Rewiring the State published last month by No10, is, on any reading, the most significant offer to English local government since 1974. From April 2027 mayors keep a share of business rates. They gain the power to charge a tourist levy on overnight stays. From 2028 they get a slice of the income tax raised locally.
Mayors also take control of the budget for educating and training 16- to 19-year-olds, of help for the unemployed, of the national fund for building social housing, and possibly of money now spent by Arts Council England and Sport England. Police forces, fire services and the NHS bodies that plan and buy local health care are all to be redrawn to match mayoral boundaries by the end of this Parliament. Every part of England is to have a regional authority in the next few years.
England is among the most centralised countries in the developed world, and I and plenty of others have spent four decades saying so. It is great to see that a politician has finally acted. The detail which will have to make this work comes in the autumn, alongside the Budget. Every number that matters is still unwritten. That is no criticism of a government three weeks old, but it is a reminder of the devil in the detail to come.
Money without a lever
Ben Houchen, the Conservative mayor of Tees Valley, was right on the substance of the tension that will need to be addressed, whatever you make of his politics.
Mayors will receive a share of the income tax raised in their areas. They will not be able to change the rate. Louise Haigh, the first secretary of state, also confirmed within hours that mayors could not hand rebates back to residents and that the money was expected to go into services and growth. Houchen's reply – that devolution means getting people's taxes to spend but not to give back – lands because it identifies a real hole in arguments about decentralising power.
Nevertheless, mayors will be delighted to have any new source of funding. This one will be a fraction of a tax someone else sets – they will not be able to control what they get except very indirectly, and will benefit or suffer with the expansion or contraction of the local tax base. So they will get more accountability but also a fair amount of risk.
Still, a mayor who knows that approving 4,000 homes, extending a tram line or landing a data centre or massive retail park will show up in her own budget for 20 years will now have a reason to face down local opposition that no system of central grants has ever given them. If what really holds England back is the local politics of getting things built rather than the local politics of taxing them, it is still positive.
To work, the arrangement must be genuinely long-lasting and the formula to top up poorer regions must not take gains away as fast as they arrive in growth areas. Neither is settled.
For a sense of the downside, look north. Scotland has controlled part of its income tax for a decade. In July, the Scottish Government confirmed that, once the real figures for 2024-25 were known, its budget for 2027-28 would be docked by £728m – because Scottish receipts had not grown as fast as the forecasts on which the budget was built. The autumn White Paper must explain how the share is calculated, who bears the cost when forecasts are wrong and what borrowing rights come with it. If the answers are ‘per head', ‘you do' and ‘none', the deal is worse than it looks.
Who tops up the poorer places?
Income tax per head in the North East is a fraction of inner London's. Any formula will either lock that gap in or offset it with a grant – and if it offsets it completely, the whole reform disappears. The Cabinet statement handles this by saying the Government ‘will consider how these growth incentives can be balanced with the need for fairness between places'. That sentence is doing an enormous amount of work at the moment.
Meanwhile a second redistribution is already under way. The Government is rewriting the formula that shares central funding between councils according to need, phased in from April. The Institute for Fiscal Studies estimates that five inner London boroughs would lose around a quarter of their funding if it took effect immediately. Adding a share of income tax on top, before anyone has modelled how the two interact, is asking councils to sign a contract with a blank clause in it.
And of course, in all this the elephant in the devolution room is whether councils are allowed to raise council tax above current limits – trusting local elections rather than special referendums to hold them accountable.
Better boundaries
Matching up boundaries is one of the strongest ideas in the document, and plainly comes from the Prime Minister's own experience of Greater Manchester where the health board, the police force, the mayoral authority and the 10 councils beneath it all cover the same ground. That is a real advantage.
The problem is that we risk doing four reorganisations at once, in the wrong order. In April, the NHS abolished 12 of its local planning bodies and replaced them with six – and has since admitted it will have to redraw them again once mayoral boundaries are settled. The current review of police force structures has not reported. Council reorganisation, meanwhile, is well advanced on boundaries agreed before any of this was announced, although still subject to challenge.
Potential for dysfunction while all this works its way through judicial review and internal politics is large. The statement does allow for flexibility, permitting police forces and health boards to cover more than one mayoral area where there are strong financial or operational reasons to stay larger.
My first reaction was that this was an escape hatch. On reflection that is too cynical. Having just merged 12 health bodies into six, splitting them apart again so each sits neatly under one mayor would be close to vandalism, and some things – such as armed policing and specialist medical contracts – genuinely do not shrink well. A health board or a police force covering three mayoral areas cleanly delivers most of the benefit at a fraction of the cost.
