Andrew Laird is a founder and Director of Mutual Ventures.
The news that Greg Clark, the Business Secretary, is opening negotiations with Andy Street, the West Midlands Mayor, about a further devolution deal is great news. The first devolution deal, agreed in 2015, gave the West Midlands an investment fund of £1.1 billion. A new deal could expand local control over transport and skills, as well as new powers to build houses. These are key levers of economic growth and this deal would give the Midlands Engine a real opportunity to control its own destiny.
Street, the former John Lewis boss, was never going to sit on his hands, and the presence of such a capable mayor will give central government the confidence to do a new deal. However, I think (and hope) that his presence is simply accelerating the natural direction of travel. I’ll admit up front that I am a fan of devolution, having previously written on these pages about English Devolution and the potential it holds for public service reform.
Devolving more powers to local areas is a sensible move from a government that clearly realises that the Brexit negotiations are going to sap the time, energy and resources of civil servants. Add a hung parliament into the mix (our second in three elections) and even the most uncontroversial legislation will require careful and time consuming lobbying and management. All of this will make progressing quickly on domestic public service reform very difficult (e.g. health and social care integration and driving improvement and innovation in children’s services).
Despite there being some positive signs that ministers are looking to press ahead with non-Brexit activity, I would still argue that we need to devolve as much power as possible to local areas.
A proper system of devolved power is how other countries handle the hiatus created by the electoral cycle. In German national elections, the main parties rarely emerge with a working majority and there usually follows a lengthy period of coalition negotiations. However, there is a sophisticated system of devolved regional government in which 16 states wield significant powers. This allows for a more fluid continuation of public business than we have in the UK. I’m not suggesting we mirror this approach – but we can surely learn something from it.
There are other potential benefits of devolving power and budgets to local areas. Unlike councils, the NHS does not have a legal requirement to balance its books. More place-based budgets, like the £6 billion of NHS funding that has been devolved to Greater Manchester and the similar deal being discussed in Surrey, are a step in the right direction and will create more local accountability. Focusing a fixed budget on a particular place (as well as merging this with council-controlled social care budgets) starts us on an inevitable path towards balanced budgets.
The question inevitably arises as to whether a Conservative government should be devolving powers to Labour mayors. I think this has to be a question of competence and stability rather than electoral politics. Take Manchester and Liverpool as examples. Both have devolution deals, but Manchester’s Combined Authority infrastructure is far more advanced and embedded. The ten councils that make up Greater Manchester also seem in lock-step with each other and as a result are more likely to make quick collective decisions.
The right mayor with the right organisational and lobbying skills can be the catalyst to get the necessary infrastructure in place, but devolution cannot be personality-based. Whilst there is no doubt that the government has tremendous confidence in Street, the progress of a further devolution deal in the West Midlands will be decided as much by the progress he has been making behind the scenes to get the Combined Authority infrastructure in place.
Devolving powers to the relative stability of local government, mayors and Combined Authorities has been the ambition of successive governments – but with Westminster facing its own set of challenges, it is now more urgent than ever.