Next phase of devolution must be about value, not just powers

English devolution continues to evolve. New strategic authorities are being created across England, with powers over transport, housing, skills, planning and economic development, working alongside their constituent councils. In some areas, mayors are already using these powers to improve buses, build homes and tackle the wider causes of poor health.

But one question still sits unanswered at the heart of the debate. Where does the value go?

When public money helps build new homes, who captures the rise in land value? When councils commission care, how much improves support for people who draw on it and conditions for the staff who provide it, and how much disappears into rents, debt repayments and shareholder returns? When subsidy supports bus services, how much lowers fares and improves routes, and how much still flows into private profit?

These are questions about public value, but they are also questions about ownership. Public investment should leave people better off – warmer homes, cheaper transport, better care, secure work – and leave places with more capacity, ownership and control than before. The opposite is extraction. This is when value created by workers, communities and public investment is drained away rather than reinvested. It takes many forms, including inflated rents, excessive dividends, opaque ownership, financialised care providers and regeneration that lifts asset values without improving everyday life.

This matters for mayors, councils and strategic authorities because they are increasingly held responsible for outcomes they do not control – expected to grow economies, reduce inequality and improve health, yet operating within wider systems that let wealth leak out of local economies. The next phase of devolution must therefore be about more than transferring powers. It must also provide greater ability to shape markets, steward assets, grow democratic forms of ownership and ensure public investment delivers lasting public benefit.

For decades, economic policy has rested on a simple assumption: if places grow, people will benefit. But people do not live in statistics. They live in homes they can or cannot afford, rely on buses that do or do not turn up, and work in jobs that may or may not offer security and dignity. The real question is not whether an economy is growing, but whether it is improving everyday life.

That is the real challenge for English devolution: not simply a lack of powers, but a lack of economic control. Strategic authorities need stronger tools to retain wealth, attach conditions to investment, support more democratic ownership and challenge business models that extract value without contributing enough in return.

Follow the public money and the same problem appears again and again. In transport, bus franchising has shown how public control can improve accountability, fares and service quality – but it does not by itself decide who benefits from the subsidy. Public support can keep fares low while still sustaining private operator profits; if less leaked out in private returns, more could be used to cut fares, expand routes or ease pressure on local taxation.

In housing, public decisions and infrastructure routinely lift land values, yet too much of that uplift is captured privately; authorities need stronger powers to capture it and steer development towards affordable homes. In adult social care, children’s services and SEND, public funding too often flows through opaque provider markets that extract profit from stretched budgets, weakening care quality and workforce conditions. Councils need powers to demand transparency, back non-profit and public alternatives, and reshape those markets, with strategic authorities helping at regional scale. And in retrofit and energy, the net zero transition could cut bills and create skilled local jobs – or become another wave of subsidised contracts that leave little behind. The direction should be the same: back municipal, co-operative and community-led approaches that build local capacity and ownership.

A single principle should guide the next phase of devolution. Public money should come with public conditions. That requires changing the rules. Local Growth Plans should be judged not only by economic output but by poverty reduction, job quality, health, carbon and local wealth retention. Procurement should be used more confidently to support fair work and local reinvestment. And fiscal devolution matters: without long-term, flexible funding and stronger tools to capture and recycle land value, devolution becomes responsibility without control.

But the answer is not simply more powerful mayors. Local economies are shaped by many institutions – councils, the NHS, colleges, universities, housing associations, businesses, trade unions and community organisations. A stronger public value approach needs stronger local economic governance: strategic authorities working with councils and anchor institutions to see where wealth is created, where it leaks out, and how more can be retained.

The promise of devolution has always been that decisions made closer to people produce better outcomes. But proximity alone is not enough. The real test is whether devolution changes who has power over wealth. Asked only to attract investment and manage consequences decided elsewhere, strategic authorities will disappoint. Given the tools to shape markets, retain wealth and build local ownership, they can deliver something far more significant.

The first phase of English devolution was about powers. The next must be about value: who creates it, who captures it, and whether it is reinvested in the places and people that made it possible.

This article was originally published in Public Sector Focus.