Andy Burnham's devolution delusion

Next year marks the 1,100th anniversary of Athelstan’s seizure of the Kingdom of York from the Vikings and the forced submission of the remaining northern kingdoms. This event marks the birth of what we now call the political entity of “England”. The Anglo-Saxon Chronicle, the main record of the period, merely records that “this year king Athelstan expelled king Guthfrith.” However, these seven words marked a seismic event in English, European and eventually global history.

It is worth reflecting on this because England is preparing to go through one of the most significant constitutional changes in its history. The answer to practically every question in politics is answered with one word: devolution. Our likely next prime minister, Andy Burnham, has made this word his central pitch to the nation in his first major speech since returning to parliament.

Devolution is very different from the administrative localism that has dominated England’s constitutional history, where policy and strategy were set from the centre, but implementation left to local shires and councils to administer. What Burnham is proposing is a major effort to create new strategic centres within England, consciously built with the powers and resources needed to pursue an independent approach to the political centre. These centres will be encouraged to develop their own economic strategies, compete for resources and create new political allegiances. Even more, the current administrative centre, Whitehall, will itself be broken up with a new No 10 North. In many ways, we are going full circle back to the Heptarchy, hardly a happy period of English history, and one that Athelstan and his successors consciously sought to overcome.

English kings ruled with an “iron hand”, according to Robert Tombs’ masterful history of the English. This strong central power, combined with the English witan, a precursor to our Norman parliament, enabled “English rulers to raise taxation and manpower that was unequalled in Europe”. Tombs concludes that “the English kingdom emerged as probably the richest and one of the most powerful European polities, with effective control over the largest territory.” From this acorn, a power was created that, for good and ill, came to dominate the British Isles and from those shores, much of the world.

The decision to give up on centralism would not just puzzle Athelstan, but almost any of the great political figures and projects of the past several centuries. We live in a world order forged through the centralisation of nation states. The Federalist Papers, which led to the creation of a new American Constitution, were not an attempt to devolve power but to create a strong central government. The French Revolution, Bismarck’s wars for German Unification, the Italian Risorgimento, the Meiji Restoration, the Russian Revolution: these were all centralising projects. Great powers did not emerge by fracturing their power and creating rival strategic centres, but from political and economic consolidation. In this process, many of these countries were consciously emulating the success of England, now expanded into the United Kingdom. As Donald Sassoon noted in history of late 19th century capitalism, The Anxious Triumph, “the key variables in Britain’s rise to global pre-eminence as an industrial power were a strong navy, economic protectionism (or mercantilism as it was called) and a proper tax system. All these required an uncommonly strong state.” An uncommonly strong state was unquestionably an uncommonly strong central state. Britain and its competitors used these strong central states to pursue national economic development and internal market building, connecting their countries through mass infrastructure, redistributing resources from richer to poorer areas, and pooling risk through new insurance and welfare systems. After the Second World War, they used them to create the economic conditions for the Trente Glorieuses, which saw the greatest sustained improvement in Western living standards in history. So why has Westminster decided to turn its back on this model?

The truth is that Westminster and Whitehall have experienced a crisis in confidence. The destructive forces they unleashed to create a “dynamic”, global, service-based economy have deindustrialised and demoralised communities across the United Kingdom through a lack of support for industry and underinvesting in infrastructure. These forces have already seen Scotland and Wales turn their back on the metropole. Now the same forces are ripping through England, particularly the North, creating a new revolt against the centre. Instead of confronting this challenge and forging a new political economy, Westminster has convinced itself that the solution is to give up. Worse, in many cases the plan is to continue the failed economic policies of the past several decades but push political responsibility down to a regional level, in the hope that this will spare the centre from relentless criticism.

The intellectual justification for this collapse in confidence is the “Metro Myth”. This myth has seen policy makers endow certain places with special powers that can defy economic gravity. Westminster wonks speak in hushed tones about “agglomeration effects”. These effects describe how productivity and efficiency benefits spill over when businesses, people and industries locate close to one another, stimulating higher productivity and growth. The devolution argument goes something along these lines: agglomeration requires long term investment in infrastructure and institutions at a city or sub-regional level to succeed. Westminster and Whitehall are unable to think about these places over the long term; so these city regions or functional economic areas need to be given the powers to pursue their own economic and infrastructure strategies. For these strategies to be implemented, cities and sub-regions need to be given tax powers and control over public bodies working in their areas, all levers the government is actively building. In order to ensure their legitimacy, these structures require political accountability that can only be achieved through direct elections, particularly in the form of mayors.

