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LOCAL GOVERNMENT NEWSDEVOLUTION

Developments in English Devolution There has been considerable interest recently in areas of England in increasing their devolved powers. This article considers recent developments.

The UK Government has adopted the principle of power being de-centralised to local authorities; over recent years the legislative framework to support the movement of powers and responsibilities to local authorises has been put in place. Through the Localism Act 2011 local authorities were given new powers for example a new general power of competence together with devolved planning functions.

Financial freedoms were extended under the Local Government Finance Act 2012 enabling local authorities to benefit from growth by allowing them to keep a share of business rates plus growth on revenue.

Under the Business Rates Retention Scheme £11billion is retained locally rather than redistributed via Central Government. The Finance Act also enabled tax incremental finance as an additional financing tool alongside prudential borrowing. The New Homes Bonus has enabled income to be raised locally.

Recent development in English Devolution

Recent announcements that the Greater Manchester Combined Authority and Cornwall Council are to have control over the use of funding from the European Regional Development and the European Social Fund show the practical effects to be achieved where devolution is progressing.

The Cities and Local Government Devolution Bill, which will provide the legal basis for the governance in areas with increased devolution has completed its passage through the House of Lords and is progressing through the House of Commons.. The Bill will make provision for elected mayors of combined authority areas.

The Communities and Local Government

Committee is holding an inquiry into the Cities and Local Government Devolution Bill, considering a variety of devolution issues. Key steps which authorities working towards devolution need to complete are:

1. Identifying and implementing suitable governance arrangements, including scrutiny.

2. Assessing risks and putting in place arrangements to manage them.

3. Building strong relationships between all sectors involved in the devolved arrangements.

It will be important to the success of the new devolved arrangements for there to be effective financial arrangements. The Bill will provide for combined authorities with elected mayors to be “major presenting authorities”, so providing them


with a source of income. There is also provision for regulations to be made to allow combined authorities to impose levies

The extent of the functions of the authorities will be key to the extent to which responsibility is devolved to them. Combined authorities have previously had responsibility for economic development, regeneration and transport and this would be expected to continue. The Bill also provides for relevant legislation to be amended to allow combined authorities to have broader functions.

The Bill would allow the Secretary of State to make regulations relating to the governance arrangements of local authorities, their constitution and membership, and structural and boundary arrangements. The explanatory notes to the Bill explain that this power is intended to enable the Secretary of State to effect changes simply and efficiently. The notes give examples of mergers of councils, moves to unitary structures or changing the democratic representation of an area with different electoral cycles and fewer councillors. It would be expected that those local authorities that are interested in devolution for their areas would expect to play a part in it themselves rather than being merged with other local authorities but mergers may be inevitable if it is concluded that this would be most effective for a particular area.

The Government clearly sees devolution and the role of elected mayors as significant to the role of local authorities generally in the future. For example, in a recent consultation about devolving responsibility for Sunday trading rules to a local level, the Government asked whether this should be to elected metro mayors as part of “devolution deals” or to all local authorities.

As local authorities continue to face pressures on

their resources, they will need to keep considering new ways of working, including working with other authorities. Devolution will require authorities to enter into new arrangements but will give them the benefit of involvement in a new range of functions in their area.

Proposals for Devolution as at September 2015

Greater Manchester

The UK Government has made proposals for the transfer of a number of powers and funding streams to the Greater Manchester Combined Authority and other bodies in the Greater Manchester Region together with the creation of a directly elected mayor for the Greater Manchester Area. The two key documents are the Greater Manchester Agreement dated 3rd November 2014 and the Greater Manchester Health and Social Care Devolution Memorandum of Understanding published on 27th February 2015.

Under the Greater Manchester Agreement the newly elected Mayor will have the following powers and resources:-

1. A consolidated multiyear transport budget; 2. Responsibility for franchised bus services,

railway stations and smart ticketing; 3. A housing investment fund of £300million

over 10 years transferred from the Homes and Communities Agency;

4. Power to produce a statutory spatial strategy subject to unanimous approval by the combined authority cabinet (i.e. the 10 leaders of the combined authorities member authority);

5. An enhanced form of the Manchester “earn back” Agreement;

6. The Mayor will also become the Police and Crime Commissioner for Greater Manchester.

The GMCA will receive the following additional powers and resources:

1. Devolved business support budgets; 2. Power to restructure further education

plus control of the apprenticeship grant for employers;

3. Joint commissioning of DWP’s next stage of the Work Programme;

4. Control over the housing investment fund and the “earn back” deal;

5. The opportunity to plan integration of health and social care.

The new elected mayor will be subject to scrutiny by the existing scrutiny committee of GMCA which is made up of 30 non-executive counsellors drawn from the 10 Greater Manchester Boroughs. There will be an eleventh member who is either

a counsellor, MP, MEP or Police and Crime Commissioner in the Greater Manchester Area who will be the interim mayor until the first election. Tony Lloyd was appointed to the position on 29th May 2015.

Health will be devolved under the Greater Manchester Health and Social Care Devolution.

Unlike the Mayor of London the elected mayor will have more constraints particularly with GMCA matters, the spending plans will be subject to rejection by GMCA cabinet members on a two thirds majority and the spatial strategy will require unanimous approval from the mayor and GMCA members. Decisions on “public service issues” will be subject to an ordinary majority. The mayor will have no responsibility for integrated health and social care but as Police and Crime Commissioner for


Greater Manchester will have considerable strategic control over those elements.

