An Attempt To Explain What Is Happening With Devolution – Long But Hopefully Clear(ish)

The Whys and Wherefores of Devolution

The issue of devolution has been a major talking point in the media and in some political circles since the general Election in May and I believe that we are getting to a point where a decision one way or the other will have to be made. I have tried to write this briefing in a way that takes out some of the bureaucratic language and technical jargon in which the current debate has been couched in to date in an effort to allow a greater understanding of the pros and cons of any devolution deal prior to any decisions being made.

The first point to make is that this is not a Labour agenda, nor necessarily a Local Government agenda. It is being driven by a Tory Government and we are well aware of the dangers of a devolution of blame and cuts rather than power that lie behind the thinking in Whitehall, particularly as the policy is being driven by the Treasury. There are clear and identifiable political risks in participating in this process of negotiation but the risks of not taking part are even greater and so, as Leaders of our local Authorities, we have been speaking to ministers to see if we are able to agree a deal that we can then put to our respective communities and Councils.

I need to stress that, at the time of writing, no agreement has been reached and there is no deal that is on the table.

History

It is important to understand where we are starting from. In 2010 The Government abolished Yorkshire Forward, the regional Development Agency, and replaced it with a number of Local Enterprise Partnerships (LEPs) made up of local businesses and local authorities based on ‘City Regions’.

Leeds City Region (LCR) covers the geography of the 5 West Yorkshire authorities, plus Craven, Harrogate, Selby and the City of York. This is a functioning economic area with over 92% of the people living in the region working in the region which means that investment in the economy and infrastructure will benefit a vast majority of local residents.

Without going into the detail of the bureaucracy of a system that is at times opaque the LEP has a budget and a remit to support business growth, improve skills and increase employment.

Some two years ago the Government offered what they called City Deals (via competition) to allow LEPs to bid for delegated control of more funding including major transport schemes.

LCR were successful in getting the largest City Deal award in the country and to administer this West Yorkshire Plus Combined Authority (WYCA) was established (there are technical and legal reasons for this which I will explain if anyone wants to know). The Plus was the inclusion of York City Council.

The City Deal gives us delegated control over multi million pound budgets for transport infrastructure, business growth and support and employment and skills. It is administered jointly by the Combined Authority and the LEP and has been delivering across the region for the benefit of our communities over the last year.

The City Deal is remarkably similar to some of the devolution deals being signed now and because we have already got much of what is being offered to other areas we believe that any devolution deal in our area needs to add to the City Deal, not merely replicate what we already have.

The District Councils have what can best be described as associate membership which allows them input and influence on decisions affecting their areas.

The LEP/WYCA arrangements may sound a bit of a hotchpotch, and they are, but they have worked and as a result we have been able to exert some control over investment in the region and deliver some real benefits.

The Devolution Offer

Much has been talked about the progress made by Manchester Combined Authority in developing devolution deals with Government and people who are interested in the details of the deals achieved by them over the years can look at the documents in the public domain and make up their own minds about the deals that have been developed and delivered. The important thing to note is that this did not happen over night, the local authorities in Greater Manchester have been working together on this issue for many years and it is their arrangements that seem to have formed the basis for the Government’s ideas on devolution.

The parameters for the devolution negotiations have been set by the Government and are based on economy, skills, employment and transport infrastructure as an initial starting point for the negotiations. If any region does agree to a devolution deal the Government are insisting on there being a Mayor.

Because of the nature of the areas being considered much of the discussion is about high level and strategic funding which is couched in even more obscure terminology. If a deal is agreed it is unlikely to be something that delivers the sort of immediacy of service that Local Authority decisions do for the people we represent but will be something that should allow greater control over some of the major investment decisions needed to grow employment, skills and infrastructure and thus develop the region’s economy.

Is this what I would want to see in a devolution deal? The answer to this is no. I am a firm believer that local priorities and delivery in many areas of service are best taken at the most local level applicable. Whilst some of the strategic decisions mentioned above may be best taken at LCR/WYCA level, if Government is truly committed to devolution they need to devolve more and to a more local level.

Local Authorities are constrained by imposition of rules and regulations from above, too rigid rules that can prevent the delivery of local services to fit local circumstances. They also have fiscal constraints that prevent local people making decisions about if they want to pay more for more local services without expensive and bureaucratic referenda. In Bradford if there is a wish to put Council Tax up by over 2% we have to have a referendum which costs £500,000 or the equivalent of a rise in Council Tax of about 0.4%. As an organisation that is answerable to the electorate through the ballot box. I would have thought that giving local politicians the right to put an argument to their communities in elections is a better way of doing things than the bureaucracy currently in place.

Having said all of the above local Councils have to work within the world as it is, not as we would want it to be, which is why we have entered into talks with the Government to see what benefits we may be able to get for our communities under the present constraints.

