The dire state of local government finances risks undermining devolution

By Zoe Billingham | 12 December 2023

Devolution is now a politically contested policy area with both major parties competing on who can go broadest, deepest and fastest.

This is good news for those of us that champion the role of local power and leadership to deliver a fairer and more sustainable economy and democracy. But progress on devolution is at risk with an increasing number of local authorities in financial dire straits.

The Autumn Statement last month delivered a new round of devolution deal announcements. According to our latest IPPR North analysis, once agreed locally and by parliament, the deals mean 91% of the population in the North will live within a devolved area as will the majority in England. This progress is to be welcomed.

The elephant in the room is the state of local government finances and their interaction with devolved power. Just one week after the Autumn Statement, Nottingham became the latest council to issue a section 114 notice (its second in two years). How can local authorities in an area collectively demonstrate the benefits of devolution when decisions on closing libraries, leisure centres and in some cases, declaring effective bankruptcy, are looming each week?

Whilst combined authorities do have access to additional funding streams, these are intended for investment to help deliver long term growth, not to patch up gaps in day-to-day authority budgets. Despite this, Mayor Tracy Brabin was compelled to offer the constituent authorities of West Yorkshire support from the combined authority transport fund to relieve authorities of immediate budget pressures. Whilst this was not what the transport fund is intended to do, it shows that the Mayor of West Yorkshire understood that without well-functioning local authorities the collective efforts of devolution will be undermined.

For those of us working in or with local and combined authorities, we know that this can’t continue. As devolution continues apace, we must ensure local and combined authorities are able to deliver on its potential to transform how power and opportunity are distributed across the country. Failing to put local government finances on a sustainable footing could undermine the progress both parties have made towards devolving power to communities.


Zoë Billingham is the director of IPPR North.

She tweets @zoe_billingham 

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Finance Devolution IPPR Autumn Statement S114