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Yesterday, Lord Heseltine launched a new report, Empowering English Cities. Commissioned by the six original metro mayors, it races through more than a thousand years of history of local government in England, from Wessex to the WECA. It asks whether devolution has been enough to reverse decades of relative economic underperformance in most of the UK’s biggest cities.
In his view, the short answer is no. While metro mayors are a welcome and important innovation in the UK, they still lack the powers and funding that their counterparts overseas use everyday to support more jobs, better wages and a higher quality of life for urban residents.
Lord Heseltine sets out a 20-point plan to help cities improve jobs, wages and pride in place. Many of its recommendations echo those of the Redcliffe-Maud report of 1969 which Heseltine, much to his regret, was tasked with spiking in his first job in government. The recommendations came in four main areas:
Changing the structure of government
Whitehall reform would put devolution-related policy, including labour market policies and local transport, under the control one new megaministry; move more civil service jobs out of London to other cities; and co-locate government offices in metro mayor buildings. A new select committee on devolution would keep Parliament engaged and a stronger compulsion should be placed on bodies from Network Rail to UK Research and Innovation to work better with metro mayors.
Changing the powers of metro mayors
Metro mayors should be given more powers too. All metro mayors should be police commissioners, and new powers over school performance, affordable housing, the skills budget and unemployment and employment programmes should be devolved, in addition to those already under control. Metro mayors should have reserve powers in many areas of where local government currently takes the lead, and be able to intervene where they do not see local actions conforming to strategic plans. This could mean all metro mayors having the power of the Mayor of London to call in any proposed development.
Changing the funding
Metro mayors should be given greater tax and debt-raising powers, from tourist taxes to airport taxes. And even wider fiscal powers should be looked at. The likely next Prime Minister was the Mayor of London who established the second London Finance Commission calling for similar powers. Hopefully he will continue to support this should he reach Number 10.
Metro mayors should work with local business to decide how the Shared Prosperity Fund and Local Growth Fund’s successor will be used in cities. This will still involve some bidding and competition. But match funding from the private sector and contributions from cities themselves should provide the signal that schemes, even in low growth cities, are worth investing in – not a simple cost-benefit analysis that always rewards the fastest growing cities.
Changing local government
The implementation of these powers rests on a deep reform of local government in English cities. The functional overlaps that metro mayors have with local authorities on local transport, housing and business support should be rationalised, with full authority going up to the city-region level. Local government leaders’ power to block metro mayors should be watered down from one third to one half required to veto.
Local government should also cease the rolling set of elections that hinder stability and the ability to deliver long-term plans. All cities should have mayors with stable, fixed terms and strong mandates. Major cities should have metro mayors, but smaller cities should have directly elected mayors too, such as Sir Peter Soulsby in Leicester.
The geographical gaps and overlaps between administrative boundaries and the extent of the urban economy should be addressed by a Boundary Commission review. Heseltine clearly has in mind making the boundaries of tightly constrained cities such as Oxford much wider to better reflect the scale of the local economy. This would reduce the damaging impact of neighbouring districts benefitting from economic growth squeezing more tightly and expensively into constrained cities without having to contribute, either through supplying more land for development or healthier revenues. Where metro mayors do not cover the full local economy, such as in the West of England or North of Tyne, integral local authorities should not be allowed to sit outside of the local structures.
In another reform straight from Redcliffe-Maud, Heseltine calls for the end of two tier local government, except in the biggest cities with metro mayors. This would mean cities that are districts such as Oxford, Norwich, Exeter and Ipswich would get more powers as well as become larger. All counties would become unitaries too. This would simply bring England into line with Scotland, Wales and Northern Ireland.
How to make this happen?
The problem with Redcliffe-Maud was that Conservative councilors would not wear it, so it was rejected on political grounds. That report was a Royal Commission, whose recommendations were intended to gain the support of both parties in Parliament to proceed through legislation. Heseltine proposes continuing Osborne’s strategy to get local government on board willingly, if grudgingly, by offering them a king’s ransom to do so. The funding and powers set out above would be conditional on these structural reforms.
The swiss-cheese nature of devolution across the UK shows the limitations of an all-carrot-no-stick approach devolution. But if the government is not willing to legislate then this is better than no progress at all. On powers and money, the exact balance of responsibilities and funding between metro mayors, local government and Westminster is also an art as much as a science at the margins, and the evidence in some areas may not clearly say that local is better. But the success of other cities internationally with these powers and the underlying potential for experimentation and sense of local democratic control over money and decisions that greater devolution provide should give government the confidence to let go in these instances.
The report makes it clear how unfinished the job of empowering English cities is. Finishing the job will first empower metro mayors to bring them closer into line with their counterparts from Rotterdam to Lyon to Sapporo. And in the longer term, that should then empower their economies, so that Manchester and Birmingham can not only reach the UK average for wages and productivity but also compete globally.
Government would go a long way to achieving the first and going faster on the second if it follows advice set out in Lord Heseltine’s report as it drafts its Devolution Framework and finalises the allocation and design of the UKSPF and LGF’s successor.
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