England & Wales Democracy, devolution and governance

Viewpoint: The biggest deal yet?


With devolution now big news, and government indicating that it is prepared to bring significant powers and budgets to the table, there has been considerable interest in the Treasury’s latest invitation to places to propose ‘devolution deals’, writes Majeed Neky.

City-region areas, counties and other combinations of authorities covering the majority of England’s population and economic output – as well as some Scottish and Welsh city-regions – have taken the opportunity to approach government, with many investing more time and political capital in both the content and the proposed governance of their ideas than they may have done previously.

Though the figure disguises some local political manoeuvrings, 38 places and groups put forward formal submissions for the latest deadline of 4th September. Framed, inevitably, by the precedent of Greater Manchester’s achievements, and to a lesser extent those of other large cities and most recently Cornwall in securing ambitious deals, the submissions reveal a number of common threads:

  • Fiscal devolution focused around business rates
  • Transport investment, bus and train franchising and integrated ticketing
  • Skills funding, incentives and regulation
  • Devolution of business support budgets
  • Specific sector-based investment
  • Devolution of employment support commissioning
  • Housing delivery and public land
  • Greater control over European funding
  • Initial steps towards integration of health and social care

Partly reflecting a strong Ministerial lead from Greg Clark, proposals have sought to go further than the one-off investments which characterised previous rounds of deal activity, with places increasingly demanding the fundamental realignment of nationally held budgets and, to an extent, fiscal freedoms. This partly reflects the budgetary circumstances: most forward-thinking authorities and partnerships will view the quest for new powers, the effort to weather the financial storm ahead and the need to join up public services as three sides of a triangle.

Leaving aside the elected mayors debate, much discussed elsewhere, disputes over geography and governance have inevitably hit the headlines, notably in Yorkshire. There are clear tensions here between historic place identity, pragmatic political relationships, different tiers of governance and the realities of economic experience. Most attempts to define areas reflect first and foremost the pragmatic politics of the area – perhaps illustrated by the number of small, single-county deal proposals submitted in areas where the functional economic geography clearly extends much wider. Some areas may well be asked to revisit these issues by the Government – as, indeed, has already been happening in recent months in areas such as the West Midlands and Derbyshire / Nottinghamshire. The submission of deals by a number of Scottish localities adds another intriguing dimension.

From a broader perspective, the transparency and accessibility of a ‘deal’-based process has long been debated, with the appointment of a shadow Mayor for Greater Manchester something of a flashpoint. The idea of ‘double devolution’, whereby power is handed down from town halls to communities, has received relatively little attention. The role of partners – including LEPs and business bodies, but also non-council public bodies likely to be affected by deals such as Clinical Commissioning Groups – has also often been unclear to date. The Centre for Public Scrutiny has called for the deal-making process itself, as well as the governance of the subsequent implementation, to be opened up to greater public involvement. Even if this does not materialise immediately, the scale of some of the budgets and responsibilities being requested by localities will see the spotlight remain on issues of accountability and participation as deals begin to be implemented. Where areas secure ambitious settlements, making them a reality is likely to involve close working with Government departments to ensure that accountability to Parliament for public spending still functions effectively.

The Treasury, in its Spending Review launch statement, has linked devolution more explicitly than ever before to the need to make savings. This was reinforced by David Cameron’s speech in the wake of the devolution submissions, which yoked together reform, devolution and efficiency as three pillars of a ‘smarter state’. An immediate consequence, as the Centre for Cities’ Alex Jones points out, is that it will be very difficult for places to secure deals which are not fiscally neutral. But the financial scale of devolution demands, and their concentration in some common policy areas, may also have more far-reaching implications for the shape of the central state. A few ambitious deals, targeting devolved budgets in the same few policy areas, could see Government agencies already under pressure reaching a tipping point of viability, potentially allowing central departments to realise significant savings while shunting administrative costs to a local level. This may see devolution accelerate rapidly in a number of defined policy areas. Outside the handful of high-profile deals, the Spending Review is likely to align an emerging ‘standard offer’ on devolution with departments’ efforts to identify savings – for example, the Area Based Reviews of skills provision currently being implemented by BIS.

These tensions will be crucial in the years ahead. But they should amplify, rather than obscure, the fact that – against the backdrop of a highly centralised state – this may be a genuinely transformative moment, presenting localities with both challenges and opportunities on an unprecedented scale. LGiU’s Chief Executive Jonathan Carr-West sums up:

“We shouldn’t see these deals as an end point, more as an opening position.  There’s a real opportunity for this to be the start of a positive, progressive process where local areas come up with increasingly sophisticated, and building on success, increasingly credible, plans for how to drive growth, improve public services and engage their communities. 

“There’s genuine potential to redraw the political map and to align it with real economic geographies.  Places that have not got proper buy in or a clear sense of what they want to achieve from these deals, that are simply trying to anticipate funding channels and tell ministers what they want to hear will get found out. Those who are genuinely committed to working together and open minded about how to do so have an opportunity to flourish.”

Majeed Neky is an LGiU briefing associate.