After over a decade in the making, devolution finally got some teeth in this year’s spring Budget.
Whilst it might be overlooked by the mainstream post-Budget commentary, new devolved city administrations with their multi-year single funding settlements could be the biggest single lever the government has to foster regional growth.
For all the various iterations of city deals, devolution deals, the establishment of metro mayors and the promise of levelling up, the UK has remained the most centralised political economy in the developed world. This has dampened productivity and undermined opportunities to attract inward business investment, create jobs and drive growth more fairly between people and places across the country.
Local government has been hollowed out by cuts and shackled by a debilitating and degrading ‘begging bowl’ culture of funding. Fragmented, tightly ringfenced funding streams undermine leaders’ ability to invest strategically, and a one-year finance settlement announced just weeks before the start of the financial year makes even short to medium term planning difficult. Hence the long call, including when I led the City Growth Commission in 2014, for multi-year, departmental-style pooled budgets. Greater Manchester and the West Midlands are now to get this as part of their groundbreaking trailblazer deals. The chancellor committed to extending the principle to other mayoralties over time.
Coupled with another overlooked announcement about the establishment of regional select committees, there is now a route to transform the constitutional underpinnings of the English state, to elevate the democratic status of mayors in their locality and in the national policy making arena, and to put the UK economy on a fairer, more sustainable footing. It might be down in the polls and losing energy after 13 years in office, but the Government is trying to signal its intent.
Elsewhere there was some tidying up of the devolution agenda, with the functions of Local Enterprise Partnerships (LEPS) – long since heading for the chop – to be given back to local authorities. The irony will not be lost on the sector that it was one of the first acts of the Government in 2010 to introduce LEPs, having abolished their predecessor Regional Development Agencies. Whilst the variable geometry of LEPs across the country will complicate the process, the change is a sensible one and likely to go ahead after consultation.
Less sound was the hope that 12 new investment zones would lead to ‘12 potential Canary Wharfs’. We have learned too much over the last decade of place-based devolution and regeneration simply to replicate London’s Canary Wharf model, in which value is concentrated among a few, while poverty and inequality persists in the local economy. I assume this is more a rhetorical device than a step away from the chancellor’s original intention to create clusters of high value-added enterprise around universities in deprived areas. It was this approach that rehabilitated Liz Truss’ shallow ‘race to the bottom’ idea of mini tax havens to one that had a chance of levelling up from the ground up. Places that have mayors, and particularly those with new trailblazer deals, have more of the powers and tools needed to make the task of inclusive innovation and fairer growth easier.
But all this begs the biggest question in the devolution debate now. What of local authorities, especially in places that sit outside mayoral combined authorities? Here the Government could apply multiyear settlements and reduced ringfencing to all upper tier authorities, immediately.
Many of the Budget policy announcements came with a lagged timetable. The extension of childcare support, the transition to net zero, the roll out of 100% business rate retention. Multiyear, single settlements for Greater Manchester and the West Midlands could see others follow suit. But in one fell swoop the Government could enhance the quality of local strategic leadership, investment and productivity potential now, by moving to two-year local government finance settlements (as the Treasury seemed to promise before Christmas, but rowed back on) – ideally three. By spending no more money, it would help local government in England play its part in the UK becoming the most dynamic economy in Europe. Why wait, chancellor?
Charlotte Alldritt is CEO of the Centre for Progressive Policy
@CentreProPolicy
