After weeks of speculation, Andy Burnham’s vision for Britain is finally coming into focus. At its heart is a simple proposition: Britain needs to shift power away from Westminster and into its regions and nations. 

Buoyed by Greater Manchester’s economic success under his leadership, Burnham argues that deeper devolution can deliver “good growth in every postcode”. It’s a bold idea, but not everyone is convinced that devolution is the answer to Britain’s problems. Some critics have pointed to Scotland as proof that devolving power does not lead to better outcomes. Former Conservative ministers David Gauke and Jacob Rees-Mogg have argued that devolution has failed to improve Scotland’s performance, while Bloomberg columnist Adrian Wooldridge has claimed it has even “hampered growth”.

So who is right? What has devolution actually delivered for Scotland? And what can Britain’s true north teach Andy Burnham about spreading prosperity beyond Westminster? To answer those questions, this blog examines Scotland's economic record since devolution, and identifies lessons for extending meaningful devolution across England.

The criticism from Gauke, Rees-Mogg and Wooldridge rests on a simple claim: devolution has failed to improve Scotland's economic performance, and may even have held it back. The evidence points in a different direction.

Let’s start with economists' favourite measure: economic growth. Since the Scottish Parliament was established in 1999, real GDP per head has grown by 35% in Scotland, compared with 30% in England. In practice, Scotland has recorded the fastest growth of any of the four UK nations, and has outperformed every English region except London and the North West. Edinburgh, meanwhile, quietly overtook London last year to become the UK's most productive city on a GDP-per-head basis.

GDP is not the only measure that matters. Labour productivity – output per hour worked – is generally regarded as a better indicator of an economy's underlying performance because it strips out changes in demographics and labour force participation. Since the financial crisis, productivity growth in Scotland has averaged 0.8% a year, compared with 0.4% across the UK as a whole. In other words, Scotland's productivity has grown at roughly twice the UK's rate.

But while GDP and productivity matter, they are not ends in themselves. What ultimately matters is whether people's living standards are improving. Here, too, Scotland compares favourably. 

Since devolution, real median weekly earnings have risen by 23% in Scotland, compared with just 15% in England, 16% in Wales and 20% in Northern Ireland. The result is a remarkable role-reversal. At devolution, median weekly earnings in England were £36 higher than in Scotland. Since then the tables have turned: weekly earnings are now £3 higher in Scotland. Scotland now has the highest median earnings of any UK nation or region outside London and the South East.

The same pattern appears when looking more broadly at household incomes rather than wages alone. Gross disposable household income per head – which includes income from work, benefits and other sources, net of taxes – has grown faster in Scotland than across the UK since 1999. In practice, Scotland has also outperformed every English region except London.

Average incomes, however, can conceal how growth is distributed. One useful measure is the proportion of employees earning below the real Living Wage. On this measure, Scotland performs better than any other nation or region of the UK. Just 11% of Scottish employees earn below the Living Wage, compared with 19% in the North East of England. That in part reflects deliberate policy choices, including Scotland's Fair Work agenda and sustained government support for Living Wage accreditation.

Taken together, the evidence is difficult to dismiss. Whether measured by GDP, productivity, earnings, disposable income or the prevalence of low pay, Scotland has generally outperformed the UK since devolution. Across most of these measures, it sits at or near the top of the UK's league table.

None of this proves that devolution itself caused these stronger outcomes. Scotland's economy differs from England's in important ways, and many factors influence economic performance. But it does discredit the claim that devolution has actively undermined performance. If devolving power inevitably weakened growth, Scotland would not consistently appear near the top of the UK's economic rankings.

Nor should relative success breed complacency. Although Scotland has outperformed its neighbours, the UK's overall economic record over the past two decades has been nothing short of abysmal. Real wages have barely recovered since the financial crisis, productivity growth remains anaemic, and living standards have stagnated for nearly two decades. Performing slightly better than the UK is not the same as economic success.

The lesson is not that devolution has solved Britain's economic problems. It is that devolving power has proved entirely compatible with stronger economic performance – and may even have helped deliver it. But this requires a meaningful transfer of power, not simply using local bodies to deliver UK-wide policy. 

Beyond headline economic metrics, devolution has enabled Scotland to pursue policies that reflect its own priorities and preferences. Most notably, this has taken the form of developing a distinct social contract. Since devolution, Scotland has delivered free university tuition for Scottish students, free school meals for primary school children, free personal care for older people, free prescriptions, free dental check-ups, and free bus travel for the young and old. The baby box, introduced for all newborns, was designed in the same spirit: to ensure every child begins life with a basic set of essentials.

The Scottish Government has also used devolved powers to strengthen the welfare state. The clearest example is the Scottish Child Payment, alongside measures to mitigate the impact of UK Government welfare cuts. To help pay for these more generous social policies, higher earning Scots pay more income tax than they would in England. But that is precisely the point of devolution. It allows voters in different parts of the UK to make different choices about tax, spending, and the kind of society they want to build.

Not everyone will agree with these policies, and not everybody has to. But the electorate evidently does, and it is hard to imagine they would have happened without devolution. And in some areas, these distinct choices have led to notably different outcomes. As we showed in our ‘Election Spotlight’ series, child poverty is now six percentage points lower in Scotland than across the UK. Were Scotland’s child poverty rate in line with the UK’s, around 65,000 more children would be living in relative poverty today. That is devolution in practice: different powers enabling different political choices, with real consequences for people’s lives.

The same pattern is evident elsewhere. It is no coincidence that meaningful land reform only became politically possible after the creation of the Scottish Parliament. The abolition of feudal tenure, the expansion of community ownership and the establishment of Scotland's ‘right to roam’ are all products of a Parliament willing – and able – to legislate differently. And what is striking about Burnham’s “Manchesterism” agenda is how much of it already exists in Scotland. His call for greater “public control” over essential services has been a central feature of devolved policy for years.

