Collapse of Sheffield deal reflects the Government’s drift on devolution

The economic rationale of devolution has been lost. The Government needs to recover it to make the best possible success of this agenda.

The collapse yesterday of the Sheffield City Region’s devolution deal – with the leaders of Doncaster and Barnsley choosing to pursue a Yorkshire-wide approach instead – is bad news for people and places across the city region. They will now miss out on the benefits the deal would have brought, including a metro mayor with significant powers to boost infrastructure, skills, businesses and jobs across the city region, and £900m funding over 30 years – with no guarantee that the Government will accept a Yorkshire deal in its place.

However, it also reflects a wider drift in the aims and focus of the city devolution agenda, away from its original rationale of empowering the major city regions of the North to drive growth and prosperity in their economies – a drift which the Government must address to make the best possible success of devolution.

In setting out the basis upon which future deals would be struck, the Chancellor put the ball firmly in the court of local politicians in England’s big cities.

The Government’s commitment to devolution under George Osborne was always underpinned by an economic imperative. As Osborne said in his first speech after the 2015 general election:“Closing the decades-old economic gap between north and south was in our manifesto, featured in the speech David Cameron made on the steps of Downing Street last Friday and is one of the main reasons I wanted to return to the Treasury to finish the job . . . We can reverse it – and create a balanced, more healthy economy for working people across our United Kingdom.”

To address the north-south divide he offered cities a deal, handing over powers from the centre to give cities greater control over local transport, housing, skills and healthcare – and the “levers you need to grow your local economy and make sure local people keep the rewards.” He was also clear on what he expected from cities in return: “with these new powers for cities must come new city-wide elected mayors who work with local councils. I will not impose this model on anyone. But nor will I settle for less.”

In setting out the basis upon which future deals would be struck, the Chancellor put the ball firmly in the court of local politicians in England’s big cities. They faced a stark choice as to whether to maintain their resistance to adopting a city-region mayor and risk missing out on the benefits of further devolution, or to resolve to broker agreement locally for new strategic city-region leadership in exchange for powers to boost growth.

The Government’s enthusiasm for city devolution has waned, and its commitment to the economic rationale for city devolution has been downgraded.

Some city regions responded pragmatically and got on with it, including Greater Manchester, Liverpool, and initially Sheffield and the North East. Others hesitated, but when it became clear that the Government’s position wasn’t going to change, they came on board: West Midlands and West of England. And others saw a chance to muscle in on the big city agenda – Tees Valley, and Cambridge and Peterborough. Unfortunately Leeds was unable to build a consensus locally on how to progress with this agenda.

In the immediate aftermath of the Sheffield situation it is easy to forget that considerable progress has been made in a very short time. We now have six metro-mayors (seven if you include London) that each have considerable power over education, skills, housing and transport in their city regions. Already, these mayors are playing an increasingly important role in Britain’s political landscape, as demonstrated by the recent high-profile campaign led by Andy Burnham and Steve Rotheram (mayors of Greater Manchester and Liverpool respectively) to secure more Government funding for transport in the North.

And while the merits or otherwise of the previous Government’s approach have been vigorously debated, I remain convinced that if it hadn’t been so clear on the terms of the deal then progress would have been far less significant.

However, since the departure of Osborne (and Cameron) from Government following the EU referendum, the Government’s enthusiasm for city devolution has waned, and its commitment to the economic rationale for city devolution has been downgraded. In particular, it has failed to offer the singularity of voice and purpose on this issue from the most senior levels of Government – the Prime Minister and Chancellor – which was ever-present under the Cameron-Osborne administration.

This change in emphasis away from the original economic rationale in part explains the demise of the Sheffield City Region deal and the re-emergence of calls for a ‘One Yorkshire’ approach, which runs the risk of diluting the importance of the Leeds and Sheffield city regions at a time when the very opposite is needed. It also underpins recently announced plans for a revised North East deal which excludes Gateshead and South Tyneside which are core parts of the Newcastle city-region’s economy.

The Government needs to recover the uniformity of voice and singularity of purpose it had on devolution during the Cameron/Osborne administration.

I understand why both areas are pursuing deals at these geographies: inability to bring on board politicians (national and local) to their preferred geography, a worry they’ll be left behind or ignored by Government, and a sense of pragmatism that something is better than nothing.

But I remain unsure that it is in the long-term interests of the city regions that make up these deals. Furthermore, while these places go back to the drawing board to work out new agreements, they are falling further behind other places which are reaping the rewards of having made tough political decisions to get their deals off the ground. These places have already seen considerable progress since introducing metro mayors in May this year, as demonstrated by the talks for the West Midlands to gain a second deal based around new fiscal powers.

So where does this leave us? Firstly, the Government needs to go back to the original focus for its city devolution agenda – to improve the economic performance of big cities in the north and midlands by introducing directly elected metro mayors with strategic economic powers around planning, housing, transport and skills.  The government also needs to double down on the existing metro mayors and reward them with further devolution around tax raising/varying powers, and to give them preferential treatment in any national programmes (for example, local growth fund, shared prosperity fund, industrial strategy). Perhaps more importantly, it needs to recover the uniformity of voice and singularity of purpose it had on devolution during the Cameron/Osborne administration and make city-led devolution a central plank of its agenda to create an economy that works for all.

Those big cities without deals – Newcastle, Sheffield and Leeds – will then have a choice: find ways to overcome the obstacles that have prevented them from progressing thus far or risk missing out. I’m no fan of the ‘don’t bother unless it’s perfect’ approach, but nor do I support the ‘something is better than nothing’ approach when the benefits of such an approach are outweighed by the losses.

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Comments

Stewart Arnold
21 September 2017 11:30

How is a Parliament and Government for Scotland less of an economic driver than a City Region for Sheffield? Yorkshire never wanted the divisive limited settlements that are City regions which is down to a lot of factors, not least identity. If an asymmetrical devolution approach is good enough for the UK as a whole why can't it be applied to England?

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