The governance of England is at a pivotal moment as the English Devolution and Community Empowerment Bill makes its way through the UK parliament. This moment represents another shift in the long-running historical pendulum swing between regional, local and now sub-regional scale institutional arrangements. The aspiration is that the bill produces an arrangement that will allow the pendulum to rest so that new arrangements can settle, enabling places fully to realise decentralisastion’s many benefits.
UK lawmakers and those enacting the legislation may learn much from the experience of Japan. The country had a similar devolution moment to the UK several decades ago, and has navigated from a highly centralised system while maintaining administrative stability and fiscal discipline. Japan’s 2000 Decentralisation Reform Act clarified the division of responsibilities between national, prefectural, and municipal governments and abolished central government’s supervisory powers over routine local functions. This change marked a decisive shift toward autonomous local governance supported by formal institutional arrangements. Today, Japan is widely considered a stable, well-ordered governance system.
In the UK, several wicked issues are emerging around the extent and nature of decentralisation, local government reorganisation, multi-level governance, and accountability. Such issues of power, money, and institutions are not new or unique.
Lift off to greater financial autonomy?
While a reality for the leading governance institutions and an aspiration for the rest in England, integrated financial settlements and an ability to vary expenditure between budget heads at the subnational and local levels are well established in Japan. This arrangement is enabled by Japan’s integrated budgeting framework, which allows prefectures and municipalities to reallocate expenditures flexibly across policy areas within their block grant settlements. In Japan, the Local Allocation Tax system hardwires allocation and redistribution into the funding system. Japan complements this with assigned revenues, such as fixed shares of national income, consumption, and liquor taxes, which provide predictable fiscal resources aligned with local responsibilities. Japan’s system helps avoid the problem of unfunded mandates: legal responsibilities to deliver services without matching resources.
There is limited mention of fiscal devolution for England in the bill beyond precepts on existing taxes and a mayoral community infrastructure levy if nationally set conditions are met, although amendments are expected on visitor levies. The English Devolution White Paper set out Government plans to introduce Integrated Settlements. The intention was to deliver a new, flexible funding model for devolved Mayoral Combined Authorities (Strategic Authorities) from 2026-27, allowing them to pool and shift significant funds between housing, transport, skills, regeneration, and climate projects, offering greater local control to meet regional needs and objectives. However, early steps to cede financial control through this approach appear timid, and only time will tell the extent to which these settlements can truly create lift off towards greater financial autonomy.
Pushing through and stabilising after local government reorganisation
The long history of centralism and centralisation in English governance casts a long shadow over between national and local government relations. Incremental and piecemeal decentralisation episodes stoke fears about governance tiers appearing and disappearing as well as gaining or losing powers and resources.
Japan undertook a local government reorganisation between 1999 and 2010, reducing the number of municipalities from over 3,200 to around 1,700 through voluntary but strongly incentivised amalgamations. This change created larger, more capable administrative units better suited to delivering modern public services. Critically, once this change was embarked upon and delivered, it was stabilised by sticking with this structure and making it work to impart continuity and stability on the system, reducing the costs of navigating constantly changing arrangements and uncertainty to enable the governance actors to plan and operate strategically. A key capability needed in tight public finance circumstances.
The structured framework and ‘devolution by default’ commitment in England have the potential to allay fears about existing and new subregional institutions hoarding powers and resources to the detriment of local governments. This system is predicated on positive and effective working relations between governance tiers based on consensus and collaboration, underpinned by duties to respond and collaborate. Yet, further clarifying local government roles and involvement in sub-regional strategies and governance will be key.
The formalised, even bureaucratised, governance in Japan provides continuity, stability, and ability strategically to plan, budget, and act into the future. The system is also considered fairer and more inclusive as a result. Japan’s system contrasts the historical institutional churn and instability in England and its informal governance of deals and negotiated deal-making with ad hoc, uneven, and uncertain outcomes and dependence upon the political leaders and personalities in the room at particular political-economic moments.
Clear lines of accountability
Mayors are the focus of accountability in the rolling out of sub-regional governance institutions to fill in the map across England. Accountability between the governance levels is key to ensuring centralisation is not simply reinforced by the new subnational institutions mostly answering upwards to national government and Whitehall departments and local governments having to relate to the new upper tier too.
In Japan, accountability in the three-tier system works through codified procedures for consultation, coordination, and dispute resolution, creating predictable and rule-based multi-level governance. Japan does not employ regional mayors because governors and municipal mayors are directly elected and already provide clear democratic accountability at the prefectural and local levels.
Restoration of the connection between what people pay in local taxes and what benefits and services they receive is urgent in England. It provides an opportunity to counter the contemporary local discontent and distrust of politicians and political institutions to make people’s lives better. In Japan, this relationship is managed through a transparent system of local taxes, user charges, and intergovernmental transfers that align tax burdens with service provision responsibilities.
Grasping the full value of decentralisation
England’s devolution history shows moments like the current one are rare and must be seized. The new institutions and structures offer a chance for local, regional, and national actors to reset the balance. Japan teaches us that staying the course is worth it to settle the pendulum in place and release the full value of decentralisation.