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Devolution: subtle differences in post deadline deals point to power disparities

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Recurring themes about what budgets and controls the government is willing to devolve are beginning to emerge - although subtle differences in the deals already reached point to a disparity of powers.

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LGC Analysis

Giving groups of councils the ability to decide how European monies should be spent on projects in their area, control of the adults skills budget, and the power to determine how business support should be delivered locally are contained in all of the devolution deals announced since the chancellor’s 4 September deadline for bids passed.

Deals for the Sheffield City Region, followed by the North East and Tees Valley, all include adopting a directly elected mayor. When theLeeds City Region secured a deal in March without opting for a mayor, it got control of the adult skills budget and business support, but little else.

In the latest round of announcements, the North East and Tees Valley have been given control over investment funds worth up to £900m and £450m respectively over 30 years. However, the Leeds City Region got a commitment to receive £30m a year as part of its growth deal in 2014.

The deal documents for the North East and Tees Valley revealed the money will only be released subject to five yearly assessments of each areas’ contribution to national growth, as is the case in the Sheffield City Region agreement and the Greater Manchester deal.

However, the Tees Valley agreement is much more explicit on how this contribution will be measured. It states the combined authority will “jointly commission an independent assessment” of the economic and social benefits with the Cities and Local Growth Unit “including whether the projects have been delivered on time and to budget”.

Bill Dixon (Lab), leader of Darlington BC which is a member of the shadow Tees Valley Combined Authority, told LGC he was “relaxed and quite comfortable” about having assessments.

 “It makes it plain and clear to everyone involved when the deal has been satisfied, so targets are not an issue,” he said.

The make-up of the investment funds also differs. The Sheffield City Region agreement says the £900m fund “will be composed of 60% capital and 40% revenue”. The North East’s devolution document says the region’s fund, also worth £900m, will be purely revenue.

Having a revenue-only pot of funding provides greater flexibilities in terms of its spending, borrowing and reinvestment potential - indeed, the North East’s deal document notes its investment fund could eventually be worth up to £1.5bn over the 30 year period.

Sue Jeffrey

Sue Jeffrey, chair of Tees Valley Combined Authority, said revenue funding would be preferable to capital

Sue Jeffrey (Lab), chair of the shadow Tees Valley Combined Authority, told LGC the make-up of her region’s investment fund had yet to be agreed with the government.

Cllr Jeffrey, who is leader of Redcar & Cleveland BC, said: “If it is revenue funding there is more opportunity to do things with that than capital. If ever asked then revenue funding is what we would want to have because it’s easier to use.”

Adopting an elected mayor will also allow areas to increase business rates, subject to a capped limit and the approval of local businesses. The North East’s agreement said that could be worth up to £30m a year to the region.

The North East’s mayor will also get to oversee the running of bus services from 2017, beginning in Tyne and Wear with the option for extension to Durham and Northumberland in future.

The Sheffield City Region’s mayor could also run buses, although the combined authority is currently seeking to improve services through partnership working. Uniquely the agreement also said the mayor would responsible for an “identified key route network of local authority roads”.

By comparison, Tees Valley has only secured an agreement that the government would discuss a bus “franchising model” or other mechanisms with the Tees Valley.

A unique aspect of the North East deal is a commitment from the government to work with the combined authority to “review which regulatory and planning powers can be devolved”, including powers which would “promote public health by addressing obesity, smoking and substance misuse”, the official agreement said.

Nick Forbes (Lab), leader of Newcastle  City Council, told LGC that could lead to the region being able to set minimum alcohol unit pricing or new rules for charity street fundraisers, also known as also known as ‘charity muggers’ or ‘chuggers’.

While the North East is setting up a commission to look at health and social care with a view to taking control of those budgets, deputy director at the New Local Government Network Jessica Studdert said it was a “surprise” it had not been a part of other deals.

“I guess people are waiting to see what will happen in Greater Manchester and Cornwall,” she said.

Nick Forbes, leader, Newcastle City Council

Nick Forbes, leader, Newcastle City Council, wants powers to set a minimum alcohol unit price

Ms Studdert also pointed out differences emerging in relation to the devolution of the successor to the Work Programme.

While Greater Manchester’s agreement refers to the region being a “joint commissioner” of the next phase, deal documents for the North East, Sheffield City Region, and Tees Valley refer to the combined authorities only getting to “co-design” employment support schemes for harder-to-help claimants.

“That’s an area that needs a bit more political will behind it nationally,” said Ms Studdert.

Andrew Carter, deputy chief executive at Centre for Cities, told LGC differences between deals was to be expected and said “places should be comfortable about that”.

While it was “helpful” certain themes were emerging in devolution deals, Mr Carter urged those involved in negotiations to continue to “push the boundaries”.

“I don’t think it’s a problem if there’s a degree of commonality if the things being asked for are the things that really matter to places,” he said. “It would be a worry and a concern if it was just a case of asking for what other places have got, but I don’t think that’s the case.”

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