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Growth commission: 'Limits' to devolution boosting economy

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Devolution on its own cannot turn round areas that have suffered economic decline, findings from the Inclusive Growth Commission state.

The commission’s interim report said the current wave of devolution deals had ended decades of failed attempts to drive regeneration by bypassing local government, but added they would work only if councils could respond to wide-ranging economic demands.

It also called for new ‘grown-up’ devolution deals covering “smaller towns and cities…as well as the major metro centres” which the commission said should hand social policy to areas while the agreements should also provide more funding for social and capital projects.

Stephanie Flanders

Stephanie Flanders

The commission was set up by the RSA think-tank to try to promote growth that would benefit the widest range of people and places.

Among its early conclusions are that “there are limits to devolution and it cannot be our only response to the calls for more inclusive growth”.

The report added: “Different arrangements should be made with places according to their level of economic and political maturity.”

Devolution should not be used to “simply transfer power and resources to a handful of big city regions, leaving smaller towns and cities to fall through cracks”, the commission said. “All tiers of government need to work together to shape a vision for long-term inclusive growth.”

Devolution should be “responsive” to different places “in both financial and governance arrangements”, the commission said. The report noted prime minister Theresa May’s “nod to potentially relaxing the mayoral requirement” but added: “If places are not to have a mayor, we do need some alternative model of accountability if a new inclusive approach is going to make for substantial change”.

The commission said it was time to reset the UK’s economic model given the discontents revealed by the ‘leave’ vote in the EU referendum, which was heaviest in disadvantaged areas.

Councils had to respond to all residents’ economic needs rather than only “at the aggregate level within a broad-based functional economic area [and] prove they can make a difference for the most disadvantaged as well as attracting new high-skilled workers and investment”, the report said.

Industrial strategies should prioritise generating jobs and work progression in lower-/middle-skilled sectors, not just high-tech, the commission said. It added the skills, transport, housing and planning needs of an area should be incorporated into the strategies. 

Commission chair Stephanie Flanders (pictured) said: “The economic system in the UK and other advanced countries is simply not delivering for a large chunk of the population. Theresa May seemed to grasp that fundamental reality in her first speech as prime minister, committing to ‘build a country that works for everyone’.

“But to achieve this, we need a concrete strategy for delivering inclusive growth.”

Commission member Paul Watson (Lab), chair of the Key Cities group and leader of Sunderland City Council, said: “The referendum has shown us how many people were left out of the opportunities our economy provides, and this report highlights the damage that causes to our communities, to our society, and to our long-term prospects as a country.”

The commission was established in April and its final report is due in March 2017.


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