Tuesday 02 June 2026 5:31 am
| Updated:
Monday 01 June 2026 10:54 am
If Andy Burnham wants a municipal bond revolution, he must first build the fiscal architecture to make it sustainable, says Tim FocasFew politicians have done more to advance the cause of English devolution than Andy Burnham. The Labour leadership front runner has become the poster child for what happens when local leaders are given the power and freedom to shape their own destiny. But let’s be absolutely clear, from George Osborne’s Northan Powerhouse to Boris Johnson’s “levelling up” agenda, all devolution initiatives over the past two decades have had a dependence on Westminster to hand over the money.It is therefore unsurprising that a growing number of voices are calling for the next stage of devolution which would allow mayors and regional authorities to issue municipal bonds and raise capital directly from institutional investors. Sounds sensible right? I mean, why should every local infrastructure project require ministers and treasury officials in London to sign off funding? And why shouldn’t ambitious local leaders borrow to invest in the roads, railways, housing and AI data centre infrastructure needed to unlock growth?Well, it is not so much that local borrowing is inherently bad. After all, look at what it has done for places much further afield like Mississippi in the US, which has projected GDP growth of 1.5 per cent this year, building upon just under 2 per cent growth in 2025.The issue is more that debt investors, just like they do with nation states, reward strong economies with cheaper capital and penalise weaker ones with higher borrowing costs. That reality creates a serious challenge for anyone who believes municipal bonds alone will help “level up” Britain. Take London as a prime case in point. With its enormous tax base, global financial centre status and concentration of economic activity, London would almost certainly be able to borrow more and at lower rates than almost any other part of the country. Investors would see a large, diversified economy capable of generating the revenues needed to service debt.
