The devolved state we are in!
After decades of oppressive centralisation, many of us have welcomed the promise of a ‘devolution revolution’ for our cities and Local Authorities. We have been expectant, that this will herald a new local municipalism of economic success and social inclusion. However, with ongoing global economic issues, Brexit, the Treasury’s economic model and the endless yoke of local authority austerity, we may need to seriously downgrade our expectations.
Of course, there are positives. Devolution has heralded new powers and responsibilities to shape planning, hard infrastructure, skills and economic development policy. Greater Manchester has control of the health and social care budget. Devolution has seen a shift in some resources with an additional funding of £30M a year for city regions. We are to get new metro mayors, with some elections in May. And more devolution and deals will continue beyond the early adopters. There is hope and promise in all of this.
However, the positives should not blinker us from the downsides. For many local authorities, devolution represents a meagre ease on austerity and cuts. Any financial benefits of devolution has been outweighed by a 40% reduction in local authority spending, which is to get worse. No other area of government has been hammered like local government. It has shouldered the greatest burden for deficit reduction.
As regards economic development, the devolution deals are framed within the Treasury driven model of agglomeration economics and incentive competition. People and places are expected to benefit either through trickle down in the new wealth through jobs or a geographic ‘trickle outwards’ of wealth from city Centres and economic growth areas. In this, narrow version of economic development, social hardship is often wrongly perceived as a consequence of restrictive planning and interference in the market, rather than the consequence of austerity, lack of social investment or structural flaws in the national economic model.
The Brexit referendum, increased the recognition that too many people are being left behind. This has prompted a change in tone around ‘an economy for all’, and a ‘shared society’. However, (as yet), this has not resulted in a commensurate change in the economic model or the fiscal basis to devolution. Philip Hammond has reversed none of the previous Chancellors cuts. The Northern Powerhouse branded infrastructural investment still talks more than it financially punches. And the aspirations could be swamped by the costs of withdrawal from EU and loss of the EU structural funds. We can place some hope in the ‘inclusive growth’ agenda. However, this hope could be limiting itself to standard economic development practice where jobs and labour market are the main focus. They are important, but inclusion within a modern successful economy should be viewing social investment for entrepreneurialism and innovation as a basic and fundamental input to economic (and social) progress and resilience.
To advance a true ‘devolution revolution’ and inclusion agenda, we need to start by acknowledging devolution (as its stands) has little prospect of tackling the scale of the problems the country faces. As a start, the newly elected metro mayors in May, could ride an electoral mandate which forges a different path, where they seek to transform what is on offer. There is a new progressive deal to strike and CLES continues to make the case for a progressive devolution (here and here). This includes:
- a new constitutional conversation and settlement, rather than an asymmetric pattern of deal making (where Whitehall holds most of the cards).
- a devolution which actively coordinates regional imbalances, and not just leave them to the market.
- true fiscal devolution to local government but framed by national fairness, redistribution and reorganisation.
- greater devolution of the social inputs to economic and social success, including employment, education, welfare and funding for the Community and voluntary sector
The devolution ‘genie is out of the bottle’ and it can be transformed into a true ‘devolution revolution’. However, it is no good accepting the devolution as it is. Key is to confront the flaws and agitate for something a whole lot better. We have a lot of work to do.