The devolved state we’re 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 to devolution: new powers over planning, hard infrastructure, and skills, for example. Greater Manchester now controls its health and social care budget. Several regions across England will elect metro mayors in a few months. There is hope and promise in all of this.
However, for most local authorities, devolution will do little to ease austerity and cuts, with a 40% reduction in local authority spending far outweighing any financial benefits. No other area of government has been hammered like local government.
The type of economic development advanced in the devolution deals is framed within the Treasury driven model of agglomeration economics and incentive competition. People and places are expected to benefit either through either trickle down in wealth through new jobs or a geographic ‘trickle outwards’ of wealth from city centres. 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, with 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 Chancellor’s 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 the 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 that 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. The key is to confront the flaws and agitate for something a whole lot better. We have a lot of work to do.
Neil McInroy is the Chief Executive of Centre for Local Economic Strategies (CLES)