Burnham’s English devolution challenge to Scotland – Daily Business

Andy Burnham will set out plans for greater devolution in England next week which will put pressure on the Scottish government to either continue its push for separation or work with him on building a better connected Britain.

Mr Burnham, who is expected to become prime minister next month, will announce the devolution of powers and money from central government, initially to England’s regions.

His aim is to rebalance the economy from the south to the north. While there is no clarity over how Scotland fits in with his plans, he is likely to want a more inclusive Britain, or else be saddled with the same accusation as his predecessor as being a prime minister for England.

It is thought that his plans could see the abolition of the Secretaries of State for Scotland, Northern Ireland and Wales, to be replaced by a Department for the Nations and Regions to ensure those areas beyond the south east get a greater share of public investment.

Alternatively, there is talk of beefing up the Transport Department as core to the plans for better connectivity.

Mr Burnham’s initial focus is on shifting some powers to city regions such as Manchester and Leeds, led by newly-elected mayors.

This will present a bigger challenge to Scotland, not least in the scramble for inward investment. He is mindful that Glasgow has a similar economic profile to cities such as Liverpool and Newcastle, while Edinburgh is competing with Manchester and Leeds in areas such as financial services and fintech.

However, there is concern that Scottish cities will slip behind their English counterparts unless they enjoy some of the benefits that Mr Burnham wants to bring to the north of England.

Some infrastructure spending will be diverted to decision makers in English regions with mayors and combined authorities likely to oversee a bigger allocation of money from the UK government.

Mr Burnham proposes a “No10 of the North” which will provide greater focus for the north of England as an attractive location for investors.

He is also likely to push ahead on devolving some areas of tax revenue to local government. Combined authorities would keep all of any increase in business rates that they generate in order to attract investment into their areas.

The plans could be extended to income tax so that a proportion of any additional tax revenue generated could be spent locally.

Greater Manchester, which has more devolved powers than any other part of England, has had an average annual economic growth rate of 3.1% since 2015, more than double the national average of 1.5%.

It has outperformed, not only other parts of England, but also Scotland on a number of measures despite having fewer powers than Holyrood.

While Scotland performed better in attracting foreign direct investment than the English regions for the eleventh consecutive year, an increase in the powers and tax-friendly appeal of those regions will make it more challenging for Scotland to maintain that status.

Recent data from EY also shows a growing competitiveness for FDI. Scotland saw a fall for the second consecutive year, down by 20%in 2025 to 108 projects, from 135 in 2024.

This was a sharper decline than the year before and resulted in Scotland posting its lowest total foir annual projects since 2020.

This is in keeping with figures from the Department of Business and Trade which show a 26% year-on-year decline in the number of FDI projects landing in the UK, falling to just 1,020 in 2025 to 2026.

This represents the lowest in over a decade and a 54% contraction compared with ten years ago, raising questions about the UK’s international competitiveness and capacity to deliver the Industrial Strategy. It also emhasises the increasing competition among UK regions.

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Mr Burnham shares the view that Britain isn’t working to the benefit of all because of the imbalance towards the south and believes that the failure of the north is also a constraint on the potential of London and the south east.

His proposed changes will be easier to apply because of existing moves to reorganise local government around strategic authorities – mainly run by a directly elected mayor.

There is also talk of hiving off part of the Treasury with a new department dedicated to economic growth which would have a remit to ensure a greater spread of public investment.

Chancellor Rachel Reeves has been criticised for focusing much of her infrastructure plans around the south east, boosting the Oxford-Cambridge corridor and investing in airports and rail projects in the region.

Mr Burnham is thought to be keen on reigniting the abandoned plan for the northern link of the HS2 project.

His thoughts on Scotland remain largely unknown but he is said to favour a stronger commitment to oil & gas which would put him at odds with Energy Security Secretary Ed Miliband who has pushed the net zero strategy and is among three contenders to replace Rachel Reeves in Number 11.