Having spent the summer frantically doing deals in quiet offices, many councils will have heaved a sigh of relief on Friday as they submitted – or not – their devolution deal, in time for the government’s deadline. The first phase is over. But where does it leave us and what happens next in the run-up to the Spending Review on 25 November?
It’s becoming clearer where we are so far. Local Government Chronicle’s helpful bid map shows that most places have submitted a deal, although some counties (such as Berkshire) have decided not to get involved and others (Dorset, Hertfordshire, Worcestershire) are likely to submit a deal after the deadline. Here’s what we know so far:
Most of the big cities have agreed to have mayors: Many have done so reluctantly, and have added conditions that they want the government to meet in return, yet Bradford’s leader David Green summed it up well when he said, “Many of us…are opponents in principle but we have to take a pragmatic approach and swallow our doubts if it is the price to pay to get the powers.”
The West of England bid is one of the major exceptions, with entrenched local opposition to a metro mayor remaining a “stopping point” for local leaders. That doesn’t bode well for a large-scale devolution deal for them, as the chancellor George Osborne has made it clear that any significant devolution of powers to large cities will only be granted if they introduce a metro mayor.
Geography and governance will continue to be problematic: In Leeds City Region for example, the preferred geography for the combined authority will be difficult as it involves working with York, which is separated from other parts of the city region by a strip of land in North Yorkshire County, which is unwilling to be involved.
Meanwhile, in the West Midlands, Warwickshire has backed away from chances to be involved. In other areas, the mix of districts and unitaries in preferred geographies will make formal arrangements challenging. These debates will continue to run – probably over the next several years, even if an initial geography for a combined authority is agreed now.
Fiscal devolution, infrastructure and skills are common themes: Most places are asking for some kind of fiscal devolution, such as retention of growth in business rates (e.g. Liverpool, West Yorkshire), with Leeds looking for the freedom to levy a 10 year infrastructure precept, exempt from council tax caps, to invest in public transport across the region.
Power over local bus services and the fare box is a common theme, as is the desire for greater control over skills. Most places have said no to greater control over health and care, however, with many concerned about whether they have the capacity to deliver such complex services.
If it’s not fiscally neutral, it’s not going in the final deal: Lots of areas are asking for additional investment in some form, whether that’s exemptions, housing funds or ongoing government investment in certain areas (e.g. International Festival for Business in Liverpool).
But unless they show how it’s fiscally neutral, and ideally how it involves reallocation of funds rather than additional money, it’s not going to go into the final deal. Manchester did get additional money, yes – but it went first. Anywhere else that wants extra cash in a very tight Spending Review is going to need to very quickly convince the Government of the benefits their proposals will bring.
Everyone needs to come out of this looking good: One of the big lessons from the first rounds of deals is that councils need to show how national government benefits from their “asks” and “offers”, and that still holds true. But given the politics around mayors, it’s also clear that areas have some local politicking to do to avoid residents feeling aggrieved that previous referenda on mayors in 2012 (in which most cities rejected the idea) are being ignored.
Local politicians need to be seen to have “won” enough from the government that they can get the tricky bits of the deal through, but the government needs to have some clear wins – including the mayor – or there won’t be a deal at all.
Just a handful of places will get a deal: Large-scale devolution deals take up a lot of government time and require various exceptions that are easier to negotiate for the few rather than the many – so my guess is that there will be up to ten significant deals this autumn at most.
The bigger cities – London, Leeds, Sheffield, Liverpool, Birmingham and the North East – will all be contenders, although the more obfuscation on mayors, the less likely the deal will happen, putting London and Leeds amongst the front-runners. I’d also expect a small number of deals with counties, with areas such as Cambridgeshire front-runners. The rest may get something, probably as part of a refreshed Local Growth Deal process, but nothing on the scale of a Manchester-style deal.
The next few months will see government and cities/counties sitting down and hammering out detailed agreements, in parallel with the Spending Review. It’s the best opportunity for cities to secure a deal for some time – there’s no certainty that devolution will be of as much interest the next time a Spending Review comes round.
So, for all areas, as they sharpen their negotiating elbows, it’s worth bearing in the mind the long game. As I have written for LGC, the places that can strike a “good-enough-for-now” deal will be well positioned to gain more powers over the years ahead, with the gap between the “have-deals” and “have-not-deals” likely to widen.
The deal has to be good enough. But making something work now, especially for the largest cities and the fastest-growing cities, could make a big difference to jobs and growth for the UK as a whole over the years ahead.
Alexandra Jones is chief executive of the Centre for Cities.
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