Devolution’s age-old problem

Despite cynicism from people of all political persuasions, George Osborne has, since helping to steer the Conservatives to their first majority win in 22 years, reaffirmed his commitment to devolution. However, like a lot of policies championed by Osborne, it is built upon unstable foundations.

Ageing populations present a significant policy challenge to governments the world over, most infamously in Japan, but it offers a problem at the sub-national level as well, to the detriment of the current government’s devolution drive.

The cost of looking after elderly populations, as we all know, is high and rising; a problem that is not going to be fixed soon. This cost, however, is looking likely to be pushed further down the political food chain, while the money necessary to fund this challenge is not being devolved alongside it.

The flagship devolution program is Manchester, the heart of the chancellor’s ‘northern powerhouse’ and the site of his constituency. Hammily referred to as Devo Manc, the passing of powers down from Westminster to a ‘metro-mayor’, for Manchester, includes the full devolution of its NHS budget.

Although the minister for communities and local government Greg Clark has indicated that the government’s devolution nation wouldn’t reach so far as full fiscal devolution (tax setting and collecting), devolved areas will still have to adhere to having a balanced budget and have to spend the money on their populations – funds that are unequally available across the country.

Population change projections produced by the ONS show the shifting sands of the make-up of society that local institutions have to pay for. Looking at the projections for the next five years, London is the only area with growth in the working population outstripping that of the non-working. In the north east, there is negative growth in the working age population and in the north west, Yorkshire and the East Midlands, growth is entirely dwarfed by the increase in the over 65 population.

Although these projections may turn out to be wrong (for example, a massive multi-national turns up with the promise of jobs in the north west), they inform a wider picture. Analysis by the Centre for Cities shows that Sunderland is the only place in the country where the population figures are falling, followed by areas across the north (like Liverpool) where populations remain the same as their graduates head down to London.

The situation is this; we are heading toward a structural problem which will work against supporting devolution as it is progressing. Research by the Smith Institute demonstrates the vast inequalities of wealth – often as a result of housing – between the regions of England, weighted heavily toward the south east. The base from which devolution will be paid for is skewed in much the same way; it is asset rich and heavy with the working age population, whereas for other areas of the country the exact opposite is true.

With the government announcing 250 communities will be getting more powers over local services, the time is ripe to reconsider what devolution actually means in an age of fiscal consolidation. If the structural problems of age and wealth are not addressed and the money needed is not provided, then what is devolution other than what David Walker mused Devo Manc may be; not real devolution at all, but the devolution of political responsibility.