Andy Burnham has just moved into 10 Downing Street with a promise to dismantle the very system that put him there. He wants to tear down Westminster’s top-down culture and spread power across the country. It is a grand vision, but it has a massive design flaw. He is trying to grant freedom using the tools of the central state. If he really wants to make radical devolution work, he needs to stop looking at modern funding models and start studying the nineteenth century.
The Victorians did not wait for permission from London to build world-class cities. They did not fill out endless grant applications or beg the Treasury for a few million pounds to fix a tram line. They just built.
Right now, the UK’s version of local government is basically an administrative branch of Whitehall. The current debate about shifting powers to city-regions is missing the point. We talk about mayors, budgets, and local strategies as if they mean independence. They don't. True independence requires financial muscle, and that is exactly what the Victorians had and what modern regional leaders lack.
The New Prime Minister and the Illusion of Centralised Freedom
Shifting from the mayoral office in Greater Manchester to the steps of Downing Street has given Burnham a unique platform. His platform of Manchesterism argues that public control over housing, transport, and energy is the only way to fix broken regional economies. We have seen the proof of concept with the Bee Network, which brought Manchester's bus system back under public control.
But let’s look at the numbers. The recent Greater Manchester devolution deals look impressive on paper. They include long-term funding settlements and the ability to keep 100% of local business rates for a decade. It sounds like a massive shift. It looks like radical devolution.
It is actually a beautifully wrapped illusion.
Every single pound given to these combined authorities still comes with strings attached from London. The Treasury remains the ultimate gatekeeper. If a regional mayor wants to fund a massive infrastructure project, they are still operating within fiscal rules defined by civil servants in London. The central state is simply lengthening the leash, not untying the knot.
The Victorian era operated on a completely different premise. Cities like Manchester, Birmingham, and Liverpool did not view themselves as junior partners to London. They viewed themselves as global competitors.
What the Victorians Understood About Real Economic Power
Go back to the 1870s and look at Birmingham under Joseph Chamberlain. He did not ask the government for a grant to fix the city's slums or improve its terrible public health outcomes. He pioneered what became known as municipal socialism, though it was effectively aggressive municipal capitalism.
Municipal Capitalism vs Central Handouts
Chamberlain’s strategy was simple. The local corporation bought up the private gas and water companies. By running these utilities locally, the city accomplished two things simultaneously. First, they drastically improved the quality of service for regular citizens. Second, and more importantly, they used the massive profits from those utilities to fund public libraries, art galleries, and grand civic buildings.
They created their own revenue streams. They did not tax their residents into poverty to build infrastructure; they ran successful local monopolies and reinvested the cash.
Today, if a regional mayor wants to build a new rail link or establish a local energy company, they have to navigate national bodies like Homes England or Skills England. They are trapped in a halfway house of governance. They have the accountability when things go wrong, but they do not have the complete commercial freedom to run the assets that generate real wealth.
The Power to Borrow and Build Without Permission
The real engine of Victorian civic expansion was the local money market. When Manchester decided to build the Manchester Ship Canal in the 1880s to bypass Liverpool's high port duties, it was an insane engineering project. It cost millions of pounds at the time.
Did they ask the Chancellor of the Exchequer for a loan? No. The local council and private backers raised the capital themselves. They issued bonds. They took massive financial risks.
Victorian Local Funding Model:
Local Enterprise -> Municipal Asset Ownership -> Commercial Revenue & Civic Bonds -> Independent Infrastructure
Modern Devolution Funding Model:
Whitehall Tax Collection -> Treasury Allocation -> Competitive Bidding Wars -> Heavily Restricted Local Spending
This structural difference explains why our modern attempts at devolution feel so small. We are celebrating capped bus fares while our Victorian ancestors were literally digging artificial rivers to the sea to beat global trade tariffs.
The Trap of the Modern Devolution Deal
I have spent years analyzing regional economic policy, and the biggest mistake people make is confusing administrative devolution with fiscal devolution. They are not the same thing.
Why the Bee Network is Just a Fraction of the Picture
The Bee Network is a great achievement for local transport coordination. It proved that local leadership can run a bus service more cheaply and efficiently than private operators who are focused only on profitable routes. But transport is easy. It is a closed loop.
What happens when you want to fix deep, systemic structural issues like generational poverty, failing school systems, or substandard housing?
Under the current setup, the funding for these areas is split across multiple national government departments. A mayor has to patch together a budget from the Department for Work and Pensions, the Department for Education, and the Ministry of Housing. Each of these pots of money comes with its own rigid targets, reporting requirements, and timelines. The regional leader spends half their time proving to Whitehall that they spent the money correctly, rather than actually delivering results.
The Financial Noose of Whitehall Accountability
The British state is obsessed with preventing local failure. Because the central government ultimately guarantees the financial stability of local councils, it insists on total oversight. This creates a culture of extreme risk aversion.
If a local authority tries something radical and fails, the political fallout hits the national government. Therefore, the national government ensures that nobody can try anything truly radical. You cannot have real innovation without the genuine possibility of spectacular failure. The Victorians accepted that risk. Modern Westminster cannot stomach it.
How to Rebuild Victorian Civic Pride Today
If the new government genuinely wants to shift power out of London, it needs to stop tweaking the existing combined authority model. We do not need more devolution deals. We need a fundamental rewiring of local financial power.
Here are three concrete steps to make that happen.
Scrap the Bidding Wars and Return the Business Rates
Right now, towns and cities across the country waste thousands of hours and millions of pounds hiring consultants to write bids for various pots of central funding. It is an absurd beauty contest where Whitehall civil servants decide whether a town in Yorkshire gets money for a new park or a town in Devon gets money for a high street bypass.
This must stop. The government should permanently return 100% of all locally generated business rates and property taxes to the local authorities, permanently. No ten-year trial periods. No strings attached. If a city grows its economy, it keeps the cash. If it drives businesses away, it suffers the financial consequences.
Empower Regions to Borrow Directly From the Markets
Cities should be allowed to issue their own civic bonds to fund green energy infrastructure, regional housing developments, and high-speed transit networks.
Let the global financial markets judge the viability of a new tram system in Leeds or a tidal energy project in Liverpool. If investors believe the project will generate a return, they will fund it. This removes the Treasury bottleneck entirely. It forces regional leaders to act like commercial entrepreneurs rather than political campaigners.
Let Cities Fail and Succeed on Their Own Merits
This is the hardest pill for Westminster to swallow. If you give regions real power, some of them will make terrible decisions. They will invest in bad projects. They will elect incompetent leaders who blow the budget.
The central government must resist the urge to step in and rescue them. The ultimate accountability should belong to the local voters at the ballot box, not to civil servants in London. When voters realize that a bad local government means higher local costs and worse services, they will start taking local elections seriously. Civic pride returns when the stakes are genuinely high.
The Practical Blueprint for True Regional Power
To turn this into reality, the government needs to execute a sharp legislative shift.
- Abolish the national bidding structures for regional development completely.
- Pass a Local Government Finance Act that grants cities the statutory right to raise capital through independent municipal bond markets without Treasury approval.
- Disentangle regional public services from national departmental silos, creating single, block-funded regional budgets controlled entirely by elected assemblies.
We have spent forty years trying to fix the UK's regional imbalance by sending money from London down to the provinces. It has failed. The gaps between the richest and poorest parts of the country are as wide as ever. The solution is not to redistribute wealth through Whitehall bureaucracy. The solution is to let the regions build their own wealth, just like they did over a century ago.
Stop asking London for permission. Start building.
