By Andrew MacAskill, Alistair Smout and Andy Bruce
LONDON/MANCHESTER, July 17 (Reuters) - Andy Burnham, Britain's next prime minister, is staking his premiership on a goal that has eluded most British leaders: transforming one of the most centralised countries in the Western world to tackle stubborn regional inequality.
Burnham has promised what he calls the "biggest rebalancing of power our country has ever seen", shifting power away from central government and giving regional leaders greater control
over spending, transport, housing, skills and economic growth.
The ambition, central to Burnham's vision, carries significant political risks. The work will be vastly complex, there is likely to be resistance from those in central government, and any benefits will take time to flow through.
Burnham will have no more than three years before the next national election, and voters have punished previous leaders who promised but failed to deliver on pledges to transform Britain.
"If you talk a good game, but don't actually pass any of the power on, or it happens very slowly, people get impatient and get frustrated by it," said Henri Murison, chief executive of the Northern Powerhouse Group, a lobby group of northern English business and civic leaders.
THE CASE FOR DEVOLVING ECONOMIC POWER
Britain is one of the most centralised developed democracies in tax and spending, and among the most economically unequal. Many economists and lawmakers argue that those problems are directly linked.
About 6% of tax revenue is raised at levels below national government, compared with 20% in France and about half in Germany and the United States, according to the Organisation for Economic Cooperation and Development.
This has exacerbated regional inequalities, which are larger than those between eastern and western Germany and northern and southern Italy, two of Europe's most economically unequal countries.
Proponents say regions with control over revenue have stronger incentives to attract businesses and expand the tax base.
But to make that work, experts say Burnham will have to do more than transfer budgets. It will involve building a new machinery of local accountability and financial control in parts of England where such systems are weak or non-existent.
Only 5% of local government bodies produced fully audited accounts for 2024/2025 - one reason why the government's own spending watchdog declined for a third year running to sign off the UK's Whole of Government Accounts.
"Getting the accountability culture right isn't a 'nice-to-have' at all - it's actually existential for devolution to endure," said Marcus Johns, senior researcher at the Fabian Society think tank.
He cited Britain's long history of creating regional bodies, then abolishing them when political support faded.
For Johns, the answer is not just to disperse executive power but also to strengthen local democratic institutions, by empowering scrutiny bodies to question regional politicians and giving accounting officers a legal duty to account for funds raised locally.
Britain has expanded devolution in stages over three decades, creating parliaments in Scotland, Wales and Northern Ireland and elected mayors in several English city regions.
Burnham's agenda is expected to focus on transferring more decision-making powers to regional leaders in England, where 85% of the United Kingdom population live, while granting some additional powers to the devolved governments in Scotland, Wales and Northern Ireland.
Evidence from the earlier wave of devolution for Scotland, Wales and Northern Ireland, where the governments are responsible for areas such as healthcare and policing, suggests it has not boosted growth there.
All three nations are ranked in the bottom half of Britain's regions for economic growth since the late 1990s.
However, their politicians argue that their devolved administrations lack the meaningful tax-raising and borrowing powers needed to shape their economies and drive economic growth.
Akash Paun, programme director for devolution at the Institute for Government think tank, said Burnham's time as mayor of Greater Manchester gave him a clear understanding of what regions need.
But he said moving powers across England could not happen at the same speed everywhere.
"He might find there's less low-hanging fruit than he would hope," Paun said. "One needs to ensure that you've got institutions, leaders and capacity able to exercise those functions appropriately. So you may not be able to do that all overnight."
BURNHAM'S DEVOLUTION GAMBLE CARRIES RISKS
Burnham has proposed opening a new prime ministerial office in Manchester, his planned "nerve centre for a rewired Britain".
Beyond that symbolic step, it remains unclear how far he is willing — or able — to go in transferring meaningful powers and resources.
Prime ministers since the 1960s have promised to devolve power or sought to address regional imbalances.
David Cameron championed the idea of a "Northern Powerhouse" for England, creating the mayoralty that Burnham later held. Fellow Conservative Boris Johnson later rolled out a "Levelling Up" programme without transferring powers.
But departments, including the finance ministry, have been reluctant to give up control over spending decisions, especially where local finances are weak or accountability is unclear.
Some economists have questioned the economic benefits of devolution, while costs are inevitable.
Burnham will also face more immediate pressures, including international crises and finding short-term ways to boost the economy when budgets are tight.
"Burnham may want to be the 'devolution PM', but the world will have other ideas," former Conservative prime minister Sunak wrote in the Sunday Times.
(Editing by Elizabeth Piper and Kevin Liffey)
