Nearly two years ago I left my role in central government to lead a bright and enthusiastic team within the RSA, dedicated to exploring the potential for city-led growth and devolution as a means to improving the long term prospects of the UK economy. Our impact was profound; helping the agenda break through decades of a centralising policy narrative that has, until very recently, meant that devolution to city-regions has been almost unthinkable, let alone a possibility.
In the twelve months since we published our final recommendations, we’ve seen rapid policy progress. The origins of the Northern Powerhouse can be found in our somewhat clumsier phrase, ‘ManSheffLeedsPool’, which would be driven by a reprioritisation of transport investment away from north-south capacity building towards fast and convenient travel between the proximate cities of the north of England. In the short term, the Commission argued, emphasis should be placed on enhancing connectivity between Manchester and Leeds, and from this ‘High Speed 3’ was born, catalysing the existing Northern Hub electrification programme. Led by a single strategic transport authority (which became Transport for the North) and facilitated by a ‘Northern Oyster’ smart ticketing system, the aim was to speed up the creation of a single, agglomerated labour market between the largest metro economies outside London. The result would be to drive productivity and growth, for the ‘super-city region’ and the UK as a whole.
Individual devolution deals followed, notably to Greater Manchester, Sheffield and Cornwall and including the wholesale devolution of Greater Manchester’s NHS budget to the Combined Authority. A truly watershed moment in the evolution of the UK welfare state. Since then the Chancellor has taken up the Commission’s recommendation for an independent infrastructure committee (to be chaired by Lord Adonis, formerly Secretary of State for Transport under Labour and author of the Adonis Review during Ed Miliband’s tenure, which argued for the role of, and devolution to, city and county regions). With luck, this independent, statutory body will prioritise the need for a 25-50 year national infrastructure plan, and invite the leaders of our major cities to give evidence and partake in key decision making.
However, I maintain my previous warnings of superficial devolution which should be heeded if we are to see a real shift in power away from the centre to localities. Take business rates and the Chancellor’s announcement to allow local authorities to set and fully retain revenues. While this is indicative of a staggering culture change in the Treasury, the grip of HMT on negotiating deals and forcing the terms of trade – particularly in requiring an elected metro mayor if places are, for example, to have the freedom to increase business rates as well as cut them. Going beyond fiscal retention in the short-medium term will take some cities by surprise and we’ll have to wait until the Spending Review for details of how risk might be shared across local authorities.
The issue of inequality is one that wasn’t lost at the Conservative Party Conference, where I spoke alongside Greg Clark, Secretary of State for DCLG. Many rural councillors were concerned that amidst further cuts to local budgets, any net neutral fiscal arrangements with newly devolved business rates would tighten the squeeze on their resource budgets all the more. The risk here is compounded where local authorities are compelled (discretely or otherwise) to work with neighbouring councils where they feel their fiscal or strategic interests will not be best represented. Several of our major city regions – including Liverpool, Leeds, Birmingham and the North East – could be undone by territorial politics.
Even Greater Manchester isn’t out of the woods when we play in national party politics. Previously I’ve argued the ‘beating heart of the Northern Powerhouse’, with nine Labour councils and one Tory, has demonstrated canny pragmatism in brokering deals with the current and previous governments. But such political pragmatism might not go down well with Labour whips under the party’s present leadership, and could threaten to derail the implementation of newly won powers. Devolution hangs on the major cities delivering, and then pushing for the next stage.
Where might the next stage take us? London to take a slice of its annual Stamp Duty Land Tax to fund a special affordable housing vehicle? Borrowing deals to allow Metro Mayors to raise investment finance on the open markets? HM Treasury to transform the way it allocates and accounts for capital and resource spending, from departmental to place-based budgets? Devolution to spark a revival in political engagement? Strategic local leadership to tackle our persistent policy problems in poor skills, low productivity and economic and social inequality?
Reflecting on the work of the City Growth Commission one year on, I’m in a positive frame of mind. There’s lots more to do, particularly to link the social, democratic and constitutional dimensions of this debate, but we’ve shown already we can exceed our own expectations about what’s possible and how the framing of ‘orthodox’ policy can be quickly overturned.
City Growth Commission project
Charlotte Alldritt is Director for Public Services and Communities at the RSA. Previously she was Secretary to the RSA City Growth Commission.