03The development of Mayoral Combined Authorities

To support the growth of clusters, the UK’s local government structure must change

There are very substantial regional inequalities in the UK, but equally the development of Mayoral Combined Authorities (MCAs) in recent years means that a huge opportunity exists to tackle these regional inequalities. This is because the Government could now devolve to the MCAs as democratically accountable bodies the powers and resources they need to provide the conditions for regeneration and the growth of high value-added per capita jobs within them.

In the past, many attempts at regional regeneration in England have failed because there were no effective regional bodies to which economic development could be devolved. This was a major problem because the tailoring of policies to regional conditions and the co-ordination of different policy areas at a regional level are essential features of economic regeneration and cannot be done by politicians and civil servants sitting in Whitehall. The development of MCAs in recent years means, however, that the key powers and resources necessary for economic regeneration can now be devolved to them.

Decentralisation, particularly devolution to large urban areas, has been a key policy feature of the past 50 years in many developed countries. Over two-thirds of metropolitan areas in the OECD now have established local institutions aimed at promoting their metropolitan-wide development. These arrangements vary in nature from informal collaborations to more formal bodies, but they share similar responsibilities. The vast majority (80 per cent) focus on regional development, 70 per cent focus on transport and 60 per cent have responsibilities over spatial planning within the metropolitan area.¹⁴

Also, the evidence suggests that, where there is metropolitan-wide governance, it leads to a number of desirable outcomes such as lower urban sprawl, higher satisfaction with public transport and lower levels of air pollution. Decentralisation can also enhance local growth.

Designing and delivering effective regional policies, however, can only be done if there are effective and efficient institutions at the regional level which share three features.

1. They should match the geography of the local economy. Designing local institutions in a way that reflects the geography of people’s lives in terms of work, travel, and education and training, enables policy-makers to co-ordinate their activities in these areas and make them more effective.
2. They should have accountable leadership. Having directly elected leaders helps reconnect people with institutions, raises the profile of a regional area on the national stage, and offers accountability for the decisions taken by such bodies.
3. They should have adequate powers and resources to help create the high value-added per capita jobs and clusters that are needed. To be effective, local bodies must have control of the decisions best taken at the local level, and have adequate financial resources to do what is needed.

The three features outlined above provide an explanation of why existing bodies such as Local Enterprise Partnerships (LEPs) have had limited success in promoting regional economic growth to date. They often do not cover a meaningful economic area, they have limited powers and resources, and lack political leadership and accountability.

In contrast MCAs with directly elected metro mayors, despite only being operational since 2017, are increasingly showing they are the way forward for the UK.

All city regions should become MCAs

As a key step in levelling up economic performance of the regions, the Government should extend the MCA model to all existing combined authorities.

Currently, there are two combined authorities without metro mayors: the West Yorkshire Combined Authority, which is to become an MCA with its first elections in May this year, and the North East Combined Authority. Political tensions at the local level have meant that constituent authorities in support of a metro mayor formed the North of Tyne MCA, while the North East Combined Authority, without a metro mayor, now has limited powers to bring about change in its larger area. The split divides the regional economy into two, creating an artificial barrier in policy around Greater Newcastle.

On top of that, the Government should complete the process of devolution by creating MCAs in all the city regions that do not have one but could benefit from the change. MCAs are proving a success, and the Government should no longer wait for places to come forward to form MCAs. The Government should also work on the assumption that every city region should become an MCA, setting this out as an expectation to kick start negotiations, and giving clear incentives to local areas to become MCAs. Similarly, the devolved nations should press ahead with creating Greater Cardiff, Glasgow and Belfast MCAs.

For areas outside city regions, the current two-tier local government system should be replaced by a single-tier system

Alongside MCAs, other parts of the country too should benefit from local government reorganisation and devolution.

As highlighted in previous research by Centre for Cities, this could take the form of a single-tier system. In a single-tier system, in which all county-district structures are replaced by a unitary authority led by a directly elected mayor, powers over spatial planning, transport and skills that are currently split between the two tiers would be joined up, and this would help support economic growth at the local level.¹⁵

Other existing local growth bodies should be integrated into the new system

Finally, for this reorganisation to have the biggest impact, the Government needs to align the boundaries of the LEPs with those of the new system of MCAs and single-tier authorities, and then integrate the LEPs within these authorities.

LEPs and MCAs are too similar in their intended purposes to either co-exist as joint leaders of local economic strategies or to cover different geographies.

In most places where MCAs have been created, this problem has been avoided. Existing LEPs have voluntarily integrated into MCAs, recognising that the clear democratic mandate of mayoral elections supersedes the more limited public accountability of the LEP.

It is, therefore, suggested that where LEPs have not been integrated into MCAs, they are replaced by a single Industry and Skills Board to advise the Mayor, and that this becomes the standard model for MCAs and other single-tier authorities.