02Risks for the English Devolution White Paper

At the heart of these principles is getting the geography right. Specifically, creating a devolved body that doesn’t reflect the geography that people live their lives over:

1. Risks making local government more complex

The core principle for determining a devolution geography should be that it matches powers to the area an economy functions over, so that local economic policy (e.g. bus franchising, housing and strategic planning, skills) can be best tailored to this area. Forthcoming ‘Local Growth Plans’ are supposed to drive national growth across England by fulfilling this principle.

Unfortunately, the invitation to local authorities to “come forward” on devolution has seen a number of confused geographies emerge which seemingly value “scale” over economic geography, as highlighted in Local Government Chronicle’s map on emerging deals, such as “New Wessex”, or “Bedfordshire and Northamptonshire”.

A New Wessex authority would need to come up with a Local Growth Plan that applies to both Bournemouth and Minehead, two places 75 miles apart and with no connection to one another. Similarly, a future authority for Bedfordshire and Northamptonshire would be responsible for three distinct urban economies with different needs and priorities.

Other indications that the Government wants devolution deals to contain at least two upper-tier authorities risks creating similarly bloated combined authorities, especially where county council boundaries are already aligned with economic geography. In contrast, small authorities with no interest in co-operating with their neighbours risk becoming “stranded” outside the mainstream.

The combined authority structure was initially created by and for the big cities to solve their unique problem – a number of small and similar unitary councils all part of a larger city-region economy. Simply extending that structure outside of the big cities to the varied situation in the shires risks creating a triple-tier structure in two-tier counties, and clunky structures comprising only two or three, often very different, authorities in others. This increases local government complexity rather than reducing it.

2. Risks making future reforms to local government finance and public services more difficult

Easing the local government funding crisis (and how public services are funded) will require a rewiring of how local government is funded, including devolving tax raising powers. We are by far the most fiscally centralised country in the G7, with only five per cent of taxes collected locally.

Tax devolution will work best if it is done over an appropriate geography that covers both (typically) poorer urban dwellers and (typically) wealthier commuters living in each urban area’s hinterland. Otherwise, neither tax raising and redistribution nor the possibility of using local economic growth to raise revenues for local services stack up. We set out why this is the case in more detail in our report Devolution Solution.

With many local authorities now warning that their finances are approaching breaking point, spending precious civil service bandwidth and the early years of a new government creating structures that cannot absorb a big increase in fiscal autonomy risks becoming a critical missed opportunity for public finances and services reform.