Where now for devolution?

As the new government sets out its stall, five commentators give their views on a key policy – devolution:

• Theresa May has a golden opportunity to make devolution work: Craig Berry
• Metro mayors have powers to be progressive now: Mike Hawking
• Five ways a new industrial strategy can make the most of devolution: Alexandra Jones
• We need to rethink regional spending: Simon Parker
• Devolution should be community-based and community-led: John Tizard

Theresa May has a golden opportunity to make devolution work – but it must be progressive: Craig Berry

Since Theresa May took office as prime minister of the UK in July there has been a great deal of speculation about how – if at all – powers over tax rates and local spending will be devolved to local authorities, as promised by the country’s former chancellor George Osborne.

Osborne presented devolution as a way for local authorities to break free from the shackles of central government and forge their own approaches to economic development. Yet despite his grand visions for a ‘Northern Powerhouse’ and ‘Midlands Engine’, Osborne’s legacy is arguably one of centralisation rather than decentralisation. The city deals he ushered through suffer from serious limitations – and they carry many risks and challenges for local authorities.

Now, May is in a powerful position – she has the opportunity to do away with the weaker aspects of Osborne’s ‘devolution revolution’ and come up with progressive city deals that will revive struggling regional economies. The question is – will she take it?

‘Let’s rethink the powers that central government has,

rather than simply gobbling up the ones it is willing to give away’

So far, the deals have focused too much on devolving responsibility for delivering national policies, rather than giving local governments the power to make decisions about how best to support their local economies. For instance, councils have been permitted to raise council tax (which is largely regressive anyway) – but only if they intend to spend the proceeds on replenishing squeezed adult social care budgets.

Similarly, the government has outlined plans to allow councils to retain all revenue from business rates raised in their area. But councils will have very little freedom to redesign the tax to suit local purposes – even though this revenue is intended to replace grants from central government over the coming years.

The result will inevitably be greater inequality between areas with a highly developed private sector and those looking to build one. And there’s no suggestion of extending more borrowing powers to councils with weaker local economies, which could languish without support.

A generous interpretation is that the deals devolve power over micro-economic policy in lay terms to city regions, while leaving macro-economic policy to the central government. As such, local authorities might be able to take control of things such as vocational training, but not the regulation over or investment in the industries that might create jobs in the future.

So far, the devolution agenda has been shaped by the ‘Treasury view’ – the notion that the budget deficit should always be reduced and that cuts to public spending will not harm economic growth. In practice, this means that deals are being made based on an economic philosophy which insists that markets will look after themselves, and implores government (at all levels) to simply get out of the way.

Local authorities and city regions have little means to shift the terms of the deals, because the Treasury – insofar as it controls all public expenditure – always holds the strongest hand. Yet city regions desperately need to unshackle themselves from the Treasury’s programme of austerity. Over the past six years, local public services have been cut to the bone. Devolving power over depleted budgets to local authorities would do nothing to fix this.

For all these flaws, the devolution deals are still a great opportunity. Brexit has underlined the British people’s desire to ‘take back control’ – and devolution is a chance to give it to them where it matters most: at a local level. But if it’s to succeed, devolution needs to become a progressive agenda. It must empower the most disadvantaged groups and give every local economy an equal chance to prosper.

So far, May’s only significant announcement has been to signal a focus on all parts of England, rather than simply the Northern Powerhouse. This isn’t saying much: David Cameron and George Osborne’s approach already had an England-wide focus, with devolution deals marked out for Cornwall and various part of the Midlands and the east of England.

May would be moving backwards if she closed down the possibility of improving central government, at the same time as we’re reforming the local level. As it stands, the door is wide open for her to reset the devolution agenda in a more progressive direction.

I explore what this new, progressive devolution agenda might look like in a new report – The Real Deal – co-authored with colleagues at the Sheffield Political Economy Research Institute and the Centre for Local Economic Strategies.