There is no doubt that agglomeration effects exist and have existed throughout history. However, merely trusting these effects is not in itself a viable strategy. Take London. Since the 19th century, agglomeration helped it become a global hub for financial and professional services, alongside the powerful support of the central state to protect the interests of these financial institutions. However, during the post-war period, we saw the relative economic decline of London compared to the rest of the country. London GDP per worker in 1931 was 31 per cent higher than the average across Great Britain. By 1971, it was just 15 per cent higher than the British average. What happened to the benefits of agglomeration? London still had the world famous Underground and was the centre of political administration as well as of enormous cultural power. Well, these benefits were offset by the government’s decision to prioritise industrial development, as documented by David Edgerton’s Rise and Fall of the British Nation, as well by as the Bretton Woods system that dampened financial speculation. This saw growth more evenly spread. It was Westminster’s economic decision to juice financial services through the Big Bang, and shift away from an industrial economy to defeat the trade unions, that saw London take off again. The capital’s revival preceded the creation of the Mayoralty and saw the abolition of the Greater London Council. From the Lawson Boom to the financial crisis, London surged forward. However, since 2007, London’s productivity and per capita growth has stalled, a slump not helped by the Brexit referendum. This is all despite disproportionate levels of transport infrastructure, such as the gleaming new Elizabeth Line. Agglomeration did not save London, and it was not the cause of its revival.

This helps put the relative success of places such as Greater Manchester into context. To the extent to which Greater Manchester has succeeded, it has done so by copying London’s economic model and creating intra-national competition, allowing it to take a larger share of the economic pie. That’s fine, but it has not grown the pie or addressed the slowdown in our financial service exports. This is not a strategy that is going to be able to pull the rest of the city region, let alone the rest of the country, forward. The same is true for Leeds, another hub of financial services. From 1998 to 2008, Leeds real per capita gross value added – a measure of economic growth – increased by 26 per cent. Since the first Leeds “City Deal” in 2012, the same figure grew by 11 per cent. Ultimately, the economic limits of Greater Manchester are not the fault of the combined authority; they are determined by global economic forces that require the full power of the nation-state to shape. The same is true for London, Leeds or any one of our cities or regions.

If London, with all its agglomerative power, could not withstand the impact of the financial crisis and generate momentum for a recovery, how is the North East supposed to overcome decades of deindustrialisation? How will providing control over 2p of income tax help the Greater Lincolnshire Combined County Authority save the region’s steel industry or set up new industrial clusters? Even the federalised and much vaunted German states with their Mittelstand of specialised manufacturing businesses are struggling to resist Chinese overproduction.

In many ways devolution is a strategy for yesterday’s economy, an economy that benefited from a stable global order, a temporary boom in financial services and relatively free trade. Ironically, the same was true for the “golden age” of Victorian municipalism in the mid-19th century. However, in the world of cutthroat great power competition and a battle for production, devolution is irrelevant.

If devolution is irrelevant, however, then what is the harm? The harm is that the political culture further devolution will create is likely to make it harder for the country to develop a political economy fit for the age we live in. Devolution advocates think they are going to convert England into a more consensual European political culture, like Germany, a nation referenced in Burnham’s speech and in his book Head North. Yet it is a culture that is already breaking down even within Germany itself.

Devolution advocates make heroic assumptions about how it will encourage greater cross-party collaboration. But this feels like a huge gamble. It also flies in the face of what we have already seen within our Union. Scottish devolution has hardly led to harmonious relationship with the centre. Westminster and Whitehall think they are cleverly shifting responsibility away from themselves. Instead, they are creating more sticks with which they will be beaten.

Politicians need to accept the limits to how any political culture can be remade. The most recent local elections are a case in point. When has any local election in England in our lifetimes ever been about local issues? We are about to find out whether mayoral elections are any more locally focussed. Early findings are distinctly mixed. Just ask Andy Street whether he lost the West Midlands based on local issues. 

The metro myth is now driving the biggest constitutional and political reconfiguration in the history of England. At best, the devolution delusion is gaslighting places into believing that it is their responsibility to overturn the effects of decades of disastrous national policies. At worst, it will consign nations and regions that have already been failed to decades of further decline. A recent study of the economic development of devolved areas found that they “did not experience faster than expected growth. Moreover, within devolved areas, the estimated growth effect of devolution was more favourable for already wealthy districts than for poorer ones.” Devolution is a distraction that takes us away from what we really need. A more ambitious goods and export-focused industrial strategy, protected by a strong, responsive central state. A realist trade and foreign policy. A massive long-term investment in rebuilding the social and public infrastructure of left behind areas. The best way to achieve the latter is the financial restoration of local government, something Burnham has positively referenced, but which is actively being ignored as Whitehall draws lines on maps.

The political irony of all this is that Labour has become the handmaiden of classical liberalism, with its suspicion of national government and belief in the division of power. The old Liberal Party was a big advocate of local government because fragmentation would keep the state small and make state intervention harder. Historically, Labour recognised that major economic reform, redistribution and risk sharing required a strong, coordinated, central state. This historic Labourism has never been more needed, particularly in the regions that have been left behind. The Conservative Party’s conversion to devolution also flies in the face of its foundational commitment to the political unity of the Union. This question for unity is needed more than ever in our divided times. However, both parties have fallen for the metro myth and the devolution delusion. To bastardise Keynes, both political parties are now the slaves of defunct political theory. 

England, and Britain, will go down in history as one of the most remarkable political formations in the history of the world. Early consolidation and the creation of a strong central state led to enormous prosperity and a disproportionate influence on global affairs. Unfortunately, rather than confront the consequences of its own misguided decisions, Westminster wants to pass the buck at a time of global economic challenge. The risks are huge and the potential gains unproven. Before we unwind Athelstan’s legacy, perhaps we should have a proper debate on why.