The year ahead in devolution

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Place, the final frontier. Will 2017 be the year when local decision makers have an even greater mission in exploring strange new ways of working together, seeking out higher quality of life and defining a post-Brexit civilization, boldly going where no one locally has gone before?

The Devolution Revolution may have lost its key architect in George Osborne but despite this, either by design or accident, devolution will still be a major topic in the remainder of this Parliament and things will be heating up in 2017.

 

Place and industrial strategy

All eyes will be on Captain Clarke, the Secretary of State for BEIS, when he publishes the governments long awaited consultation paper on industrial strategy expected on 23rd January (Labour have already published theirs, similarly a consultation document).

One of the key debates said to be taking place around the paper, possibly causing the delay, is whether a sector approach or a place based approach is the best route to follow to deliver the objectives of the strategy.

Devo-followers will have come across the concept of 'place' before. In each of his previous roles in government, the SoS has sought to impart the values of place making, i.e. overtly being guided or having one eye on, how policy decisions taken at each level can contribute to making local areas even better places to live.

EEF's view on industrial strategy focusses on the horizontal policy levers that could be used to improve overall UK productivity and achieve a set of bold ambitions. Places can be powerful drivers of this, but not unless we improve their governance.

Ambitions-and-2026-vision

Our report last November, Manufacturing Local Growth, looked at local government reform setting out the need for stronger governance at the local level in England. Our view is that this can be delivered by incentivising areas to scale up through mergers.

Last year's Cities and Local Government Act made mergers far easier to undertake, expect to see more of them this year...

The Local Growth Fund and LEPs

At the last Autumn Statement the Chancellor announced allocations to LEP areas from the Local Growth Fund. The Fund is allocated to the 38 LEPs (two merged last year) to help improve the business environment in their area.

This is the final allocation expected, with £12bn having been promised under the Coalition Government, however the new Chancellor may decide to continue to use the Fund as a way to blanket all areas with some cash.

LEPs had previously received core funding to the end of the current Spending Review period in 2019/20. However recently questions have started to swarm, prompted by some bad press, about the future role of LEPs. In a world of Devolution Deals, no more local growth fund to bid for, mayors and industrial strategy - what role should they play? Expect a period of introspection about LEPs this year or a classic government relaunch.

Mayoral elections

The big one this year, plus a major factor that will start to separate the success of cities and regions, will be elections for mayors in large parts of the country in May.

The power of each mayor will vary, but savvy areas realised it was more important to get a mayor and Devolution Deal so that these can be built upon, rather than letting perfect be the enemy of the good (we're all looking at you Yorkshire).

A lot of back and forth has been taking place in some areas but we know that elections in Greater Manchester, West Midlands, Tees Valley, West of England and Liverpool City Region will definitely go ahead.

EEF was broadly happy with where these deals ended up, with a particularly focus on transport and infrastructure - the number one challenge identified by manufacturers in the local business environment and coincidentally their number one priority for devolution action.

whats-good-in-the-local-business-env

We’ll be actively playing a role in each debate, so bookmark our hub for all things to do with devolution in England: www.eef.org.uk/devolution

These elections may be overshadowed by the triggering of Article 50 at the end of March kick-starting the Brexit process. Expect that to be a factor in each debate helping to boost turnout and put these elections on the national stage.

Government vision for devolution

Even before the EU Referendum there was a recognition of the need to boost the productivity of areas outside London and the South East. Devolution was an attempt to address this.

The approach taken by the Coalition Government and the post-2015 Cameron Government was a sensible one, a steady shift towards more local decision making and allowing this to bed in - rather than a big bang approach.

Since the start of the May Government in mid-2016, the future of devolution has become less certain.

Early in the new government rumours circulated that the requirement for mayors in exchange for a good devolution deal would be dropped (it wasn’t), it received very little focus at the Conservative party conference and no new Devolution Deals were announced at the Autumn Statement.

After the change in government, officials suggested that the new approach on devolution would be a stocktake on the current approach, embedding deals already on the table (rather than rushing to create new ones) and deepening Deals in areas that already have them (thus vindicating areas that were savvy enough to get with the program).

With Government attention likely to be focussed elsewhere (e.g. Brexit) the likelihood of an avalanche of new Devolution Deals being signed is fairly remote. Expect at most a trickle, perhaps the odd beefed up Local Growth Deal or two and potentially a new focus on housing linked potentially to local government reform.

In short, devolution will become business as usual this year, being subsumed into other government objectives rather than being a strand on its own. But this won’t signal a waning interest, more an opportunity for things to start bedding in.

Author

Head of Business Environment Policy

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