All too often, the devolution agenda is framed by the question: ‘what should be devolved?’. A progressive approach to devolution would instead ask: ‘where should power reside?’. Let’s rethink the powers that central government has, rather than simply gobbling up the ones it is willing to give away – and let this be the basis for a new constitutional settlement on what relations between central and local government should look like.

For one thing, proper consideration must be given to the crucial role which central government can play in growing regional economies. We need a meaningful industrial strategy – something May has promised to deliver. As part of this strategy, the nation’s resources would be mobilised to support strategically important industries, such as high-value manufacturing. Effective industrial policy cannot be managed at a local level; rather, it must be informed by the local, but led by the centre.

It’s also important to build on the progress which has already been made, to take advantage of the political momentum around devolution. It is possible to go with the grain of existing devolution deals, while broadening out their scope.

Councils should be given more powers – including over tax – to shape how local land is used. Veto powers over planning should be supplemented by the ability to shape local housing markets. Local authorities should be empowered to deploy employment support programmes strategically to support local economies, rather than forcing individuals into ‘any old job’.

Above all, devolution must genuinely bring democracy closer to the people. For the process to succeed over the long term, we need to see much higher levels of citizen engagement in local politics. City deals with strings attached should be suspended while residents are consulted in a meaningful way. Unless individuals, communities and local authorities are empowered by devolution in a meaningful way, the entire process will backfire.

• Craig Berry is deputy director of the Sheffield Political Economy Research Institute (SPERI) at the University of Sheffield  
• This article was first published on The Conversation

Metro mayors have powers to be progressive now: Mike Hawking

Greater devolution to towns and cities across the UK could help to boost growth and share prosperity across the country. The majority of the ideas in The Real Deal are sensible, realistic proposals for the transfers of power from central to local government. But the chances of some of these happening in the near future may be slim.

The current period of devolution may not be perfect. But there is a fantastic opportunity to do things differently using the powers that are on offer.

The leadership needed to making the most of existing devolved powers must come from the new metro mayors. The Joseph Rowntree Foundation believe that city regions can play a big role in solving poverty in the UK. Here are a few thoughts on how mayors can use the powers they will have in a progressive way.

Firstly, mayors can target employment and training support to households experiencing poverty. Most devolution deals include joint commissioning of employment support for harder to reach claimants. Successful schemes would provide tailored help for individuals though pre-employment, employment entry, and importantly, once they have found work.

‘For progressive devolution, success needs to be made of the

current powers. Good metro mayors will make this possible’

Jobs created through major development and infrastructure projects will also help with this. Mayors should work with local authority leaders in their cabinets to use planning and procurement policies to generate employment and skills opportunities for local residents. Some local authorities will already be doing this, but our evidence shows good practice isn’t always shared within city regions.

Secondly, mayors can make use of their convening powers. The elections next year will provide the victors with huge political mandates. The triumphant Greater Manchester mayor will have received a minimum of 450,000 votes if turnout is similar to that of the 2016 London mayoral election.

This type of mandate could be used to convene anchor institutions to take collective action around an issue. It could be increasing procurement spend in the local economy, or it might be leading the way on paying the living wage. Matthew Todd sets out further suggestions in a chapter in The Real Deal. But countless examples from cities in the US show that additional powers aren’t always needed foster positive change.

Housing and transport are two other policy areas where mayors could make an immediate difference.

The bus services bill currently going through parliament could give metro mayors’ Transport for London-style powers over buses. Reviewing routes and fares to create a bus system that is accessible and connects deprived areas with opportunity should be a priority.

Most Metro mayors will have responsibility for a spatial strategy. A mayor intent on increasing affordable housing delivery could use this to set higher targets, while also ensuring new housing developments are well connected to areas with new employment opportunities.

While mayors won’t have control over affordable housing budgets, building strong relationships with the regional Homes and Communities Agency (HCA) should be a priority. Showing competent and effective leadership will help to convince government to transfer HCA powers to cities. Use of mayoral development corporations is another way to boost regeneration activity and influence housing delivery in a particular locality.

