The Chamberlain News

Cosy closed-door devolution deals must be replaced by independent commission, report warns

The next Government has been urged to produce a clear plan for devolution to English regions and  establish an independent commission to oversee the transfer of powers and budgets.

Calling for an ambitious timetable to be set in place, the RSA’s latest report on city growth says George Osborne’s decision to devolve funding to Greater Manchester, Sheffield and Leeds city regions must be the start of a major shift towards decentralisation – whichever party is in power after the General Election.

The report calls for an end to “ad hoc deals and closed door arrangements” in favour of clear and deliverable arrangements for devolved powers to be given to city regions that can demonstrate “competence, accountability and collaboration”.

In the Budget, the Chancellor announced that Greater Manchester and Cambridge would be able to retain 100 per cent business rate revenue. That followed on from a move to give Greater Manchester control of its health and social care budget, amounting to an additional £6 billion of devolved funding to the combined authority and its partners.

With a metro mayor due to be elected in 2017, Greater Manchester has been the chief recipient of George Osborne’s Northern Powerhouse initiative. The Chancellor has made it clear only combined authorities with metro mayors will benefit from full devolution.

Greater Manchester’s successes have put more pressure on talks in the West Midlands aimed at pushing forward with a Birmingham, Black Country, Solihull and Coventry combined authority, although any prospect of an elected mayor appears to have been ruled out.

The RSA report states: “A clear framework for sub-national devolution is needed to bring transparency and legitimacy to what has so far been an evolving series of ad hoc deals and closed door arrangements.”

A tidal wave in favour of devolution will be unstoppable if the three main parties stick to their decentralisation commitments, according to the report.

“The level of policy traction and rhetoric across all parties is so significant it seems almost inevitable that the next government will preside over further waves of devolution.”

The report continues: “However, if we are witnessing the start of a journey towards decentralisation and city-devolution, there is considerable uncertainty about the end goal, and how we will get there.

“Fundamental questions are still to be considered, including: what powers places will be entitled to, under which circumstances? Should all places ultimately strive for the same arrangements over time? How much will local residents, business, or civil society be involved in shaping new models of governance?”

The RSA is calling on the Government to establish an Independent City Devolution Commission (ICDC) – the equivalent of the Smith Commission for city devolution – to quickly work up policy detail and guide draft legislation.

An ICDC would ensure that city-regions which can demonstrate competence, accountability and collaboration, and have the economic platform and potential to shoulder financial risks, should be able to enter into devolution negotiations with central government.

The report suggested that the Independent City Devolution Commission (ICDC) could be responsible for holding government to account for the pace and degree of progress on devolution, reporting annually to Parliament.

The Commission would help to work through five areas that need to be resolved if the UK is to resume a sense of stable and coherent political economy:

1. Legislative:This is needed to make provision for new metro mayors, and will need to be drafted ahead of the 2015 Queen’s Speech to ensure inclusion in the first Parliamentary session.
2. Public Service Reform:This is needed to improve outcomes and drive down costs, designed and delivered more effectively at local level.
3. Fiscal Devolution:The most mature city-regions should be able to borrow more flexibly, leveraging private finance and the value of their public sector assets.
4. Deficit reduction and a place-based Spending Review:Multi-year Local Government Finance settlements will be essential to enable place-based strategic investment and allowing cities to become more financially self-sustainable.
5. Capacity and Collaboration:Capacity varies between city-regions, but metros need to build a track record of effective governance, risk management, policy delivery, data analysis and evaluation.

 

A RECENT HISTORY OF UK DEVOLUTION:

2012

October – Lord Heseltine calls for city-devolution in ‘No Stone Unturned’ report November. Silk Commission on devolution to Wales recommends transfer of fiscal powers to Welsh Assembly.

2013

March – Scottish Tory Leader Ruth Davidson sets up a commission to look at further devolution to Scotland.

October – City Growth Commission launched as 12 month inquiry into how cities can be empowered to drive their economies.

December – Draft Wales bill published in order to implement the Silk Commission’s fiscal devolution recommendations.

2014

June – ‘Midlands Connect’ formed to champion transport investment across East and West Midlands.

July –City Growth Commission releases its report Connected Cities. Labour’s Adonis review on UK economic growth recommends package of devolution to English cities and counties.

August – George Osborne gives his first speeches on his commitment to the Northern Powerhouse. Five northern cities (Manchester, Liverpool, Leeds, Newcastle and Sheffield) produce the One North report proposing a £15 billion, 15 year investment plan to boost regional transport links.

September – The ‘No’ side wins in the Scottish referendum. All three parties promise further devolution to Scotland.

October – Transport for the North set up by government to better connect the North and maximise its growth potential.  City Growth Commission publishes final report, Unleashing Metro Growth.

November – Birmingham and Black Country propose forming a combined authority. The Smith Commission publishes its recommendations for devolved to Scotland, to be included in a 2015 bill. Greater Manchester Devolution deal announced, transferring greater powers over finance and policy and creating a Manchester mayoral post.

December – Sheffield Devolution Deal devolves to new combined authority, increasing its control over policy and various budgets.

2015

February – Labour pledge £30 billion in greater UK devolution, with funds transferred to the regions over five years from 2016. Manchester becomes first English region to gain control of health and social care budget worth £6 billion.

February – The Prime Minister announces new devolution package for Wales including referendum on new income tax powers, Welsh bonds, and guaranteed funding.