The Case for Devolution
The North taking control of building back better
It is our firm view that levelling-up can only be achieved if a significant number of policy areas are taken from Whitehall, and placed in the hands of directly-elected Mayors and those who will be elected to represent those areas still waiting for devolution. Those policy areas include:
- Health, care and service reform to replace top down national bureaucracy with an integrated and more efficient local system.
- Devolved city region infrastructure budgets to enable growth.
- Investment flexibilities to allow local places to invest in their own schemes alongside government, sharing in both the risk and rewards.
- Closing the disadvantage gap which has been exacerbated during lockdown by targeting specific areas with local partners.
- Devolve all post-16 skills funding to places to enable them to invest in what is most needed by businesses.
- Shared Prosperity Fund allocated directly to Metro Mayors where resources are most needed.
- Decentralisation of R&D funding with significantly-increased spending in the North.
The Northern Powerhouse was a project of a Conservative Chancellor, in partnership with Labour local government leaders and business leaders. That project has had its challenges, and had largely stalled in terms of Whitehall and policy since 2016, with a number of mis-steps by former Prime Minister Teresa May instigated by her initial Co-Chiefs of Staff. Education has been strikingly missing, skills policy devolution has been slower than first promised and the government had not pursued devolution with sufficient priority until this year.
The initial momentum of the project, and the current Prime Minister’s former role as Mayor of London, has put a more positive public perception on one element of the Northern Powerhouse – the establishment of Metro Mayors from the river Mersey to the river Tyne. It has made accountable leaders take decisions in the long-term interests of their places, doubling down on the challenge of historic low productivity. Their work will be critical to the economic challenges we face going forward with their local knowledge of place, which is so more effective in investing resources to generate impacts which will make measurable and decisive impact.
As well as bringing new deals to functional economic areas without larger cities – from Cumbria with Carlisle and West Coast from Workington to Barrow, to North Yorkshire, with York, Scarborough and rural areas – now is also the time to deepen devolution. In this paper is a deal for the North which is as bold as the Northern Powerhouse when it first proposed. Devolution for the whole of the North to achieve levelling up in line with Treasury priorities in the Comprehensive Spending Review with a step change in how decisions are made and money is spent that will shrink Whitehall, reduce waste and drive up productivity. Making spending decisions closer to those areas it is best suited to, enabling Westminster to focus on the questions best addressed and delivered for the country as a whole.
Devolution must be bottom up, and alongside core powers available for places to take on when they are ready. This cannot prevent places taking on bespoke roles – such as the planning of specific National Infrastructure projects which would be best handled by a Mayoral Combined Authority. Both the Treasury and MHCLG should play key roles, with the Cabinet Office and every government department bought in to ensure buy-in across departments. Without cross government convening power, led by the Chancellor supported by the Prime Minister, this agenda cannot be delivered. There will be agreed shared outcomes, making this a genuine partnership between central government and combined authorities over the lifetime of the CSR.
- Health, care and service reform
The Greater Manchester health devolution deal has demonstrated that there is no need for a centralised top down set of bureaucratic institutions to run the NHS. A service free at the point of need to all can and must be differentiated on how it is delivered. Otherwise, the wider social and economic factors in poor health, and the costs for addressing the immediate demands for those with high and more complex needs, is invisible in the decision-making process. Investing in better value interventions which reduce demand for acute services, and lead to improved outcomes, must be made the basis for how decisions are made. In addition, the opportunity to test and quickly roll out cutting edge advances, due to the North’s strength in clinical trials from Newcastle to Manchester, necessitates collaboration between health economies. This would give greater scale, attracting investment and strengthening health innovation as a leading pan-Northern capability to drive up productivity, as well as the wider benefits of reduced ill health and inequalities to economic growth overall.
