In the summer of 2026, Britain stands at a crossroads: its next prime minister wants to upend how the country is governed, shifting power and money out of Whitehall and into the regions. Andy Burnham, the former Greater Manchester mayor who is set to replace Keir Starmer in mid-July, has promised the most sweeping devolution reforms in a generation. His plan – described by allies as an attempt to fix the "grotesque regional economic inequality" that has left some of Europe's poorest regions in the UK – would see tens of thousands of civil service jobs moved from London to the North and Midlands, and give regional mayors unprecedented control over taxes and infrastructure spending.
The core of Burnham's vision is a radical reduction in Whitehall's control. Currently, 80% of all public spending is directed from central government – far higher than in other wealthy democracies. In Germany, for example, only 30% is spent from Berlin. Burnham wants to move to a system where decisions about buses, housing, and economic development are made at the level of city-regions – populations of between three and eight million – rather than micromanaged by ministers in London. He also plans to carve up the Treasury itself, creating a new economics ministry focused on growth based in Darlington, while leaving a finance ministry in Whitehall. This would break the Treasury's exceptional grip on economic policy – a concentration of power not seen in any other high-income country, according to the New Statesman.
“Explaining the proposed shift of power and money from Whitehall to the regions under the next PM.”
The plan has been defended by Communities Secretary Steve Reed, who says it will even help London. "It doesn't help London if London is the only place where people see opportunities for jobs and economic growth," Reed told Sky News. "People from all over the country come to London. It pushes up our housing costs and pushes up housing demand." By creating stronger economies in the North and Midlands, the hope is that fewer people feel forced to move to the capital, easing pressure on its housing market. London Mayor Sadiq Khan has warned Burnham not to cut investment in the capital, but Reed insists that boosting the regions "actually helps the South East of England".
For UK readers, the practical impacts could be significant. If you live outside London, you could see more jobs in your area, better local transport funded by locally-controlled taxes, and perhaps even lower house prices as demand spreads more evenly. For Londoners, the hope is that reduced internal migration would slow house price inflation. But the reforms come with enormous economic risks. Britain's economy is stuck in a low-growth rut, weighed down by high debt and soaring borrowing costs. The bond market – which effectively lends money to the government – is now dominated by hedge funds rather than predictable pension funds, making investors more jittery. Burnham must convince these creditors that his plans won't blow a hole in the public finances, while also avoiding tax rises that could further squeeze households.
Q: What is devolution and how does it work in the UK? Devolution means transferring power and money from central government (Whitehall) to local or regional bodies. In England, it already exists in the form of city-region mayors (like the Greater Manchester mayor) and combined authorities. Burnham’s plan would dramatically expand this model, giving mayors control over more taxes and spending decisions that are currently made in London.
Q: Why does the Treasury need to be restructured? Critics argue that the Treasury tries to control too many aspects of the economy, and that its power is excessive compared to other countries. Burnham wants to split it into two ministries: one for finance (budget and tax) and one for economic growth (investment and regional development). The growth ministry would be based in Darlington, physically moving decision-making away from London.
Q: How will devolution help the housing crisis? The government argues that by boosting jobs and opportunities in regions like the North and Midlands, fewer people will move to London in search of work. This would reduce demand for housing in the capital, helping to cool prices and ease the crisis. More broadly, local control over planning and infrastructure could accelerate housebuilding in areas where it’s most needed.
What happens next is uncertain. Burnham must first become Labour leader and then prime minister – expected in mid-July. His choice of chancellor will be the clearest signal of his economic direction. Contenders include Ed Miliband, Shabana Mahmood, and Pat McFadden. He also faces a difficult choice: push ahead with radical devolution while keeping the bond markets calm, or risk spooking investors and triggering a crisis. The next few months will determine whether Britain’s experiment in rebalancing power can actually work.