Scrutiny and open decision-making is further area where metro mayors could take immediate action. Devolution deals to date have taken place behind closed doors, involving a small group of officials. To be successful, mayors will need to change this. Simple steps could include showing decision-making meetings online, hosting monthly press conferences, and holding regular open public meetings.

But just as crucial will be formal scrutiny of decision-making. Metro mayors should ensure they have properly funded and staffed overview and scrutiny arrangements, with back bench councillors from each member authority represented. The cities and local government devolution act has a provision to make this possible.

With additional powers, metro mayors could of course do much more. SPERI and CLES are right to highlight this. For devolution to be more progressive in future, success needs to be made of the present. Good metro mayors will make this possible. A lot is resting on them.

• Mike Hawking is partnerships manager (cities) at the Joseph Rowntree Foundation

Five ways a new industrial strategy can make the most of devolution: Alexandra Jones

The launch last month of the government’s new economy and industrial committee – tasked by Theresa May with driving growth ‘up and down the country’ – marked the first shift in economic policy and devolution under the new prime minister.

As the new government decides what policies to keep, what to jettison and what to add, here are five ideas about a new devolution strategy that should be integral part of a new approach to economic growth and industrial policy.

1. Ensure industrial policy makes the most of cities and city regions, which are best placed to boost economic growth and productivity

To drive economic growth, the government must boost big city regions. Manchester’s 1% increase in tax revenue over the last decade was nearly as big as the tax generated by the 10 fastest growing smaller cities, demonstrating the critical role that major city regions (including their suburban and outlying rural areas) plan in the national economy. Giving big city regions greater control over transport, skills, planning and finances, will enable them to tackle some of the specific local constraints to growth identified by local businesses and particular local sectors.

The government should also work with the fastest-growing places – not necessarily through devolution deals, but by giving them greater flexibility to invest in the infrastructure that local businesses need. For places where people feel left behind by globalisation, the government should work with them to understand and make the most of their key strengths, their relationships with other local economies, and actions that will make the most difference to local growth and local people.

2. Bank the progress already made on metro mayors in big city regions, but relax mayoral requirements for smaller areas.

By May 2017, we should have a cadre of powerful voices for city regions (including towns, rural areas and suburbs) that will be at the heart of improving productivity over the next decade.

However, if the government backs away from mayors in any one area, the agreements elsewhere could be put at risk. Changing these policies could also mean still-sceptical civil servants seize the chance to pull back powers. But keeping big city region mayors does not and should not mean that more rural areas or smaller cities have to have mayors to gain more powers, or that the powers these areas gain need to be the same as Greater Manchester.

3. Ensure economic growth policies take decisions at the smallest efficient geography.

Whitehall and Westminster should not be trying to do everything on economic growth and industrial policy themselves. Partnerships already exist to support policy development and delivery, whether at neighbourhood level (in the form of combined authorities) or across city regions.

Whatever happens to the ‘Northern Powerhouse’, the city regions across the north will keep working together; the same is true of places dubbed the ‘Midlands Engine’ and ‘Great Western Cities’. Local areas should be empowered to devise or deliver policies to support growth and improve public services, where they will often know far more about what will work efficiently than Whitehall civil servants.

4. Make skills and innovation a national priority and work closely with city regions to deliver these aspirations.

Two of the biggest differences between successful places, and those that struggle, are skills and innovation. It’s vital that the May government does not fall into the historic trap of neglecting investment in human capital because its benefits take so long to come through.

The government’s national industrial strategy must prioritise skills, and work closely with local areas and key institutions across the UK to ensure everyone – from early years to those already in the workforce – can get the education and training they need to prosper in the modern economy. Government should also work closely with business to understand and raise demand for skills. This will be vital for future economic growth and productivity in cities across the county.

5. Borrow to invest, working closely with city regions.

With the relaxation of Osborne’s fiscal rules, there is an opportunity for the government to invest in infrastructure projects that generate jobs in the short term, and could help city regions attract businesses, employment and investment in the long term. An industrial strategy that makes the most of devolution should also allow areas to borrow against local revenue and invest prudentially in infrastructure that unlocks development.