- Devolved city region infrastructure budgets
As proposed by the National Infrastructure Commission, there should be long-term devolved city infrastructure budgets to deliver integrated plans for housing, digital and transport. On digital, the pandemic has changed what are the enablers of social mobility; fibre to the premises, focused on those in greatest need, is critical alongside accelerating 5G roll out. The Transforming Cities and Flexible Brownfield Land Funds are the bases on which to build, with a need for more mechanisms for raising local funding. The Williams Review must be implemented, and the specification of commuter and wider local services should be devolved alongside current subsidies (enabling rail to be fully integrated in local ticketing) alongside deployment of the existing bus franchising system with certainty of funding to invest to underpin growing patronage in the recovery from COVID19.
- Investment Flexibilities
These are about creating greater local flexibilities within existing funding streams, or fast-tracking future promised investment (such as that through previously agreed earnback mechanism). The investment approach which has been most successful in the city regions of core cities and their towns has always been to combine local and national investment to get the biggest economic bang for buck. By agreeing joint plans for investment there is ‘dual accountability’ between government and places – ensuring that the investment will deliver better value for money than Whitehall acting alone.
The flexibilities asked for in the paper relate to existing funding vehicles and would enhance local investment capacity by anything up to £5bn across the Northern Powerhouse. This includes maximising capacity of existing Housing investment Funds as in Greater Manchester at £300m as originally intended and create further ones; renewing the Earnback scheme and City Deal receipts; minor adjustments to reset arrangements to the local growth business rates deal; extending business rates growth in Enterprise Zones from 25 to 40 years and other minor adjustments and extending the zones to capture planned investment in the future. The Treasury will need to drive this process as these are not neat categories of funding for local authorities to bid for, but will require the same creativity within Whitehall which was seen when the first Mayoral devolution deals were done.
- Closing the disadvantage gap from birth to adulthood
The need for targeted interventions, focused on the causes of why children fall behind often the better off children in schools down the road, need to be in the highest need places, more tightly bound than the existing Opportunity Areas that have been created till now. Designated in future by Metro Mayors with civic leaders and government together, we need to take models being piloted by the voluntary sector and learn what works from those which have been most successful. The aim being to close the disadvantage gap within the Northern Powerhouse, between the greater numbers of long-term disadvantaged white and other lower-achieving ethnic groups and the better off here, enabling the North to also close the current gap with London schools.
- Post 16 skills and careers
Kickstarted by a major package for capital investment in FE for areas with the Adult Education Budget, the next step is to take responsibility for all the skills funding streams (including 16-19 technical budgets and traineeships). Building on the success of devolved AEB and enabling more integrated and locally-focused employment and skills systems. This isn’t about government spending more in the North than would otherwise be spent, but spending the money already allocated and committed in the CSR more effectively, specifically aligning the skills system to place-led economic strategies (ensuring that there are the people to fill the jobs we create in our key capabilities – across the Northern Powerhouse specifically including advanced manufacturing, health innovation, energy and digital). Opting for local delivery of employment support programmes, such as the Kickstart Scheme, will achieve better outcomes by allowing those who may need additional support to be wrapped around them.
- Shared Prosperity Fund
Ensuring that the full budget is devolved, and that areas do not see reductions in funding compared to before Brexit, which will benefit those parts of the country that have the largest number of left behind places.
- Decentralisation of research and innovation funding
There is a major role for mayoral combined authorities supporting government to achieve the proposed increase in the proportion of GDP spend on R&D, without needing to take away funding from the Golden Triangle to do so. We must explore place-based settlements with new partnerships between government, business, academia and civic leaders. The opportunity is to embrace the opportunities of such settlements driving R&D and innovation-based activity as part of a network of city and town centres, and embrace wrap around programmes for skills and training to support people and social mobility, as N8’s proposed Net Zero North programme does.
In addition to the case for further devolution to existing combined authorities, and achieving 100% devolution across the Northern Powerhouse, there is also a case for clear co-operation across the North. This would take the form of a Northern growth body, with credible business involvement and the democratic mandate from Metro Mayors.
Working with businesses and organisations accross the North