The Cities and Local Government Devolution Act received Royal Assent on Friday. This is an enabling piece of legislation for the government's devolution in England programme.
The Act clarifies the framework for devolution deals, creating a more stable framework and hopefully, will ensure stability in the local business environment for manufacturers.
These are some of the things manufacturers will like about the Act and a few things that we would have liked to have seen. Ultimately this is just a start, the delivery of growth will be the measure of whether or not subsequent Devolution Deals will be effective. This is what manufacturers think about devolution in England.
1. There will be elected Mayors
This was a contentious point throughout the passage of the Act. The Government had set out the need for Mayors for ‘substantial’ devolution deals to be done with local areas.
Some saw this as top-down devolution, but in reality the Government intends to devolve powers from central government to regional and local areas and wanted to pass these powers to a directly elected Mayor who would have the legitimacy to act across a much larger area.
Regional decisions need a regional mandate.
Currently Combined Authorities (made up of a number of local authorities coming together), take decisions on regional issues headed by one member of the Authority.
This member is only likely to have received a democratic mandate from voters in one ward, of one constituent council. Hardly a mandate for sweeping changes across city regions.
As we set out in our report Devolution in England – the business plan, Mayors should help to stabilise decision making at the local level which manufacturers feel had been subject to frequent changes in the past.
2. Devolution Deals will be bespoke
The Act is not prescriptive on what powers will be devolved to what areas, instead it sets up a framework that allows for the transfer of powers in a very broad range of areas from central government to Metro-Mayors, County Governors, Combined Authorities and other local government bodies.
This means local authorities can really tackle the core parts of their business environment that can help to unlock growth.
It also allows local authorities to come together and transfer powers 'up' to such bodies as well, but this is not mandated. Except…
3. Powers can be moved from one council area to another
This is where it gets a bit technical.
County councils sit geographically above district councils in the cornucopia of local government bodies in England. As a result in some areas, mostly outside cities, they take on strategic functions such as transport.
But what if a district council within a county council area wanted to work with a district council in another area as part of a Devolution Deal on issues such as transport, but the county council didn’t agree? (This, believe it or not, is a current tangle in one area).
The Government decided that this shouldn’t put a stop to the ambition of district councils and rightly so.
Businesses don’t care about the parochialism of local authority boundaries, what matters as part of devolution is what will deliver growth.
Strategic transport, linked to functional economic areas, is a huge enabler of that.
4. Sub-national transport bodies will improve regional infrastructure
Transport crosses boundaries and is the major challenge in the local business environment for manufacturers. Businesses need access to ports, airports, customers and suppliers as well as access to talent far and wide. The idea that this stops at local authority boundaries has held back local economies for some time.
5. Devolution Deals will be 'reported' to Parliament and Orders will need to be approved by Parliament
Lastly, some aspects of Devolution Deals will be laid before Parliament enabling a final check and approval of the transfer of powers to local areas. The more checks that take place as part of Devolution Deals, the more robust they become and the less likely they are to unravel in the future.
But what’s missing?
1. A statutory underpinning for LEPs
As part of the Spending Review Local Enterprise Partnerships were given core funding to 2020/21. Alongside this the Single Local Growth Fund will continue to be managed by LEPs over the rest of this Parliament.
Our view was given the significant change in areas adopting Metro-Mayors, LEPs should have been transformed to become part of the oversight and scrutiny arrangements and given statutory underpinning to perform that role.
2. Clearer guidelines around the devolution of business rates and the interaction with the business community
Alongside the passage of the Bill there were several announcements relating to Devolution. Notably for manufacturers the Chancellor announced the devolution of several aspects of the business rates system to local areas.
This included the possibility for Metro-Mayors to increase business rates to fund infrastructure projects, provided the LEP agrees. This is one of the reasons we felt LEPs should have statutory underpinning as Business Improvement Districts, which have similar powers, do.
We’ve heard rumours that these changes will be taken forward as part of another Bill in the next Parliamentary session.
Over the coming year we expect several new Devolution Deal announcements and before long the first Orders laid before Parliament to enact some of the previously announced Deals.
This will all need to happen swiftly to ensure the Mayoral elections, scheduled for May 2017, can take place.
We’ll be watching to see how these Deals bed in across this Parliament and to ensure they deliver growth – after all, despite the focus on governance and questions of who wants to work with you, delivering growth is ultimately the measure of whether or not these Deals are effective.