Labour's devolution policy will have implications for Southampton, the largest city by population not covered by a Mayoral combined authority.
Centre for Cities was in Southampton last week and a theme that came up in conversations with a number of different stakeholders, as it has in other recent city visits, was devolution. Southampton is the largest city by population not covered by a Mayoral combined authority after plans for a Southampton-Portsmouth-Isle of Wight deal collapsed in 2018, and a much larger Pan-Hampshire deal were vetoed by the Solent authorities earlier this year.
While the Conservative position is set out in the Levelling Up White Paper, Labour’s position is less clear. As they ride high in the polls, this blog reviews what we know and what we don’t about Labour’s plans for the devolution agenda.
Both Keir Starmer and Angela Rayner have both spoken in favour of further devolution in England. Going ‘further and faster’ toward ‘full fat’ devolution certainly sounds enthusiastic.
Published March this year, their plan to ‘Power Up’ Britain places great emphasis on the potential for devolution to bring an economic dividend via better, place-specific decision-making. And on this, they seem to understand the basics of how this might be achieved: “new combined authorities or devolution settlements should be tailored to functional economic areas”, and through “deepening devolution to city regions” – two ticks from us.
They also note the need for greater funding certainty, proposing longer-term settlements and ending competitive bidding. They are however shyer on talking about more money or different sources of money.
The same policy document also suggests that Labour will aim for all of England to be covered by some kind of combined authority, by asking all councils to work on proposals to take on new powers through their “enhanced devolution framework”. They would also introduce a new requirement for these authorities to produce Local Growth Plans.
Here though is where the detail from current Labour politicians ends.
Gordon Brown (2022) and Ed Balls (2024) have both waded into the debate on the direction of devolution in recent years. Do they offer any clues as to what Labour might do in power? In short, some, but not that many.
Brown argues for a bottom-up approach, whereby devolution responds to local demand and isn’t imposed from Whitehall. He also suggests that it might take a variety of forms – not only combined authorities with mayors, but also ‘local partnerships’ – seemingly a looser association of local authorities committed to cooperation. Brown also suggests that local governments should be able to draw-down responsibilities from central government, through enacting localised legislation – a means by which significant deepening might occur organically.
Balls’ proposal is more direct than any Labour-adjacent suggestions to this point. He aims for full coverage to create a simplified three-tier system of government across England, within a limited timeframe. Balls thinks that any parts of England that fail to come forward with a plan for a combined authority within the first year of the next parliament, should have deals imposed upon them. These authorities should all have a single point of contact, be that a Mayor or an appointed leader.
There are some points of agreement. Both Brown and Balls favour devolving more powers over skills and infrastructure investment policies. They are also more explicit than current politicians about the need for more money being available to combined and local authorities, especially if they are to take on additional powers. They would also both create specific bodies (e.g. Brown proposes a ‘Council of England’) to coordinate between devolved authorities and national government.
What remains up in the air is arguably the most important piece of the puzzle – fiscal devolution. Balls is explicitly against, at least until there has been a regional rebalancing of the UK economy. Centre for Cities’ view is that this gets the order wrong, and changes, such as allowing Manchester and Birmingham to retain a share of their local income tax take, would help those places grow.
Brown declines to comment altogether, saying it is a matter for the Shadow Chancellor. Rachel Reeves has said Labour don’t have plans for fiscal devolution, seemingly lumping this discussion in with their desire to appear fiscally responsible and rule out a range of tax increases. Again, we would disagree with this framing – fiscal devolution can proceed revenue neutral for Mayors and the Treasury, and without raising individuals’ taxes.
This all being said, it has recently been reported that treasury civil servants are looking into how fiscal devolution might work, so maybe we will see more movement in this area than the politicians have been saying.
Come Thursday, we might have answers to all our questions and Southampton might know more about what could be in store if Labour were in power. Then again, that might be being hopeful.
Whatever their current plans, a Labour Government will have to wrangle with some tough choices regarding the devolution agenda. It seems likely they will want to give more powers to combined authorities, and they will have to find a way to fund this if they want it to be effective.
And it seems they are more likely to side with Balls and try to complete the devolution map. While this is theoretically desirable, if expansion comes at the cost of deepening devolution in Manchester or giving places like Southampton sufficient tools they need to grow their economy then this would ultimately be bad for the performance of the UK economy.
The next government could expect to gain most from focussing its limited capacity on the most meaningful economic geographies, and they should do this by being willing to tackle knotty questions regarding council tax, business rate retention and accept a gradual shift away from grant funding toward cities retaining a share of income tax.
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