00Setting the context

Within days of winning the 2015 General Election, both the Prime Minister and Chancellor of the Exchequer had made clear that improving the economic performance of areas outside of London and the South East would be a major policy priority for the Government.

In order to achieve this aim while continuing to cut public spending, we have seen a deepening and broadening of the devolution agenda pioneered under the previous Coalition Government. Local authorities across the country are being encouraged to come together in combined authorities and adopt a directly elected mayor in exchange for a range of new powers, including local transport, skills and planning. They also have the option to bid for responsibilities in new policy areas such as local health spending, as seen in Greater Manchester.

Most recently, we have even seen the first steps towards greater fiscal devolution, with the Government announcing that it intends to allow all local authorities to retain, cut, and – for those combined authorities with mayors – have the option to raise business rates by 2020.

Each of these reforms will have a significant impact on businesses across the country, as more of the big decisions that affect their performance are taken locally and different places move at different speeds towards more devolved arrangements. This divergence could lead to businesses considering new factors when deciding where in the UK to locate in the future. Ultimately, the success of devolution will largely be judged on whether new city-region mayors use their new powers in ways that help firms to access the skilled workers, new technologies, customers, suppliers, and competition that can enable them and their city economies to thrive.

Yet to date, most of the debates and negotiations regarding specific devolution settlements have been undertaken by senior national and local politicians and national bodies. This reflects the necessity of elected politicians being in the driving seat regarding decisions over where responsibility for publicly funded services and policy interventions should lie. It has also been a result of the Government working at a rapid pace. To expedite the process, the Government has insisted upon a degree of privacy during negotiations, in part to allow neighbours – many of whom have needed to bridge long-standing divides to work together – to have more honest and frank conversations. One of the consequences, however, has been to limit the involvement of other stakeholders from across local communities, including businesses, resulting in a lack of knowledge about the extent of private sector support for devolution.

This report seeks to redress this. The national and local polling summarised in this report, together with the findings of in depth conversations with businesses held across four UK cities, provides a better understanding of the private sector’s views on the devolution agenda to date.

The work has been undertaken at a critical time. The Cities and Local Government Devolution Bill, the passage of which the majority of these reforms depend upon, is nearing the end of its Parliamentary journey, and the Government intends to finalise a series of additional devolution deals ahead of the Comprehensive Spending Review.

In 2016, the focus will increasingly turn to implementing these new arrangements at the local level, translating the rhetoric and ambition of devolution agreements into action on the ground. That is exactly the time for businesses to become more involved in helping to shape how devolution is put into practice in their area.

To begin this process ahead of the upcoming Comprehensive Spending Review, this report asks the timely question – what do businesses really think of devolution?