The weeks and months ahead will see frantic work on industrial strategy, productivity, economic growth and devolution. But for the government to realise May’s vision for growth up and down the county, it is vital that this work is joined up, as all these areas are integrally linked. The Government must also continue to recognise the diverse roles that different places, and cities and their surrounding areas in particular, can play in generating growth and contributing to the national economy, if it is to succeed in raising prosperity across the country.

• Alexandra Jones is the chief executive of Centre for Cities

We need to rethink our approach to regional spending: Simon Parker

What is England for? Where are its regional economies headed? How is that funded? Who pays, and who benefits? How do we all feel about that?

These are questions that our politicians almost never debate in public, for the obvious reason that it is almost impossible to devise a system of local and regional funding with which everyone is happy, especially at a time of austerity. But recent weeks have forced the issue of regional fairness back on to the table. In the coming years, we will have to confront a series of troubling questions about our over-centralised economy, and the result may be a radical shift in the way we spend public money.

The EU referendum revealed a country in which many people living outside of successful urban centres feel alienated and left behind. It also revealed that some of those people were prepared to take a huge gamble on their area’s European funding and short-term economic prospects in order to ‘take back control’ of British sovereignty.

‘Governments might need to shift their attention

from funding services to growing local economies’

More prosaic, but just as important, is the government’s current consultation on business rate retention and the new system for recognising the needs of different council areas. This process may well result in a substantial redistribution of public money around the country.

The difficult truth is that most parts of Britain do not currently pay their own way. London, the south east and the east of England make a net contribution to the Treasury, while the rest of the country takes a net subsidy. This is hardly the fault of those regions – in many cases their recovery from Britain’s 40-year process of deindustrialisation remains incomplete and unevenly spread.

And there are lots of reasons why this sort of regional redistribution makes perfect sense. Quite apart from simple questions of fairness and need, London benefits from being part of a country that supplies it with talent, culture, and the heft that comes from being part of a globally-important nation state that contribute to the capital’s leading voice on the world stage. London has long received more than its fair share of capital investment. You could argue that taxpayers across the country both contribute to and invest in London’s success and deserve to see a dividend in return.

But the way we spend that dividend might be part of the problem. Huge amounts of it are paid out in revenue subsidies to support public services, but it has become increasingly clear that employing more people in local government and the NHS is not a route to economic sustainability. As we saw in the Blair years, public spending can prop up an economy in the short term, but it cannot substitute for a weak underlying private economy in the medium term. Once the public spending goes, so do many of the jobs and the local growth multiplier.

This is why we need to rethink our approach to regional spending. Governments might need to shift their attention from funding services to growing local economies. In other words, we should see national spending less as revenue for public service provision and more as long-term capital investment specifically targeted to improve regional economies to a point where many more places can fund their own local services.

You can see the beginnings of this shift at work in current local government policy. Greater Manchester’s devolution deal is explicitly aimed at self-sufficiency. Leeds City Region’s unsigned devolution proposal contains the same ambition. Business rates retention will ensure that there is a much closer link between the performance of the local economy and the amount available for social spending. Areas that do not grow get less money over time, and their councils must either fix the economy or accept a likely loss of population to wealthier areas.

But it is not possible simply to devolve some inadequate powers, cut budgets and demand regional self-sufficiency. We will need a period of transition, strong regional economic leadership and a clear strategy for economic change if places like Merseyside or Blackburn are going to move closer to becoming self-funding.

In this context, Theresa May’s promise of an industrial strategy becomes very important indeed, and the delivery of that strategy by the devolutionary Greg Clark at the new Department for Business, Energy and Industrial Strategy becomes even more critical. It will be vital to recognise that renewing regional economies requires both investment in infrastructure and ongoing support for reformed public services which can deliver a skilled workforce.