Current Position

The West Yorkshire Leaders have drawn up a list of asks to Government as part of any devolution deal and these were submitted some months ago. We did this in consultation with the leaders of the other authorities in LCR as our preferred option on the devolution geography is the Leeds City Region, despite the different political hues of the various councils. The reason for this preferred geography is that the Government has made it clear that they want devolution to be functioning economic areas, which as outlined above LCR is, and because it is an area where there are working relationships which have begun to deliver economic benefits in the region. The asks are attached at the end of this paper as an appendix.

Since the submission there has been ongoing dialogue and discussion with Ministers and Civil Servants about what the Government is prepared to offer and what we may be prepared to accept. These negotiations are ongoing and we have been asked to keep details out of the public domain until they have been concluded. However there are some issues and challenges that we are clear need to be resolved if we are ever to get to a deal that we can recommend:

Fiscal

We need any devolved authority to be able to raise finance outside the current council tax capping rules. Not to allow local finance to be raised for local investment flies in the face of central governments commitment to devolution. Whether or not local taxes are raised either through business rates or a council tax precept should be a decision taken by those entrusted with the devolved powers, not at the whim of a Minister.

Currently there is no indication that the Government is willing to consider allowing fiscal devolution and allowing local businesses and communities to decide on whether they would be happy to pay a small additional levy to increase local investment and improve services.

Governance

The Government insistence on an elected Mayor as part of the deal raises concerns about local accountability of decision making. Three of the Cities in West Yorkshire rejected an elected Mayor in 2012 in large part because of these concerns. We are seeking a system of governance that will seek to ensure that there is some accountability, oversight and democratic control over a mayor if we have to have one. We are also seeking ways to try and ensure that there is wide local councillor involvement in the administration of any devolved authority.

Al of the above we are trying to do in the context of the governments desire to have a single responsible person and at times this is proving difficult.

Geography

As many people are aware there are several competing bids for devolution in Yorkshire. South Yorkshire has already been given a deal that they are consulting upon but there are several other bids for the rest of the County.

As West Yorkshire Leaders we have based our support for the LCR footprint on a number of reasons:

It is a functioning economic area as has already been stated and as such the impact is clearly measurable and will be of benefit to the residents and business community in the LCR region area.

It is of an optimum size in terms of geography and population. International evidence in less centralised countries where devolution is the norm indicates that if an area is too small or too large devolution is less effective. We could have gone for West Yorkshire as a region as this would work in terms of size but the LCR footprint is the optimum size.

The alternative of the wider sub-Yorkshire bid has several practical challenges in terms of its size and the diverse nature of the economy. It is likely that any option incorporating such geography will result in a lack of focus and some serious horse trading with resources which will result in a diminution of impact.

There is no trans-Yorkshire functional economic area. The links between Bradford and other areas in the LCR are clear, be it workers commuting, supply chains or industrial links. There are no such links with some of the more rural areas to the north and east.

Many of the proponents of the wider Yorkshire deal are proposing it because of concerns about the future of some of the local government arrangements rather than because they feel that there is a major economic advantage. This is form following function and is not the way that we should be considering such an important issue although we should recognise that the medium to long term effect if we go down this road will be a change in the structure of the current system of local government, whatever the final geography. This is looked at in a bit more detail in the next section.

Whatever the footprint of any devolved area, or if there is no agreement, there will be a need of a cooperative framework between authorities to ensure that those Northern issues such as transport links can be dealt with efficiently. We have already established Transport For The North without devolution and this can form the blueprint for dealing with issues of mutual interest.

Local Government

As has been mentioned above any devolution deal will eventually have an affect on local Government and governance. Whilst we seek to obtain devolved powers from central government the likely effect of this will be to move strategic functions that exist in each local authority such as transport and economic development into the new devolved authority.

Currently there are no other asks from Government that are likely to result in powers moving upwards from LAs but as the devolution agenda moves onwards, Manchester has shown that the agenda does not remain static, there may be moves to centralise some of the LA functions. If there is a new structure there may also be moves by LAs themselves to centralise certain functions as shared services in the light of the ongoing attacks on local government finance.

There will also be a challenge to the democratic structures within each authority if powers are merged, already there are groups that feel that there are too many local councillors and their voices will become louder if the role of LAs change.

Whatever ones views on the way local authorities run are it is likely that all of the above challenges will come regardless of the devolution debate and we need to be thinking now about how we will meet them.

Conclusion

There is currently no deal on the table for either West Yorkshire or Leeds City Region and any such deal will need to be ratified locally by each council in consultation with their communities.

We are well aware that there is a danger that any devolution deal will result in the devolution of blame, not power, and because we are aware of it we are very clear that any such deal will not be recommended for approval.

