Unlike previous fiscal events, the Levelling Up agenda was not a strong theme of the 2023 Autumn Statement, but rather an item that the Chancellor briefly discussed.
That doesn’t mean nothing has happened. Although the changes may have sounded muted and understated, some rather crunchy changes were included in the technical detail of the reforms. They will cap off this Government’s record on devolution, and set the stage for the next Government to tackle the tricky problems that remain.
In summary, we saw a substantial deepening and some widening of devolution, alongside changes to the Investment Zone initiative, and some promising planning reforms. Let’s take each in turn.
Devolution has been deepened in the big cities
The 2023 Autumn Statement will deepen devolution in two ways.
First, a Memorandum of Understanding (MoU) on the ‘Single Settlement’ that was promised in the Levelling Up White Paper and the Trailblazer Deals has been agreed between the Government and Greater Manchester and the West Midlands.
The Single Settlement is one of the most important advances in devolution to date. Whereas priorities were previously decided in Whitehall by the different departments – granting a share of their spending to the mayors to use within limits – the Single Settlement will see a shift towards the mayors drawing down from a single Whitehall pot to spend on their priorities.
Although it sits outside the wider local finance funding framework and there are still details to set out, it’s clear at this stage that this is a complex reform that requires a rethink of many of the basic assumptions and mechanisms of the state in England. The MoU sets out that the next Spending Review will establish the Single Settlement, including the amount and distribution of funding, monitoring and cost control, and the degree of flexibility (10 per cent of spending can be used between policy areas and from capital to revenue spending).
Second, a ‘Level 4’ mayoral devolution tier has been set out, which after the Single Settlement is established for the trailblazer cities will allow it to be extended to other mayoral combined authorities. Beyond this, Level 4 devolution will grant more powers across post-19 skills policy, transport and especially highways, ‘strategic housing powers’ primarily relating to affordable housing and net zero.
And devolution has been widened outside of the big cities
The Autumn Statement also saw some progress in the extension of devolution to other parts of England. As most of the big urban areas now have mayors, most of the next phase of devolution will be to places with smaller cities and their rural hinterlands.
Accordingly, mayoral devolution deals have been agreed for Hull and the East Riding as well as Greater Lincolnshire, encompassing Lincolnshire County Council and the two Lincolnshire unitaries on Humberside. Although both broadly align with their economic geography, the latter will be another instance of the ‘triple-tier’ devolution deal that has been unlocked by the county deal approach, which has previously produced messy governance arrangements.
In addition, a Level 2 non-mayoral devolution deal was announced for Cornwall as well as Lancashire and its unitaries, while others are reportedly in the works for Buckinghamshire, Gloucestershire, Hertfordshire, Oxfordshire, Somerset, Surrey, and Warwickshire. Local authority opposition to mayors and – for many – the poor economic geography and triple-tier nature of local arrangements will limit the benefits of these county deals.
As the development of the Level 4 devolution tier shows, the big cities with mayors are for now the more promising locations for deepening devolution to advance national growth. They should continue to be the focus of efforts for local government reform, such as Centre for Cities’ triple deal proposal for Greater Manchester, the West Midlands and London.
More Investment Zones have been announced
The Autumn Statement has also seen advances to the Investment Zone agenda. Five new Investment Zones were announced to Greater Manchester, the West Midlands, the East Midlands, and Wrexham and Flintshire as well as Cardiff and Newport. New funds have also been announced to help bridge new investment into each Zone.
The Investment Zones are each assigned to a specific sector, and most so far are attached to manufacturing or engineering activities, and seem to be located in the suburbs and hinterlands of urban areas rather than their cores. There is nothing wrong with supporting these sectors or places. But specialised ‘monoclusters’ are rare, and the local and national economies are less likely to benefit from this kind of place-based intervention in these locations than comparable interventions into city centres, which have biggest concentrations of highly innovative activity in the country.
Planning reform remains a priority
As the Levelling Up and Regeneration Act was passed earlier this year, few planning reforms were expected. But a range of changes – to infrastructure planning, changes to planning fees, and measures to incentivise greater use of Local Development Orders – were announced.
One particularly interesting change was highlighted by the Chancellor in his speech – a new permitted development right (PDR) to allow houses to be converted into two flats. This ‘duplex’ planning reform is potentially significant, as previous expansions of PDRs to allow office-to-residential conversions resulted in tens of thousands of new dwellings, and these duplex conversions will come without the quality issues that emerged from the use of commercial buildings for housing. Getting the most out of the new duplex conversions will require them to be applied flexibly, and in combination with other PDRs to allow for extensions.
Levelling up is still important
With the next election probably a year away, the national public debate is shifting to the dividing lines between the two major parties. As there is now a political consensus we need more devolution, planning reform, and some form of levelling up, it was perhaps inevitable that they would not be a prominent part of the positioning around the Autumn Statement.
However, under the bonnet, we are continuing to see small advances to the devolution and planning reform agendas. It remains an important issue to the Government, and by the start of the next Parliament things will be very different to what they were at the start of this one. Naturally, there is still much further to go, but small steps are being made.