UK regional tax devolution fuels written constitution push

Prime Minister Andy Burnham has announced that a new programme of decentralisation strengthens the case for a written UK constitution. The plans, outlined on Friday, include giving regional mayors the power to keep a share of income tax generated in their areas by early 2028.

Under proposals expected in late October, wealthy economic hubs like London, Greater Manchester and the West Midlands will transfer a portion of their tax revenues to less prosperous regions such as Hull and East Yorkshire. This cross-regional subsidy is explicitly modelled on Germany’s postwar basic law, the Grundgesetz, which mandates equivalent living standards across all states.

For European businesses and investors, this represents a potential shift in how the UK manages its internal market. Moving from a highly centralised system governed by an unwritten constitution to a codified, federal-style arrangement could alter the fiscal landscape across English regions, Scotland, Wales and Northern Ireland.

“It will increase the case for a constitution because Britain is changing through this, England is certainly changing through this,” Burnham said. “In the end, I think it does start to point towards a new constitutional settlement … with that commitment to equivalent living standards,” he added, arguing that his pledge of “good growth in every postcode” was “more than just a soundbite”.

Tim Bale, a professor of politics at Queen Mary University of London, noted that introducing such a document would be a “huge departure”, as historically most countries adopt one only in the wake of a revolution or war. He warned that a codified system would “represent a major constraint on the executive … because it would presumably put the rules of the game beyond the power of parliament to change with a simple majority”.

While defining the competencies of local, regional and national government could bring clarity to regional markets, Bale cautioned that “there is no way he will be able to limit it to that”.

The sheer scale of the project raises questions about implementation. Dr Hannah White, chief executive of the Institute for Government, stressed that “adopting a written constitution – of the kind almost every other country already has – would represent a very significant constitutional shift for the UK and be a major exercise.” She added that a fully codified constitution “would need to go far beyond devolution to encompass all the rules which structure the UK state”.

Balancing this structural overhaul with concurrent agendas on social care and public utility control will test the government's capacity. However, Burnham has made clear that importing the German model of fiscal redistribution is central to his strategy of ending the deep inequality he says is entrenched by Westminster's concentration of power.