The Chancellor’s Growth Plan commits to “unlocking growth in every part of Britain”, and Andy Burnham has highlighted the same direction of travel in his speech on 29th June. The government has promised a Treasury roadmap for fiscal devolution, including, for the first time, looking at income tax alongside other taxes. But will these reforms genuinely empower places to invest, or will they push financial risk downward?
This evidence review examines the international and UK evidence on fiscal devolution to answer that question. It draws on OECD cross-country analysis, Scotland’s lived experience of income tax devolution since 2017, and a detailed assessment of England’s current fiscal architecture, including the 2026 business rates reset, Integrated Settlements, the English Devolution and Community Empowerment Act 2026, and the unresolved problem of council tax.
The headline finding is that fiscal devolution can support growth, but only under certain conditions. The review identifies seven risks where the current trajectory could fail, including the danger of “risk devolution”, where financial exposure is transferred to local government without genuine fiscal control, and the exclusion of council tax, which funds over half of local government spending, from the reform conversation. It finds that cities, towns, and rural areas will be affected very differently, and that without deliberate design, fiscal devolution risks producing new patterns of spatial inequality rather than correcting existing ones.
The review sets out ten practical recommendations organised in three tiers: foundational architecture, structural design for redistribution, and institutional capacity for democratic legitimacy, designed to move the Treasury’s roadmap from risk transfer to genuine capability-building. The central argument is that fiscal devolution works when it is designed as “capability devolution” and fails when it is merely risk transfer.
“The next phase of fiscal devolution should be judged not by how much financial risk is localised, but by whether it builds the capability, powers, protections, and institutional capacity needed for every place to invest, adapt, and prosper.”
Professor Rebecca Riley
The Treasury’s roadmap for fiscal devolution must move beyond risk transfer to genuine capability-building. This means defining fiscal devolution with precision, addressing council tax alongside business rates, creating revenue borrowing facilities, and bundling devolution with institutional capacity support, particularly for towns, rural areas, and non-mayoral geographies that risk being left behind. Read the full briefing to understand how the design of fiscal devolution will determine whether it delivers balanced growth or reproduces spatial inequalities in a new form.
Meet the authors
Professor Rebecca Riley
Professor Rebecca (Bec) Riley is Co-Director of City-REDI, Deputy Pro-Vice-Chancellor for Regional Engagement, Director of the Local Policy Innovation Partnership (LPIP) Hub, and Professor of Enterprise, Engagement, and Impact at the University of Birmingham’s Business School.
Bec joined the University of Birmingham nine years ago to set up City-REDI, to build a distinctive local, regional, national and international research platform through the development of a Birmingham approach to understanding and facilitating growth in city regions. This systemic approach in identifying and conceptualising the inter-dependencies within and between regional economies has provided new opportunities for understanding, conceptualising, modelling, evaluating and comparing economic activity and business trends at the city-region level.
As the newly announced Deputy Pro-Vice-Chancellor for Regional Engagement, Bec will lead on setting the civic and regional vision for the University, while building on the work she has been doing with the University’s Regional Engagement Group. Alongside her new role, Bec remains the Principal Investigator (PI) and Director of the LPIP Hub, addressing nationwide issues through local partnership and place.
Bec’s research interests focus on regional economic development, including research to develop policy and regional strategies, monitoring frameworks, economic forecasting, skills and labour market analysis, and strategic business cases and project evaluation. She applies a mixed methods approach in her research, with a strong focus and record of impactful policy-relevant applied research and stakeholder engagement. She is an experienced lead on research projects, with over 200 research projects carried out across academia, policy, and consultancy roles.