In the wake of the Brexit vote, the UK needs urgently to reconsider its economic model. We can continue with a centralised approach which turns London into a Singapore-style island of deregulated prosperity, using its dynamism to continue funding the rest of the country. Or we can take the longer, harder, but more hopeful path of restoring balance to our over-centralised economy.

• Simon Parker is director of the New Local Government Network

English devolution should be community-based and community-led: John Tizard

Last week saw a major voluntary and community sector summit on the voluntary sector and devolution in England. The summit was timely and important as government considers the next stages in the drive to devolve responsibility and some power and resources to city regions and sub-regions.

Inevitably, the change in political leadership post-Brexit has created a pause in the programme, and sadly, there are signs that government may now be less enthusiastic on this topic. This is most unfortunate for there remains a real opportunity to consider how best to deliver and achieve greater local control and accountability with proper resourcing.

‘Seize the moment’ has to be the order of the day for the the voluntary and community sector (VCS). It is vital that it energises itself and is proactively involved in the political debate around devolution.

‘Devolution has to be underpinned by central government

committing to resources for local control and decision-making’

There has been a varied degree of opportunity for VCS to be engaged at a local level, with far too many examples of local authority leaders and ministers rushing at a pace to secure ‘devolution deals’ without taking time to involve or even speak with critical local stakeholders.

I accept that, in part, this has been due to the pace of decisionmaking required by George Osborne as Chancellor. However, there can be no excuse, whatever the pressures from Whitehall, for local political leaders to exclude civil society groups and local citizens. If devolution is about empowering local communities and strengthening local democracy, then citizens and civil society organisations should never be sidelined or excluded. To do so challenges the very premise on which the policy is meant to be based.

Central government should always ask how the VCS and wider civil society groups have been consulted and involved in the development of local devolution propositions before considering, let alone endorsing, them.

And local government leaders have a moral duty to consult and involve local civil society. I would go further and suggest that local authorities should provide support, including financial support, to enable the local VCS to participate comprehensively.

Much emphasis has been placed on the economic benefits of devolution but long term, sustainable, inclusive growth can only be achieved through long term growth in social capital, community assets and communities themselves. Such growth cannot be ‘engineered’ by central or local government on their own, though clearly they have major roles to play. It requires the contribution of the local voluntary and community sector, wider civil society, and local employers too.

Above all, it requires local communities and local citizens to make local decisions, to take control and to contribute.

No two devolution arrangements will be the same. And just as devolution must embrace a range of public services from health and social care to education and employment programmes, so too devolution has to be about more than devolving power to elected mayors, combined authorities and local authorities.

It has to include a commitment to ‘double devolution’ to communities. It has to be underpinned by central government committing to make the right level of resources available for local control and decision-making; to redistributing resources to address regional inequalities; and to a wider programme of systematic redistribution of wealth and income to address the inequality which is so dominant in this country. The reality is that without greater equality, the opportunities from devolution will be less and they are likely to reinforce the current obscene social, gender, sexual, ethnic and economic inequalities. We can have a more equal country without having uniformity or taking away local choices and differences.

The summit this week provided an important platform to discuss and argue for a new agenda of devolution based on fairness, democracy and equality.

And surely a good starting point for such is the set of principles promoted earlier this year by Locality and NAVCA:

• creating a social economy
• enabling representation of local VCS within local leadership structures
• ensuring accountability through community engagement
• taking decisions at the most local appropriate level
• engaging local organisations to transform public services

The summit endorsed this approach and unanimously agreed a wide ranging set of principles – to be published soon. The summit said that devolution had to be contribute to a fairer and more equal country or else it had no value. It believed that this requires collaboration between the sectors and positive government action through its taxation and redistributive policies.

Government and local government have to understand and accept that is that English devolution to be effective should be community based and community led with effective local accountability and national redistribution in order to create strong communities and local economies and a fairer country.

• John Tizard is an independent strategic advisor and commentator on public policy and services. He is a former council leader and was director of the Centre for Public Service Partnerships.