Devo should not be about what Whitehall is prepared to cede

By Jessica Studdert | 22 February 2022

It has been eight years since the first devolution deal was signed with Greater Manchester, so the publication of a full devolution framework in the Levelling Up White Paper was long overdue.

In that time, although more deals have been done and new mayors created, changing national administrations has meant the appetite for it has been stop-start.

Given that devolution has officially been a policy for the best part of a decade, it is remarkable how little evolution there has been. Both the overall model of bilateral deals in return for new governance structures and the limited menu of options for devolved powers are largely unchanged from the early days.

There has been no attempt to establish universal principles for devolved decision-making. The Government still holds the initiative. It has resisted anything resembling a deeper governance shift which would recognise where decisions are best made for impact of public investment and democratic legitimacy. The terms are set at Whitehall, and each demand for new powers must be made separately by each area on its own terms.

This has always lent a tone of ‘divide and rule’ to the process. Areas must queue up for their deals and bid against each other over finite single funding pots. The incentive is to compete, rather than collaborate and co-ordinate to push ambition over the whole agenda.

Mayors across northern conurbations are getting better at organising and setting out a shared agenda for the North. Yet two things are apparent. Firstly, they have stopped short of calling for devolution to all parts of the North, which remains a patchwork of areas with and without deals.

Many of the devolved powers they call for, such as skills and transport, could equally apply to the Midlands, the East and West of the country.

The northern mayors rightly calculate that the Government’s appetite for Levelling Up and desperation to give the agenda some substance lends a particular opportunity for devolution to their part of the world. They should certainly seize it.

Devolution demands risk dilution if the strategy of separate pitches in different places is allowed to dominate, as opposed to collectively calling for principles that would apply everywhere. The Government reinforces the prevailing zero-sum quality by using tactics that cherry pick areas to go further faster, such as the new trailblazer model which will see Greater Manchester and the West Midlands on accelerated paths.

So, what would a more principled approach to devolution look like? It might start with the question: ‘What do communities need to thrive?’ rather than ‘what is Whitehall prepared to cede?’

Some powers, such as those over adult education and London-style transport powers for big conurbations should just happen, and it is increasingly ridiculous that energy must be expended to make the case for them.

More broadly, mayors and combined authorities could be asking what powers and budgets they need to align support over the lifetime of communities, rather than within service silos. For example, why should their role over education and skills only begin at the age of 18? This means investing to mitigate the problems created by a fragmented national approach to the 0-18 years.

High quality childcare is an overlooked economic good. Lack of school readiness is hard to compensate for later, and education accountability has been fragmented by academisation.

Why shouldn’t we advocate for stronger place-based oversight throughout the whole life course? This could involve greater alignment across health and employment investment too.

At the moment, the big spending departments of the Department for Education, the Department of Health and Social Care and the Department for Work and Pensions have largely opted out of devolution discussions and continue dancing to their own tunes.

More imagination about fiscal devolution is also needed. We seem to be limited to a conversation about business rates retention – a long-planned but unhappy reform which cannot get past the fact that devolving it fully would cement the national distortions in our economy and property values. The tax itself is in something of an existential crisis given its decreasing legitimacy in an era of online shopping and high street decay.

The mooted land value capture tax would be nice, but we need to think bigger and more systemically – devolving a share of VAT or income tax generated in places would have more potential. Currently, the taxable fruits of economic growth in the form of increased transactions or employment, all go back to the Treasury. The Exchequer needs to loosen its grip and let areas themselves develop virtuous cycles of growth and investment without having to beg from the centre at every stage.

While this might sound radical we should remember that as a highly centralised country, our starting point is very far behind our international peers, for whom devolved decision-making is standard practice. Devolution has a long way to go.

Jessica Studdert is deputy chief executive at New Local


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Devolution Skills Mayors Transport governance New Local Levelling up