We support devolution, and we did before the Government discovered their enthusiasm for it, but not at any cost and we are clear that if any deal offered does not allow us to deliver for the people we represent then we will not be supporting it. Devolution must add to local powers and spend, not re-package what we already have and if we do get it right, even under the current cuts to public spending, we are confident that our communities will benefit but if the deal is not right then we know that it will not be agreed.

Summary Leeds City Region Devolution Asks

Our Asks:
1. Control of a 10-year infrastructure precept, which is exempt from the Council Tax capping regime to deliver major new investments such as a world class metro style public transport network that is HS2 and HS3 ready. The ability to raise our own finances has been reinforced by the recent postponement of the electrification on the Transpennine rail route (the ability to generate local investment finance for infrastructure has been discussed since the City Deal and at that time was linked to a potential change in governance beyond Combined Authorities).

2. Responsibility for a devolved and consolidated transport budget, with a multi-year settlement to be agreed at Spending Reviews.

3. Enterprise Zone / Tax Increment Financing status for major developments at growth areas around principal transport hubs, including Leeds South Bank, York Central, Bradford City Centre, Wakefield, Huddersfield and Halifax, as well as any new wider area based Enterprise Zones that may be established in areas such as in the Colne Valley, Dewsbury and Harrogate.

4. Responsibility for franchised bus services (subject to the Buses Bill) to secure access to ‘fare box’ revenues, and for integrating simple smart ticketing across all local modes of transport.

5. Devolved ownership of local rail stations, with associated maintenance budgets.

6. Devolved powers, responsibility and maintenance budgets for a locally defined strategic highways network (including initially the M621 and M606), including new traffic management powers such as moving traffic enforcement.

7. A Memorandum of Understanding with the Highways Agency with regards to traffic management and emergency management on the M62.

8. Responsibility for managing European Structural and Investment Funds (ESIF) in the same way as London.

9. Responsibility for a strategic infrastructure investment plan to direct infrastructure investment priorities which will provide long term confidence to those wishing to invest in the City Region.

10. Control of a new £500+ million LCR Housing and Regeneration Investment Fund, including a fiscally neutral transferred £350m revolving loan facility.

11. To be the Government’s delivery agency (potentially via a Land Commission arrangement similar to London) to ensure assets are used and disposed of in a way that supports growth and regeneration, to include local assets, such as those belonging to Homes and Communities Agency, Network Rail, Highways England, NHS; and other public assets not currently controlled by the HCA.

12. Powers to incentivise developers to bring forward strategic sites and prevent land banking; and to bring empty listed building back into use.

13. To adopt the powers of the Police and Crime Commissioner and explore potential oversight of other blue light and Criminal Justice services including the Courts and Probation to support interoperability and protect the frontline.

14. Retention of 100% of the local growth in business rates.

15. Powers to levy a Supplementary Business Rate to invest in major strategic infrastructure in a similar way to the London Crossrail scheme.

16. Responsibility for regional education advisory services, innovation funds for kinship care, family group conferencing and multi-agency interventions to put children and young people at the heart of the economic growth strategy.

17. Powers to drive the improvement of careers advice and schools and for local authorities to intervene in failing academy schools deemed by Ofsted to be failing.

18. Control of Further Education (FE) capital and revenue budgets (including 16-18 provision) and powers to reshape and re-structure local appropriate skills provision that is responsive to the needs of employers, including giving priority for a new National College facility and the approval and development of new vocational education facilities.

19. Devolved budgets for employer-led skills investment, to allow our joined up skills brokerage service to help more employers offer Apprenticeships.

20. Responsibility for devolved and integrated business support budgets, building on the LEP’s growth hub, including the resources for Growth Accelerator, Manufacturing Advice Service (MAS), Innovate UK and UK Trade and Investment (UKTI) Export Advice. Joint responsibility for HEFCE investment in local economic partnership activity in Higher Education (HE) including HE Catalyst, knowledge exchange (HEIF). This will build on the Memorandum of Understanding already in place with the City Region Universities.

21. Allocation of a significant share of national investment for global R&D facilities on a par with the Crick Institute, to accelerate our Northern Powerhouse research and SME commercial strengths in digital health innovation and innovative manufacturing; work with the City Region to relocate a Research Council to our area.

22. Secure ring fenced UKTI resource on inward investment and sector specialists, and deliver culture, arts and tourism through oversight of devolved funding held by Arts Council England and Heritage Lottery Fund.

23. Responsibility for budgets, including DCMS/BDUK, to deliver ultrafast broadband connectivity and further develop the market beyond that provided by BT.

24. Control of a programme that extends the successful Troubled Families model of joined-up public services to other high cost groups like people with complex needs such as drug dependency, worklessness and mental health.

25. Devolve DWP national programmes and budgets targeted at addressing worklessness (currently the Work Programme).

26. Responsibility for local energy generation and efficiency.

27. Responsibility for flood defence capital investment through devolved DEFRA and Environment Agency powers and budgets.