Proposals for Sheffield

A more limited set of proposals was set out for Sheffield on 12th December 2014 with a written statement following on 18th December. The Sheffield City Region will receive the following:

1. The majority of the adult skills budget and the apprencticeship grant for employers to build a “skills system”;

2. The opportunity to introduce smart ticketing and funding for the Sheffield – Rotherham tram train pilot;

3. Consultation with DWP regarding joint commissioning for the next phase of the Works Programme from 2017;

4. Close working with UK Trade and Investment, the Sheffield Local Enterprise Partnership and Job Centre Plus on improving outcomes for employment support allowance recipients together with devolved spending on business support to be aligned by the Sheffield Growth Hub;

5. Decisions regarding disposal and regeneration of assets and land held across the public sector to be taken jointly by the City Region and Government via a joint assets board.

Cornwall

1. The proposed devolution deal for Cornwall and the Scilly Isles (“CSI”) is expressed to be fiscally neutral for Cornwall.

2. In terms of funding CSI will receive €603.7million of ERDF and European Social Fund (“the Central Fund”) from 2014-2020. Both CSI and central Government have agreed that further powers over that funding could be devolved subject to

safeguards. It is proposed that an Intermediate Body (Cornwall Council) will be established from April 2016 to fund projects from the Central Fund on the basis of the strategically alignment of agreed programmes.

In return Cornwall Council will provide £57millon match funding, match fund technical assistance. It will agree to deliver additional outcomes including at least 500 additional jobs, 400 additional businesses assisted and 700 more participants in training.

Cornwall Council will receive powers for franchising bus services by 2018 – the first rural unitary authority to do so.

Local partners will be invited to submit proposals for a low carbon enterprise zone linked to geothermal energy. CSI will be invited to provide a business plan for the integration of health and social care – Cornwall Council will work with central Government to improve efficiencies in the public estate.

Proposals for West Yorkshire

The West Yorkshire leaders expressed the view that their preferred option for a devolution bid to central Government was based on Lead City Region geography and that a bid would be submitted on Friday 4th September 2015 covering the districts of Bradford, Calderdale, Kirklees and Wakefield plus the North Yorkshire districts of Craven, Harrogate, Selby and the City of York which will represent the UK’s largest city region economy outside London generating £57.7billion of economic output and a population of 2.8milion 92% of whom work within the area.

The leaders want the deal to cover the £1.6billion growth deal secured last year through the Lead

City Region Enterprise Partnership. The devolution “asks” will focus on transport, housing, business support, skills and new powers to generate investments for major infrastructure projects.

Although the UK Government is insistent on the introduction of an elected metro mayor and citizens of Bradford Leeds and Wakefield voted against this in 2012; leaders believe that the potential benefits are so substantial they have a duty to residents to give it serious consideration.

The devolution deal announced in the 2015 budget on 18th March would see the combined “Lead City Region” taking further responsibility over skills, transport, employment, housing and business support to include:

1. Reforming the further education system to be done by the Combined Authority and Government;

2. Devolution of the apprenticeship grant for employers;

3. Consultation with DWP regarding joint commissioning of the next phase of the Works Programme from 2017;

4. National and local spending on business support to be aligned through the lead city region growth hub with more devolution from 2017 onwards, closer working with UKTI;

5. More control for the Lead City Region of the delivery of local transport schemes, improved liaison with Highways England regarding investment and strategic network; infrastructure works to be aligned with Lead City Regions; investment strategy for rail stations;

6. Reconfiguration of the city regions joint assets board with the Homes and Communities Agency development of a joint asset and investment plan.

Financial Devolution

The core cities group have identified the need for a place based comprehensive spending review which would seek to deliver integrated and devolved budgets for a specific set of services across a place taking into account the relationship between public sector service reform, economic development, sustainable city, lead growth and deficit reduction together with a process to determine how much broader physical retention and devolution could operate. This approach recognises that without the flexibility of available funding the true benefits of devolution will not be achieved.

The Independent Commission on Local Government Finance has identified a case for urgent change in the system of local government finance recognising the potential transforming effect on local government and the delivery of wider public services.

It enables local authorities to keep the rewards from their investments and ensure that those areas facing more difficult social and economic conditions are made more secure.

The Final Report of the Commission was that the existing system is not fit for purpose and it’s interesting when considering areas in terms of gross value added per head of population combined authorities such as West Yorkshire are the equivalent of Scotland.

The Commission states that devolution and the reform of local government finance need to go hand in hand with the following aims:

1. Growing the economy; 2. Transforming service delivery; 3. Strengthening accountability for the spending


of public money.

One of the Commission’s recommendations was that an independent review should be carried out to assess whether local authorities are appropriately funded to meet their strategy duties.

Key reforms identified by the Commission are as follows:

1. A place based budget; 2. Self-sufficiency and equalisation; 3. Further reforms to council tax;4. Assignment of taxes to sub-national areas; 5. Local public accounts committees; 6. Changes in governance to ensure greater

accountability at subnational level.

Conclusion

It will be interesting to see how devolution develops and whether reform of Local Government Finance keep s apace to enable a real shift towards development of both power and purse strings. G

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