The fanfare led by George Osborne in relation to the ground-breaking devolution deal given to Manchester and the Northern Powerhouse saw a surge of excitement in the local government community. However, even with the wave of signed deals scepticism remains around what is truly driving this devolution revolution and the motives of Mr Osborne and the Treasury: an issue that is discussed further in our latest report, Our changing state: the realities of austerity and devolution, writes Peter Ware of Browne Jacobson LLP.
The phrase “Devo Dump” has been coined by sceptics who suggest that devolution is just a way in which responsibilities are passed to local government without the associated funding. Sceptics argue that local government is merely being passed the buck to make cuts and central government can wash its hands of blame. Inevitably however, in times of austerity, where responsibilities are transferred to local government they will be passed with an ever decreasing budget. Indeed, Sir Richard Leese, when asked this question on a number of occasions, has accepted that in principle he may be taking responsibilities where there is less cash to deliver them. However, his response is often that whilst this may be the case he would rather be in a position to make those decisions locally than see them made centrally in an arbitrary way across the country. I think this is the key message. We are, as a result of government policies, in a time where public spending is reduced and services are being cut. The question therefore is who makes those decisions? Should it be central government where an approach has to be delivered across national lines which will inevitably be a compromise, or should it be in localities where the people closest to it can make those difficult decisions reflecting local needs and challenges?
Another issue that is often put forward as a problem is the fact that certain central government departments do not really want to accede control and indeed are only paying lip service to devolution. Whilst, of course, common sense suggests that anyone holding power or responsibility is always reluctant to lose that responsibility, evidence in the current deals is showing that hard fought battles are being won. We have seen in the Manchester deal, wide-ranging powers across a number of government departments including responsibilities for certain health matters being devolved. Whilst the breadth of the devolved responsibilities given to Manchester has not been mirrored across the piece, it is clear that more and more departments are getting used to the idea of devolution. Indeed, one would expect that as combined authorities continue to progress they will continue to take more responsibilities. Where they can show that they can deliver services and decisions locally, the momentum will hopefully be unstoppable.
What is disappointing, however, is the lack of enshrinement of local government powers. My concern is that a change of government or indeed a change of Minister in the Treasury could lead to a slowing down and perhaps even a reversal of devolution. Nothing in the current legislative package prevents a reversal of devolution. Indeed the Cities and Local Government Devolution Act 2016 helps to preserve the Whitehall centralist instinct. To this end will combined authorities be allowed to make mistakes? Inevitably, mistakes will happen and if they do will combined authorities be able to work through and fix them or will government departments seize the opportunities to take powers back?
Finally, the lack of proper fiscal devolution remains a shortfall in the devolution package. As we have seen in the recent budgets, it remains in the hands of Treasury to make decisions about business rates and who does and does not pay them. One may argue that the removal of thousands of small businesses from the business rate regime has its wider economic benefits. However, if devolution is going to be a success it must be for the localities to make decisions about how they structure local taxes. Furthermore, the raising of new local taxes is clearly not on the agenda. It is common in Europe for example to have local city taxes and hotel taxes and whilst bodies lobbied for such a right to be included this has been squarely rebutted by central government. In times of austerity when many commentators are suggesting that local government is on the brink of extreme financial difficulties, the ability to structure local taxation to deliver its core requirements is a pressing need and should continue to be fought for by local government.
So, as a whole, the devolution picture is a balanced one. There are clearly arguments to suggest that it is not as rosy as some may suggest. However, it is also not as bleak as the vehement sceptics are putting forward. Devolution represents a fantastic opportunity for localities and local government and they must grasp the opportunity with both hands. Showing that local decision making is being delivered positively will demonstrate that devolution works and should continue.
Peter Ware is head of the Government and Infrastructure Team at public sector law firm Browne Jacobson LLP.