste hundreds of millions of pounds building shiny innovation quarters that sit empty because the underlying economic plumbing is broken. Decentralization, as it is currently peddling, is a placebo. It makes the patient feel cared for while the underlying disease gets worse.
If we want to fix the UK economy, we have to stop treating London like a villain to be weakened and start understanding why regional devolution schemes almost always fail to deliver real productivity gains.
The Regional Mayor Delusion
The core argument for devolution is simple: local leaders understand local needs better than a bureaucrat in Whitehall. It sounds logical. But it ignores a fundamental law of economics: public spending does not automatically equal private sector productivity.
When power is devolved to a regional authority, what actually happens? You create a mini-Whitehall. You add a new layer of compliance, a new set of consultation committees, and a fresh army of communications officers.
Look at the data. The UK’s productivity puzzle is not driven by a lack of local committees. It is driven by a lack of capital investment, abysmal transport connectivity between northern cities, and a skill mismatch that no regional mayor can fix with a pen stroke.
Consider the "agglomeration effect." True economic growth happens when businesses, workers, and institutions cluster together closely, reducing transaction costs and accelerating knowledge sharing. London thrives because of intense density.
Moving a government department to Leeds or giving Greater Manchester control over its bus subsidies does not recreate that density. It dilutes it. Instead of creating a new economic engine, you end up with localized stagnation managed by local politicians instead of national ones.
The Relocation Fallacy: Moving the Desk Doesn't Move the Market
Politicians love civil service relocations. Moving the Office for National Statistics to Newport or parts of the Treasury to Darlington are constantly cited as triumphs.
But let’s look at what these moves actually accomplish.
Imagine a scenario where 1,000 civil service jobs are moved from London to a northern city. On paper, that regional economy just grew. In reality, you have shifted public sector salaries from one tax jurisdiction to another. The multiplier effect on the local private sector is notoriously weak. A few sandwich shops near the new office see a bump in lunchtime trade. A few local housing markets get a minor, temporary bump.
What doesn't happen is the spontaneous creation of high-growth, export-oriented private enterprises.
Government departments do not generate wealth; they process revenue generated by the private sector. By focusing on moving the desks of regulators and policy advisors, governments avoid the far harder, more expensive work of building infrastructure that attracts actual commercial industry.
Furthermore, these relocations often suffer from an unspoken talent drain. High-fliers in the civil service frequently resist permanent relocation away from the capital where the career ladder is tallest. The result? You don't export London's top-tier capability; you simply decentralize the administrative burden.
Why Regional Investment Zones Are Hidden Subsidy Traps
The standard playbook for a devolved authority is to establish investment zones or enterprise hubs, usually offering tax breaks to businesses that set up shop there.
This is an economic shell game.
Enterprise zones rarely create new economic activity. Instead, they cause displacement. A manufacturing firm located three miles outside the zone boundary moves its operations inside the boundary to pocket the tax credit. The local mayor claims credit for "creating jobs," but the net gain to the regional economy is zero. The taxpayer simply subsidized a move that would have happened anyway, or worse, funded a move that brought no new productivity to the table.
Centre for Cities, an independent research institute, has tracked the impact of these initiatives for years. Their findings are consistently grim for devolution zealots: enterprise zones consistently fail to meet their employment targets, and the jobs they do create are overwhelmingly low-skilled, back-office roles.
We are building a regional economy based on low-value call centers and fulfillment hubs, all while pretending we are building the silicon valleys of the North.
The Brutal Truth About Transport Over Devolution
If you ask a regional politician what they need, they will say "more autonomy." If you ask a business owner in Manchester what they need, they will say "a train to Leeds that doesn't take an hour and fifteen minutes."
The distance between Manchester and Leeds is roughly 40 miles. In any functional global economy, that distance should take 20 minutes on a high-speed link, effectively turning two distinct labor markets into one massive, highly productive economic superpower.
Instead, successive governments have prioritized political grandstanding over hard infrastructure. They offer devolution deals as a cheap alternative to laying tracks. It is far cheaper to give a local politician a fancy title and control over a small regional budget than it is to build a modern, high-speed rail network across the Pennines.
Without physical connectivity, regional devolution is just isolation by another name. You are giving mayors the power to govern economically isolated islands. No amount of local policy innovation can overcome the physical reality of gridlocked roads and Victorian rail infrastructure.
Addressing the Flawed Premise of Regional Equality
The entire debate around leveling up and devolution is built on a flawed question: How do we make Manchester, Birmingham, or Newcastle look exactly like London?
This is the wrong objective. They will never look like London, and trying to force that outcome via bureaucratic engineering is an expensive mistake.
London is a global financial anomaly. It competes with New York, Singapore, and Tokyo, not with the rest of the UK. Trying to replicate its financial and services-heavy ecosystem across the country is a fundamental misunderstanding of regional identity and capability.
Instead of trying to decentralize London's political power, the strategy must pivot toward hyper-specialization based on existing industrial strengths. But this requires national, centralized coordination—the exact opposite of devolution.
When you fragment economic policy across ten different combined authorities, you get ten different regions all competing for the exact same life sciences cluster, the exact same green energy hub, and the exact same tech incubator. They bid against each other with public money, diluting the nation's overall competitive advantage on the global stage.
The Downside of Centralization No One Wants to Admit
To be absolutely transparent, a centralized approach has a massive downside: it is politically toxic. It requires a government to openly admit that some areas are better suited for specific industries than others. It means telling one city that it will not get funding for a tech hub because that funding is being concentrated in another city forty miles away to achieve critical mass.
Devolution is popular precisely because it allows national politicians to pass the buck. When a regional economy fails to grow, the government can blame the local mayor for poor execution. When the local mayor fails, they blame Whitehall for a lack of funding. It is a perfect, self-perpetuating loop of political unaccountability.
We have created a system where everyone has enough power to obstruct growth, but nobody has enough centralized authority to force it through.
The Actionable Order for True Growth
Stop listening to the rhetoric of power shifts and constitutional restructuring. If we want to transform the economic reality of the UK outside of London, the playbook must be stripped of political vanity projects.
- Scrap the Mayoral Office Expansion: Stop creating new administrative tiers. Freeze the headcount of regional authorities and reallocate those operational budgets directly into capital expenditure funds.
- Enforce National Industrial Specialization: End the wasteful competition between northern cities. Central government must dictate which regions receive specific industrial focus based on historical strengths—advanced manufacturing in Yorkshire, materials science in Manchester, marine technology in the North East—and block funding for copycat initiatives elsewhere.
- Pound-for-Pound Infrastructure Matching: For every pound spent on regional administrative devolution, mandate that ten pounds must be spent on inter-city physical infrastructure. If the trains don't run, the policy doesn't matter.
We do not need a plan to shift power from London. We need a plan to build roads, tracks, and laboratories in the regions. Anything else is just moving around the deck chairs on a stagnant economy.