Scotland’s water industry was never privatised and remains in the hands of state-owned Scottish Water. ScotRail returned to public ownership in 2022. Scotland has retained a far larger stock of council housing than England, helped by the abolition of Right to Buy in 2014. And after introducing temporary rent caps during the pandemic, Holyrood has now legislated for a system of permanent rent controls. If Burnham’s agenda reaches Downing Street, the rest of the UK may find itself becoming rather more Scottish.

This points to another advantage of devolution: policy experimentation. Different parts of the country can try different approaches. When they succeed, others can learn from them. Devolution turns the UK from a single-policy state into a laboratory of democratic innovation.

None of this means every devolved policy has succeeded, or that Scotland is some kind of utopia – quite the opposite. The NHS on both sides of the border is under severe pressure after years of austerity, the Covid-19 pandemic, and rising demand. Scotland’s educational performance has deteriorated relative to England and to international competitors. From ferry fiascos to missed climate targets, Holyrood has had its share of costly failures. And some critics – including Andy Burnham – contend that devolution has stopped at Holyrood, with too little power passed on to Scotland's cities and local authorities.

The lesson is not that devolution is a silver bullet. It is that it makes government more responsive to local priorities, creates space for policy innovation, and gives power to those with the greatest stake in whether decisions succeed.

While devolution offers real opportunities, it also brings real challenges. The most important is in relation to funding. Scotland’s devolved funding is still shaped by the Barnett formula, the much-contested mechanism used to allocate changes in UK Government spending across the devolved nations. Critics often point out that Scotland receives higher public spending per person than England. While this is true, it partly reflects higher costs and spending pressures linked to Scotland’s geography, dispersed population and demographic profile.

Since Scotland gained control over income tax rates and bands, the fiscal framework has become more complicated. In taking on these powers, Holyrood also assumed greater exposure to the performance of Scotland's tax base relative to the rest of the UK. Although the Scottish Government now retains the income tax raised in Scotland, its block grant is reduced by an amount linked to the growth of comparable revenues per person elsewhere in the UK. Scotland therefore gains when its income tax revenues grow faster than the UK, and loses when they grow more slowly. That risk was understood when the powers were devolved, but it has had significant fiscal consequences.

Today, Scotland's more progressive income tax system raises significantly more revenue than matching UK policy would have done. But because Scotland's underlying tax base has grown more slowly than the rest of the UK's – partly reflecting the decline of the North Sea oil and gas sector, among other factors – much of that gain has been offset. In theory, Scotland's income tax reforms should be generating around £1.7 billion more than would have been raised under UK policy. In practice, the net benefit to the Scottish budget is only around £616 million – roughly a third of the expected revenue gain.

Some argue that control over income tax should allow Scotland to grow its own tax base. But the drivers of earnings and employment extend far beyond income tax, and many of the most important levers remain reserved to Westminster. Scotland is therefore being asked to carry risks it cannot fully control.

This offers an important lesson for England. If devolution simply means allowing already successful places to keep more of their tax revenue, it risks entrenching regional inequality rather than reducing it. A successful model of English devolution will need to combine meaningful tax powers with a fair system of fiscal transfers, so that poorer regions are not punished for having weaker tax bases. That will be complex and controversial, but it is essential if devolution is to tackle regional inequality rather than deepen its divides.

Then there is borrowing. Bizarrely, the Scottish Government has less flexible borrowing powers than local authorities. Unlike councils, it is constrained by strict annual and cumulative borrowing caps that amount to only a small fraction of Scotland’s overall budget. The Treasury has repeatedly resisted granting the devolved governments greater borrowing freedom, limiting their ability to invest in essential infrastructure. This is especially problematic in areas such as the transition to net zero, where Scotland faces significantly higher investment needs than other parts of the UK, but currently lacks the fiscal tools to fund them. If Burnham is serious about shifting power out of Westminster, meaningful borrowing powers must form part of the settlement – not only for Scotland, but across the UK’s regions and nations.

That would mark a radical change in the UK’s fiscal governance, and the Treasury would almost certainly resist it. But devolution without the power to invest is only partial devolution. Success requires real fiscal firepower.

Britain's experiment with devolution to date offers an important lesson. Places that have enjoyed meaningful devolved powers have generally outperformed those that have not. That strengthens the case for extending devolution across England – but only if it is accompanied by meaningful fiscal powers and a funding system that prevents regional inequalities from widening rather than narrowing.

Yet Scotland and Greater Manchester also illustrate devolution's limits. While both have generally outperformed the UK as a whole, the UK's overall economic record over the past two decades has still been extremely poor. It is possible – although far from certain – that more devolution may have delivered even stronger outcomes. But it can never be a panacea.

This is because many of the forces shaping Britain's economic performance still operate at the UK level. Monetary policy, employment law, competition policy, trade policy and much of industrial policy remain the responsibility of Westminster. Even with greater fiscal autonomy, devolved governments will continue to be at the mercy of the fiscal framework set by the UK Government. As long as the UK remains a single economic union, all nations and regions will remain inextricably wedded to decisions taken in Whitehall, whether they like it or not.

The lesson then is not that devolution is an alternative to a coherent UK-wide economic strategy. It is that the two are complementary. Strong devolved institutions can make better decisions about local priorities, while the UK government must provide the macroeconomic conditions in which every part of the country can prosper. 

Andy Burnham is right to argue that power should move closer to the communities it serves. But if that ambition is to deliver more than administrative decentralisation, it must be matched by both meaningful fiscal devolution and a more ambitious UK economic strategy. Without each of these working in tandem, no nation or region of the UK will be able to flourish – and Burnham’s vision to deliver prosperity in every postcode will be in vain.