1. Governance
April 8, 2016

Four things we just learned about Britain's devolution deals

By Alexandra Jones

It’s been a rocky couple of weeks for devolution deals – even without considering the updated policy on business rates in the Budget. So what have we learned?

1) Devolution deals can keep on evolving and improving – if places have robust institutions that put together “asks” in the right way.

As the Greater Manchester authorities have amply demonstrated at every fiscal event since November 2014, places with strong institutions working together effectively at the combined authority level and putting together well-developed “asks” and “offers” for government can keep on grabbing more powers and resources – criminal justice being the latest power devolved to Manchester.

National government has been clear that other places can also put together proposals about gaining more powers – but with a few relatively small exceptions, this isn’t really happening yet, leaving Greater Manchester pulling ahead of the other city regions when it comes to power and influence. The confidence that Greater Manchester institutions inspire has been critical to its success; other city regions should ensure they are investing in strengthening their institutions, as well as considering whether there are additional powers and resources they would like to see following on from their original devolution deal.

2) It’s harder to put together a successful devolution deal when the key players involved didn’t design the geography.

The proposed East Anglia mayor, bringing together Norfolk, Suffolk and Cambridgeshire as well as their respective cities, has been rejected by both Cambridge City Council and now Cambridgeshire County Council, both of whom say there is not enough on the table for them to sign up.

This is the first deal where the government has moved away from its strong emphasis on “bottom-up” geographies, and insisted upon places working together. The feedback from councils and businesses in Cambridge and Cambridgeshire was that there was not enough in the deal for an East Anglian mayor to help them tackle some of the big issues they face – including congestion, housing shortages.

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Clearly working at a large scale and having governance structures such as mayors have benefits, and we’ve long championed them in the large cities. But if this is about improving the local economy then research (e.g. Cheshire and Magrini) suggests that governance structures such as mayors should ideally be based on functional economies. The challenge for East Anglia is that Cambridgeshire businesses and workers are more likely to have connections with Essex, Hertfordshire and London than Norfolk and Suffolk.

More informal partnerships (for example, Norfolk and Cambridgeshire working on agri-tech) are enormously important. But when it comes to doing more devolution deals in the weeks and months ahead, the government should stick to its original principles about bottom-up geography wherever possible.

3) Agreeing a deal (even a “bottom-up” deal) in principle and getting it over the line are quite different tasks – and there’s a real risk that significant gains made by city regions could fall away if councils don’t hold together.

Recently we saw Gateshead council pull out not just of the devolution deal but the combined authority, leaving huge questions marks about the North East deal: how can it plan transport for Newcastle without Gateshead involved?

If the devolution deal falls through, the North East will not only fail to gain the additional investment fund worth up to £1.5bn, and responsibility around skills, business support and broadband. It will also fall further behind other city regions with a deal, such as Manchester and Sheffield.

The economy of the North East faces a range of challenges, from global competition to managing the impact of public spending cuts. None of these challenges are altered by failing to agree a devolution deal: the only difference will be that the area will have less control over the resources that are available, so is less able to manage and respond to what’s happening.

Councillors rejecting the deal should set out a clear plan about how leaving the combined authority will deliver better results for their place and the people who live there. Those still in the deal – and, to be clear, that’s all of the other councils, although some have delayed making a final decision to get more information – will need to work out what can now be done to pick up the pieces.

4) Some of the deals are starting to move away from the government’s commitment to bespoke deals with different places.

With £30m over 30 years in nearly every devolution deal – regardless of size – and other similar clauses on skills and housing, some of the deals look much more alike than might have been expected. While I would expect similarities between the deals for big cities (and there are benefits to this), there’s a genuine question about whether the big city template should be applied to smaller city regions and counties.

Places like the ‘Fast Growth Cities’ group, for example –  Cambridge, Oxford, Milton Keynes, Swindon and Norwich – could have something that looks much more like a City Deal, with additional financial powers to help them invest in housing. This could also sidestep some of the political difficulties of agreeing a metro mayor, while getting the benefits of doing more to tackle barriers to economic growth: metro mayors don’t necessarily have to cover the whole country.

So what should central government be doing?

If the last few weeks are anything to go by, there are three big priorities:

·      First, support the places where deals are agreed in principle to get those deals over the line – including the West of England and the nearly-but-not-quite-announced Solent. Big devo deals could make a big difference to local economies, but it’s not easy to bring and hold councils together. Central government support could make a difference.

·      Second, when doing additional deals beyond the big cities, use the original template that the government developed under Greg Clark as cities minister.

That means bottom-up, bespoke deals. Geographies need to be agreed locally with central government support but not insistence, and deals should adapt to local need, with not everywhere needing the large scale devolution deal and accompanying metro mayor.

·      Third, keep the pressure on for delivery – both on other government departments to negotiate, and on local areas which already have deals to deliver what they have agreed.

Devolution deals have the potential to play a big role in supporting local economic growth and changing the way that decisions get taken across the UK. There are bound to be rocky moments.

But they are too important to fail. The onus now is on central and local government to keep talking, and working with business, to ensure the deals, of all shapes and sizes, are a success in cities across the UK.

Alexandra Jones is chief executive of the Centre for Cities. 

This article was originally published on the think tank’s blog.

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