Blog: Playing fair with place-based devolution

In the fast-paced game of city-devolution, one-upmanship drives many of the players: can this government fulfill the promises of its predecessors by delivering localism and rebalancing the economy? Can this city-region secure the most ambitious deal? Can those local authorities put aside entrenched politics to show central government it means business? It seems that competition can, after all, be a powerful lever of local dynamism; Lord Heseltine’s City Challenge Fund and the ethos of bidding for funds has perhaps been based on the right idea, but only once the stakes seem high enough to generate real results.

However, if devolution is a game it is at times more akin to ‘Mornington Crescent!’ in the BBC Radio 4 panel show, I’m Sorry I Haven’t a Clue.  Nobody quite knows the rules, except a shout of ‘Northern Powerhouse!’ is a clear winner.  Even when you think you’ve got a grip on the pattern of events, a closer look at the small print could throw you. A mayor is needed, yes, but it need not always be directly elected. The West Midlands Combined Authority agreement (announced last week) requires only that its mayor be “elected by the local government electors for the area”. Is this a game changer for some places, such as West Yorkshire or ‘Greater Bristol’, where the mayoral footprint has been a sticking point?

There are some common characteristics to the devolution deals announced so far, with devolved powers including:

• Control of a Single Investment Fund with annual funding (circa £30m) allocated over 30 years with five-year gateway reviews to ensure spending contributes to economic growth;
• Area-based review of post 16 skills and devolved 19+ adult skills from 2018/19; and,
• Strategic planning powers, with provisions (e.g. Land Commission) to identify and leverage public estates for housing and economic growth; and, in certain metros,
• Responsibility for a consolidated, devolved and multi-year transport budget, franchised bus services and smart ticketing system across the city-region (pending the Spending Review and Buses Bill).

These are all to be welcomed, particularly, as I’ve argued previously, where they give places the ability to pool, sequence and coordinate their resource income and capital investment over multiple years – that’s what drives real financial flexibility and local responsiveness. Greater fiscal freedoms have also been put on the table in recent weeks, with the announcement of 100% business rate retention. In this game, central government is starting to lay down a strong hand. 

However, any analysis of tomorrow’s Spending Review will need to consider three main questions when it comes to place-based devolution:

1. Managing transition – how can city-regions manage the transition to more fully devolved policy making and financial self-sustainability, especially during another round of severe public sector cuts and a potential lag between revenue grants ceasing and new forms of income coming on stream (e.g. business rates or potential to raise council tax)? What additional capacity is needed for local and combined authorities? What role for central government in smoothing the transition?  
2. Tackling inclusion – economic growth and deficit reduction have been the driving political narrative of national government since 2010. This has legitimised the prioritisation of public spending on infrastructure – particularly transport – and job creating initiatives (e.g. Regional Growth Fund). At the same time much of social policy and spending (e.g. housing, children’s services, and social care) has been tightly squeezed, and is notably absent from many city-deals to date. How can we shift the debate so that effective social policy is recognised as integral to growth and prosperity? What will this mean at a local and/or city-regional level? How does this play into a global debate on economic inclusion and the role of cities?
3. Public service reform – while city-devolution has come to frame local growth and governance issues, public service reform has remained a mixed picture. On the one hand, Greater Manchester’s health deal signals the potential for radical new arrangements. On the other, renewed commitment to see all schools become academies arguably enables the central department and (or via) the regulators to have far tighter influence over education. How can we put in place the conditions for effective, integrated and collaborative governance between local authorities, city-regions, central government, delivery agencies and providers?

Over the coming few months, the RSA will be delving into these questions – looking at the details of the Spending Review to understand the extent to which, amidst the anticipated round of further cuts, central government is playing fair when it comes to devolution.

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