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What are the challenges to devolving more powers to cities and regions?
Last week saw the Cameron-Clegg Roadshow roll into Cardiff to announce that the UK government will devolve more financial powers and responsibilities to the Welsh Assembly Government (WAG). In particular, business rates will be devolved in full and the Assembly will get some control over stamp duty and landfill tax, greater borrowing powers, and will be given permission to hold a referendum on the ability to vary the rate of income tax (although it’s not going to be the full level of flexibility called for by the Silk Commission).
This is the latest step in the UK’s devolution story that was started by the Labour government in 1997 which saw the Scottish Government, Welsh Assembly and London-wide government being reintroduced. The next big step will be next year when Scotland goes to the polls to vote on whether to become an independent country. In this context, it’s unsurprising that several cities and city commentators have been raising the “what about us” issue. If devolution is good enough for Wales and Scotland, and some devolution is good enough for London, why isn’t devolution good enough for Manchester, Leeds or Bristol?
As you would suspect I have lots of sympathy for this perspective. We live in a very centralised country where (nearly) all decisions of note are taken by central government. A little less centralism and a bit more devolution would be beneficial to the country as a whole and not just to those places to which power was devolved.
But as this debate heats up, those of us advocating for greater devolution to our cities and city-regions need to have a coherent response to several issues raised by the Welsh and Scottish announcements.
First, the UK government is able to devolve additional powers and responsibilities to the Welsh Assembly Government simply because it exists. The City Deals process in England has in part been slowed by a lack of clarity from national government and from cities as to who exactly the deal is being negotiated with and who the additional powers and flexibilities are being devolved to: is it with individual local authorities or a coalition of them? An institutional response to this question, ideally tailored to local city circumstances but based on a set of clear principles around transparency, accountability and democracy, is a matter of urgency for city devolutionists.
Second, WAG has a clear democratic mandate with which to wield these additional powers. This is vital. If in the future WAG decides to vary income tax or raise new taxes it will face the ballot box test and will need to set out to the voting public a robust argument for doing this prior to the change occurring. Any devolution in England will also need to be to institutions that have a democratic mandate and have to face the ballot box test.
Third, there’s the issue of scale. Whilst the administrative boundaries of WAG are not perfect (think about the economic links between Bristol and Cardiff and Wrexham and Chester) they are at least large enough to capture and tax a significant proportion of the activity that takes place within its borders. Contrast this with local authority boundaries in England: many are too small to co-ordinate and deliver issues that directly affect the economy, such as skills, transport and housing. For example, think about Barnsley’s increasing reliance of its business rate base for core funding. Its location between Leeds and Sheffield means the success of its economy and the prosperity of its people are in part influenced by the decisions that Leeds and Sheffield take. Devolving responsibilities to individual local authorities particularly in relation to economic matters is not the answer.
So where does this leave us? These issues suggest that if we want real devolution in England so places are better able to support and improve their economies and the prosperity of their residents, we need to design it in a way that meets five criteria:
The Scottish independence question and further announcements about greater powers for the Welsh Assembly that follow on from the Silk Commission means that devolution in England will remain in the public eye and be towards the top of the political agenda for the next 12 months or so. For city devolutionists this is the time to act; to get our messages straight and our offers to and asks of Government clear.
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