david rees and andrew hooke | local government news | 13 june 2016
This article was first published on Local Government News
England’s path to devolution has been a slow one but the momentum is building, with the latest round of devolution deals announced in the budget meaning that there are plans in place across a large part of the country. The critical question now is how can government and local authorities make that devolution a success and ensure that it really does drive economic growth and improvements in services?
The first factor to consider is the need to recognise that fiscal devolution is critical to any real and profound devolution of powers. At the moment devolved organisations, such as the Midlands Engine and the Northern Powerhouse, have minimal real economic power and so cannot compete on a global stage for business investment, talent and high net worth individuals. The proposals to allow authorities to retain business rates are a start, and the announcement in the budget of a pilot of 100% business rates retention in Greater Manchester and Liverpool City Region is welcome.
However, if the assumption that business rates income will be used to offset reductions in Revenue Support Grant is borne out, its influence on local economic growth will be limited. What is needed is more radical thinking, informed by the proposals for Scotland and Northern Ireland, about giving English devolved regions the power to set or influence their own corporation tax, business rates, income tax and investment incentives so they can meet the particular economic needs of their regions.
Secondly, there needs to be a recognition that to compete globally, economic development needs to be undertaken on a regional basis, such as through the Northern Powerhouse or the Midlands Engine, rather than being led by individual cities. However, this needs to be accompanied by a relentless focus on reducing and managing complexity to bring together and align incentives and agendas across the region and ensure budget flows enable the necessary changes.
There then needs to be a rethinking of the way local public services are provided. New technology has opened up opportunities to develop a much more citizen-centric approach. So digital communication means communities can talk directly to accountable officers, allowing citizens increased involvement in local decisions and the ability to give officers real-time feedback. Local communities have also used digital communication tools to self-organise and provide support for local people without needing direct intervention by the council.
At the same time, improved information sharing among different local services will allow the effective use of big data to provide a more precise understanding of local needs. That in turn, allows for a more tailored and aligned approach to service planning and provision. As devolved authorities take on more responsibility, in more areas, they will need to adopt these new ways of working to ensure they can provide high quality and responsive services.
At the same time, central government needs to recognise that it has to play its part in making devolution work. That means focusing on simplicity and consistency and avoiding conflicting directions from different departments. There is also more work to be done to clarify exactly what the government wants from devolution. Is it truly transferring powers or just delegation? Is the aim to ultimately have consistently and uniformly devolved government across the UK or England?
At the moment different government departments and national bodies are taking varying positions. So the Skills Funding Agency is showing a consistent commitment to devolution, supporting local skills policies, working with local providers and clarifying regional funding allocations. In contrast, NHS England have expressed serious doubts about the devolution of health and social care beyond Greater Manchester. That means it is difficult to see where the government really wants devolution to end up and there needs to be a detailed and open discussion about how best to achieve its aims.
The final critical factor in devolution’s success will be strong leadership and clear democratic accountability. While the Government’s focus on mayors will give one central point of direction and ownership, top down leadership will not be enough. The multiple local governance arrangements currently in place will need to be aligned to ensure decisions can be made and acted upon. This means creating a range of leadership arrangements and networks with a strong sense of ownership, responsibility and accountability. That should include reviewing the current two tier system of Districts and Counties to ensure that any new leadership roles do not lead to additional administrative layers. However, there will be no single answer to this challenge as ultimately it is local circumstances that should drive the most appropriate model.
All this underlines that there are still a number of unanswered questions about devolution, how it will work, whether the current approach is providing devolved organisations with sufficient powers and the effective structures that will both allow them to compete on the world stage and improve services for local people.
David Rees is head of local government services and Andrew Hooke is head of government services at PA Consulting Group