So the question is not whether the exemption exists, but what principle governs it. Boundaries that nest inside one another are fine; boundaries that cut across them are not. Rule that no service may straddle a mayoral border, and the exemption is sensible engineering. Negotiate it force by force and board by board, and everyone will discover strong operational reasons, leaving us with the same patchwork we started with – having paid millions for a reorganisation to get there.
If the Prime Minister's new Manchester operation is to mean anything, this is its first test. Set the principle publicly, apply it once, and refuse the special pleading.
Who answers for the police?
The case for abolishing police and crime commissioners is clear. Turnout has been dismal and very few will miss them. But what replaces a directly elected official is, in most places, a deputy mayor appointed by the mayor. As one former commissioner put it, many areas will acquire a commissioner by default who was never elected to the job. Emily Spurrell, who chairs the Association of Police and Crime Commissioners, warns of an accountability vacuum opening just as policing is handed a much stronger national centre. Colin Talbot, emeritus professor of government at Manchester, points out that whatever you made of commissioners, the direction of travel is the steady ‘presidentialisation' of local government: will new arrangements really answer the accountability question better than the ones they replace?
Now set that beside the boundary argument. If a police force sensibly covers three mayoral areas, who holds the chief constable to account? Three deputy mayors? One, on behalf of the others? A board of leaders drawn from all three.
Upheaval and opportunity costs
Savings in previous reorganisations have tended to be smaller than anticipated, and costs higher. Councils that know they are about to be abolished tend to spend freely, because someone else will inherit the bill. The Ministry of Housing, Communities and Local Government has anticipated this by demanding big decisions get called in, but not the quiet attrition of a council deferring capital expenditure and leaving posts unfilled in its final two years because the successor inherits the problem.
Underneath all of this sits a question about people. The chief executive of a mayoral authority is about to become a different job. Under these plans such post-holders become local accounting officers, personally answerable for the use of public money. Beneath them, an entirely new senior tier is being created. Deputy mayors for policing, health and education are explicitly on the table, alongside real control of training budgets for 16- to 19-year-olds, transport, housing and money for commercialising research.
These are not advisory appointments or ceremonial ones. They carry line responsibility for services costing hundreds of millions of pounds a year, inside organisations that in many places do not yet properly exist. The assumption that two dozen or more mayoral authorities will simultaneously appoint chief executives of permanent-secretary calibre, plus three or four credible deputy mayors apiece, deserves more scrutiny than it is getting.
Making this happen
As I wrote in The MJ recently, when asked what most holds public services back, people say money. Not structures and certainly not ‘reform'. When The MJ revealed last week that ministers had overruled the public's preferred option in most areas being reorganised, just proves the point – structures have always mattered less than council tax and delivery. For decades, how clean and safe people think their streets are explained more about local satisfaction than housing, education and planning put together.
Reorganising local government, health and policing in short order is one of the most reliable ways to ensure visible, humdrum services suffer for years. Colleagues who have been through reorganisations describe applying for their own jobs, improvement programmes shelved and partnerships neglected while the machine consumes itself. Do that across four systems at once, at a moment when every failure confirms the public's dim view of politics, and the reward for devolution arrives long after 2029.
What local leaders should insist on
So as the sector rolls up its sleeves – as ever, cheerfully getting on with it, do demand to see the winners and losers from the new funding formula alongside the autumn announcement and refuse to write a budget plan without it.
Ask what happens when the tax forecasts turn out wrong and secure the borrowing power or reserves to cushion it, before accepting a share of income tax rather than after the first bill lands.
Ask for one boundary exercise, working outwards from the mayoral map, with a published rule for when a service may cover more than one area – and, where policing does, a published answer on who holds the chief constable to account.
Think hard about the leadership team you need, where you will find them, and how you will take staff through massive upheaval.
Take a benchmark of key basic services. Track them. If they hold up or improve you have something to point to. If they slip, you will at least know by how much, which is more than could be said in 1974, 1996 or 2009.
The prize here is real, and larger than anything on offer in my working lifetime. The risk is that we spend the rest of Parliament redrawing lines on a map while the streets get dirtier, and then wonder why nobody is grateful. This is where No10's leadership will matter – for us all.
It can be done, but thinking it will be simple or easy is likely to lead to disappointment.
Ben Page is visiting professor at King's College London
