The opportunities and challenges of widening devolution

One of the key pledges in Labour’s manifesto was to ‘widen devolution to more areas, encouraging local authorities to come together and take on new powers’. With 50% of the total working-age population and 49% of businesses in England covered by devolution, there is significant scope for widening.

Encouragingly, in its first weeks in power, the Labour government has acted quickly on this manifesto pledge, underlining the significance they see in terms of the role devolution can play in achieving their wider mission around economic prosperity and opportunity.  The Deputy Prime Minister, Angela Rayner, has written a letter to all leaders of county and unitary councils without existing devolution deals, encouraging them to “partner with the government to deliver the most ambitious programme of devolution this country has ever seen”. The emphasis is being placed on these so-called “devolution deserts” to work together to take on powers in areas such as transport, adult education and skills, housing and planning, and employment support. Alongside this, Labour has committed to bring forward a new Devolution Bill called the Take Back Control Act which will set out the framework for devolution.

While this will be welcomed across much of local government, challenges such as complex negotiations over geography and lack of clarity on powers and accountability are expected. Having worked with a number of the existing mayoral combined authorities alongside extensive work with the County Councils Network on County Devolution, there are some key considerations for local leaders as they work through whether being part of the 'devolution revolution' is worth the investment of time and resource.

Key considerations

What is an appropriate geography for my authority?

The letter makes clear that new devolution settlements should continue to be tailored to ‘sensible economic geographies’ and suggests that, in many cases, local authorities will need to collaborate to form new combined or combined county authorities. Considering geography is therefore a crucial first step for establishing effective and equitable devolution arrangements. When contemplating a suitable geography, we would recommend that local leaders consider the following four factors:

1. Economic scale and growth potential should be sufficient to optimise the benefits of unified strategies and policies, encompassing wealth generation, employment, and efficacy potential.
2. Historical and cultural ties should be leveraged to build upon the existing relationships and local identity, thereby fostering public support and engagement with the proposed deal.
3. Administrative service delivery should leverage existing boundaries across the public sector while minimising the impact of current devolution deals and proposals from neighbouring areas.
4. Political alignment that facilitates delivery and reduces complexity.

What is the right governance structure?

Identifying the most appropriate governance model for an individual place will also be critical to the success of a new devolution deal. While the letter to local leaders indicates a preference for Mayors as being the most effective, it does not specify this as a requirement. We know that the requirement for a Mayor has been a barrier for many places so it will be important for the Government to provide further clarity on this as part of the promised new devolution framework. Ahead of this (and even in the absence of) further clarity a valuable starting point is the three different levels of devolution deals set out in the 2022 Levelling up White Paper:

• Level 3 – A single institution or County Council with a directly elected mayor (DEM)
• Level 2 – A single institution or County Council without a DEM
• Level 1 – Local authorities working together e.g. through a joint committee

Given the differing levels of powers and functions across the levels it will be important for local leaders to carefully consider the suitability of each, for example, Level 3 provides additional powers around transport, investment spending, skills and employment and local infrastructure. Through our work with the County Council Network, we have established a robust method of evaluating different governance models. This model helps local leaders consider the most appropriate governance structure against three key factors: strength of governance, deliverability and powers.

Deliverability

Another key consideration is how complicated the model is to deliver. Drawing on our experience of working with devolved areas we would recommend considering:

Powers

The choice of governance model is intricately linked with the powers and flexibilities available. Angela Rayner’s letter indicates that in due course a new devolution framework will be published, detailing the new powers and flexibilities that will be made available. However, it is already clear that the most expansive powers will be offered to places that adopt mayoral leadership. While a mayor might not be the initial preference, it does offer more power and funding, therefore the core question is whether the introduction of a mayor would compromise your authority’s ability to deliver the existing core services and priorities it has.

Concluding points

With proposals for new devolution settlements expected by the end of September, there are a number of key considerations that local government need to start thinking about immediately:

• What is the right wider geography for your authority and who do you need to speak to about the different spatial options?
• Are you clear on the needs for your ‘place’ as this will help you assess the relative benefit of different powers, as well as the sense of shared priorities you will have with other authorities?
• What will key stakeholders think about the different governance structures – are there any insurmountable barriers?
• What are likely to be the biggest barriers to delivering devolution locally? And how do these compare to the places you might be combining with?

Alongside these local considerations, the new Labour government will need to start thinking about what more they can do to enable local places to reach their full potential and maximise the benefits of devolution. In particular, how can the Government learn from recent efforts, both in terms of removing sticking points, and how to make devolution more appealing. These include:

• The proposed devolution framework will need to be different – it needs to offer more locally, and demonstrate that it can be dynamic and evolve to respond to the needs of places.
• There needs to be greater transparency on how resources and particularly funding will be devolved, for example even a simple formula that will enable places to calculate the likely scale of investment funds available would support local decisions around whether to explore the introduction of a mayor. Clarity around what is not ‘on the table’ will also help.
• Linked to the above, what will be the most effective funding mechanisms to make this happen eg black grants, earmarked funds or local taxation powers
• If more power is to be devolved, there will be a greater need for more effective scrutiny and accountability. Establishing clear performance metrics and evaluation criteria to assess the impact of devolved funding on service delivery, outcomes, and value for money.

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We have worked closely with devolved administrations, from deal-making and establishing robust governance structures, to detailed work on individual powers (such as Bus Franchising or use of the Adult Education Budget). We would be happy to discuss and share our experience further in supporting you through the devolution lifecycle