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EXCLUSIVE: Power to shape economies tops devolution demands

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Business development, skills, housing, and transport were central to almost all devolution bids, LGC analysis of the latest submissions to the government has found.

Almost all bids featured demands for more control over spending on business support. More control over buses, control of skills budgets and more freedom to invest in housing were included in at least three-quarters of bids examined.

In return for increased controls, areas are pledging to create hundreds of thousands of jobs and generate billions of pounds of economic growth, in recognition of the government’s requirement for bids to be fiscally neutral.

Ambitious proposals for financial freedoms featured in 14 of the proposals LGC examined, including Hampshire and the Isle of Wight where authorities are seeking full business rates retention in return for forgoing revenue support grant.

Devolution demands

 

Speaking at an event in central London last week, Core Cities vice chair and leader of Newcastle City Council Nick Forbes (Lab) warned the government’s aim of rebalancing the economy would “never be a success” unless cities were given “financial powers”.

He said: “Both [the spending review and devolution] have the potential to change us for the better or leave us to struggle for years with the fallout of missed opportunities.”

LGC analysed 27 of the 31 detailed bids from English regions submitted by the chancellor’s 4 September deadline. A further four bids were received from councils in the devolved nations while a few areas submitted letters stating an intent to submit a bid.  

Nine bids offered to adopt a directly elected mayor in return for the government agreeing to their demands, although the vast majority of bids stayed silent on the issue. Those areas that agreed to elected mayors tended to be those where devolution bids have been longest in development – the Leeds, Liverpool and Sheffield city regions, the north-east, Derbyshire and Nottinghamshire – as well as the West Midlands and the counties of Gloucestershire and Leicestershire.

The bid content varied from being very detailed in places such as Greater Manchester, London, and the Leeds and Liverpool city regions; to more broad brush in Essex, Oxfordshire, and Telford & Wrekin.

A report due to go before the Local Government Association’s executive this week said councils had expressed concern about the government’s ability to commit the time and resources needed to support all of the negotiations.

“This could lead to a de facto prioritisation, with proposals at an earlier stage of development being squeezed out by those judged to be closer to implementation or those seen to be more aligned to government’s priorities,” the report said.

Business and enterprise

Calls for devolved responsibility for business support budgets – a feature of all devolution deals so far agreed – proved a recurring theme in most proposals. Investment funds also featured heavily. These are pots of cash provided by the Treasury for areas to spend on projects aimed at unlocking growth, with a view to returning the money with interest after an agreed period. The West Midlands Combined Authority has asked for control of an £8bn investment fund over 10 years. Requests to gain enterprise zone status, which offers incentives such as business rates relief and simplified planning processes, were common, while the Liverpool City Region wants to create the UK’s first free trade zone for the Port of Liverpool, which would exempt companies trading through it from paying certain taxes.

Fiscal devolution

The most popular fiscal proposal involved the retention of business rates. While the Leeds City Region has called for full retention off any growth, local authorities in Hampshire and Isle of Wight (HIOW) have proposed forgoing their share of the revenue support grant in exchange for 100% retention of the business rates generated in the region. Fiscal freedoms to vary local council tax bands and undertake revaluations were also included in HIOW and Cumbria’s proposals, while Greater Manchester is also seeking discussions on air passenger and stamp duties. Requests for multi-year funding settlements were also demanded by some.

Health

Deals to allow Greater Manchester to take control of health and social care budgets, and another one to integrate health and social care services in Cornwall, have encouraged 13 areas to seek greater control over health services. Suffolk wants devolved multi-year funding settlements for health and social care while the Heart of the South West bid, which includes Devon, one of England’s most financially challenged health economies, wants the freedom to “develop local metrics and incentives” for health and social care.

Housing

Housing investment funds were a common feature in devolution demands. Leeds City Region, for example, wants control of a £500m housing and regeneration fund. Requests to create land commissions so that surplus public land can be identified and freed up for housebuilding were also common. In addition, proposals to take control of an area’s whole public estate were often included in submissions.

Skills

Control of adult skills budgets was a common ask, as were requests to reshape and restructure further education provision. There was also interest in controlling apprenticeship grants. Joint commissioning of the next phase of the work programme was also included in some proposals, while Suffolk wanted to establish a new local employment service which could deliver universal credit.

Transport

A wide range of transport proposals featured in most bids, including requests to manage local bus services, use investment funds to deliver infrastructure improvements, and gain more influence over the work of Highways England. Among the more unusual ideas was a proposal from the Liverpool City Region to set toll charges for motorists passing through the Mersey tunnels.

*See attached spreadsheet for a full breakdown of bids by policy area

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