Michael Burton 11 June 2015

A growth case for devolution

The Queen’s Speech last week confirmed that the devolution bandwagon in England is rolling and that city-focused combined authorities will be at its core with mayoral models.

However the focus on the constitutional aspects of devolution obscures the fact that boosting England’s local economies is one of the Government’s prime aims and that core cities are not the only vehicle for achieving it; key cities, counties and London boroughs are also lobbying hard for devolved powers arguing that if anything, their impact on jobs and growth is even greater.

In addition bringing in new business can enhance a council’s bottom line through increases business rate revenue. Devolution therefore is inextricably bound up with local economic growth.

These issues will be aired at a one-day conference organised by The MJ in Westminster where key speakers will outline the Government’s growth agenda. The focus is on practical advice for local authorities and local enterprise partnerships (LEPs) wanting to know more about how to attract investors and how to market their areas.

Sir John Peace’s report Devolution to non-metropolitan England: seven steps to growth and prosperity argued that non metropolitan areas (NMAs) ‘account for roughly half of England’s economy and population meaning their economic contribution and growth potential is as significant for the nation as that of big cities.’

Backing combined authorities, it envisages the council of the future transforming from one that ‘spends central money and provides services directly to ones that manage and grow their own budgets through new revenue streams.’ The NMAs account for 56% of England’s economic output compared to London’s 17% and the mets’ 27%. The top performing areas are manufacturing, wholesale and retail trade, property, professional services and financial services.

The report proposed:

? Devolving skills funding locally
? Encouraging further investment in non-metropolitan areas ‘by encouraging locally-led promotion of Foreign Direct Investment in local areas that complement and add value to the existing UK-wide approach’
? Localising bus funding to groups of councils

A new report from the LGA lobbying hard for the devolution case, both on efficiency grounds through merging funding pots and on economic grounds. Its paper English devolution: local solutions for a successful nation says there is ‘clear evidence that devolution can help deliver economic growth and rebalance the economy, making clear the benefits to the nation of greater powers not just for our major cities, but also for our non-metropolitan areas.’

Estimates show that £80bn of extra additional growth could be generated if city regions ‘were freed ‘to realise their full potential’ while devolving skills could help reduce youth unemployment by 20%.’ The report adds: ‘Experts have warned that the imbalance in England’s economy, exacerbated by the economic downturn, could be damaging to the UK’s global competitiveness in the long-term. For example, the concentration of foreign investment in London and the South East may come to make the UK less attractive to investors than countries such as France and Germany, which are seen to have more balanced regional portfolios.’

How extensive devolution will be however is open to question and the Government’s insistence on elected mayors may dampen enthusiasm. As one Whitehall insider remarked last week to The MJ: ‘The Treasury just doesn’t have the capacity to negotiate a whole load of combined authority agreements. I see maybe two or three getting underway.’ Nonetheless the economic case for devolution is so powerful that the Government will find it hard to resist the pressure to allow different models to proliferate across the country in both urban and rural areas.

For more details on The MJ Growth Agenda conference visit growthagenda.themj.co.uk

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