What is Devolution? Why is it Important?

What is Devolution?

Updated on 18 April 2022

English devolution is not the same thing as levelling up, but it has close links with it and, in its present form, has its roots in the same speech by then Chancellor of the Exchequer, George Osborne, his so-called Northern Powerhouse speech, in Manchester on 14 May 2015. Osborne said:

‘Here’s the deal:

‘We will hand power from the centre to cities to give you greater control over your local transport, housing, skills and healthcare. And we’ll give the levers you need to grow your local economy and make sure local people keep the rewards. But it’s right people have a single point of accountability: someone they elect, who takes the decisions and carries the can. So with these new powers for cities must come new city-wide elected mayors who work with local councils. I will not impose this model on anyone. But nor will I settle for less’.

George Osborne, Chancellor of the Exchequer, 14 May 2015

 

Four years later, levelling up was a phrase used in the Conservative Party manifesto:

‘…in his first months as Prime Minister, Boris Johnson has set out an agenda for levelling up every part of the UK – not just investing in our great towns and cities, as well as rural and coastal areas, but giving them far more control of how that investment is made. In the 21st century, we need to get away from the idea that ‘Whitehall knows best’ and that all growth must inevitably start in London. Because we as Conservatives believe you can and must trust people and communities to make the decisions that are right for them.’ (p. 26).

‘This is an agenda which shows that the days of Whitehall knows best are over. We will give towns, cities and communities of all sizes across the UK real power and real investment to drive the growth of the future and unleash their full potential.’ (p. 29).

Two clear but separate threads run through both the 2015 Osborne speech and the 2019 Tory manifesto. One is essentially economic – that the economies of the north and other left-behind parts of England are to be developed to the level of its more prosperous areas. That is levelling up. The other is essentially political – that it is not Whitehall but the cities and/or localities that will be given powers and resources to get the levelling-up job done. That is devolution.

So politicians both national and local must play their part. National politicians must ensure that the powers and resources devolved are adequate to the task, and local politicians must co-operate with the government and each other to live up to their new responsibilities.

This is how the twin economic and political threads have unwound since the Coalition came to power

LEPs and CAs

2010

The new coalition government of Conservatives and Liberal Democrats abolished the nine regional development agencies (RDAs) set up by Labour in 1998 and replaced them with 39 local enterprise partnerships (LEPs). These are led by local business people, with council leaders making up a minority on their boards.

2014

LEPs published strategic economic plans (SEPs) and were allocated growth funds to carry them out.
The North East LEP (NELEP) got £270m.

2014+

In the ensuing years councils were encouraged to get together in combined authorities (CAs) to operate some services across municipal boundaries. The North East Combined Authority (NECA) was established in 2014, made up of the five councils in Tyne & Wear plus the counties of Northumberland and Durham.

As a next step, CAs were offered devolution deals under which they would receive extra powers and responsibilities devolved from Whitehall and annual grants for 30 years to support investment in their economies. NECA was offered £30m a year – a total of £900m. But the string which Osborne, in his Northern Powerhouse speech, had tied to the offer of extra powers and resources for councils – acceptance of a directly elected mayor – remained firmly attached.

2016

The five councils in Tees Valley, which had been split from the rest of the North East in 2010 and given its own LEP, formed a CA in 2016 and accepted a devolution deal worth £15m a year for 30 years. 

But the seven NECA councils, after provisionally accepting a deal worth £30m a year for 30 years in 2015, changed their minds after months of disagreement and prevarication, and rejected the government’s offer by four votes to three.

2017

A Conservative mayor, Ben Houchen, was elected in Tees Valley.

2018-2019

The three councils north of the Tyne – Newcastle, North Tyneside and Northumberland – which had voted for the deal, left NECA, formed their own North of Tyne Combined Authority (NTCA) and accepted a deal worth £20m a year for 30 years. A Labour mayor, Jamie Driscoll, was elected in 2019. The four councils south of the Tyne – Gateshead, South Tyneside, Sunderland and County Durham – remained in a rump NECA without a deal, a mayor or a devolution grant.

2021

When West Yorkshire elected a mayor and started implementing its devolution deal on 6 May 2021 Tyne & Wear was left as the only one of England’s former metropolitan counties without a deal covering its whole area or a single mayoral voice like that of Andy Burnham in Greater Manchester or Ben Houchen in Tees Valley to make the area’s case nationally and in the global competition for investment.

WHY DEVOLUTION MATTERS

A clear sign of what happens to areas that do not accept devolution came on 3 March 2021, when Chancellor Rishi Sunak delivered a Budget in which Tees Valley got the freeport and economic campus it had been hoping for, plus other investments, while the North East got virtually nothing. The North East is continuing to do relatively badly out of funds like the £4.8bn Levelling up Fund and most notably is missing out on £600m for local public transport under the City Region Sustainable Transport Settlement, which it could have if it did a devolution deal. 

Rump NECA is not only damaging itself by its failure to agree to a deal, it is holding back its former partners north of the river as well. This cannot be allowed to continue. The six councils in Northumberland and Tyne & Wear (the LA6 – now probably without Durham, which is considering its own deal – must get back together again and do a devolution deal as fast as they can, consistent with transparency. .

The North East is in the worst of all institutional worlds: its economy is being run by one LEP, one mayor covering only half its area, two CAs and seven councils. The Tyneside economy is split, with enhanced powers, a devolution grant and a mayor on the north bank of the river and none of these to the south. Worst of all, there is no unity, no common sense of purpose and little collaboration except when it cannot be avoided, as with the joint committee that runs the Metro light railway that crosses the river and, since 2020, in dealing with the coronavirus emergency.

It is not clear whether relations between the North East council leaders have improved since 2016, and the business community remains alienated by the failure of the devolution deal at that time. With devolution talks now in prospect again the same mistakes must not be repeated. If the government fulfils its commitment to level up left-behind areas – admittedly a big if – the North East cannot afford to miss out again. But without a devolution deal covering all six councils there is a real danger that it will.

That means getting over the problems that wrecked the NECA deal in 2016 – the opposition to a mayor, the resentment of Newcastle’s position as regional capital, the mutual rivalry and mistrust between different municipalities, the lingering memory of the de-industrialisation of the Thatcher years which make Labour councillors still unwilling to do business with a Tory government. Most of all, perhaps, it means recognising that the £30m-a-year devolution grant was intended as a support for investment in the economy, not as compensation for the much larger austerity cuts to core day-to-day services. The £30m-a-year that NECA was offered was as much as any other CA received  apart from West Midlands (£36.m) and West Yorkshire (£38m).

Now that the government’s long-awaited Levelling Up White Paper has been published, with its offer of talks on a county devolution deal for Durham and an expanded North East deal for the LA6, the North East must react positively and take advantage of the opportunity. It is fortunate to have a second chance and cannot afford to throw it away again.

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