Memorandum by Policy Exchange (DRA 14)
ENGLISH REGIONAL GOVERNMENT: THE EMPEROR'S
NEW CLOTHES
EXECUTIVE SUMMARY
The proposed Assemblies clearly fail six criteria
set out by the Prime Minister in his Preface to the ODPM Policy
Statement:
— They will not deliver more accountable
government in the regions.
— They will not deliver more streamlined
government.
— They will not deliver more effective
government.
— They will not give the regions greater
say over the key issues that affect them.
— They will not give the regions power
to devise their own solutions.
— They will not give the regions power
to set their own priorities.
Regional Assemblies are the wrong answer to
the wrong question. Like the Emperor's New Clothes, they contain
nothing of substance.
Credible devolution would:
— Give powers to existing local authorities
and not waste money establishing new artificial entities.
— Transfer powers exercised by the
Highways Agency downward to local authorities.
— Permit local authorities to operate
rail franchises.
— Abolish the Whitehall directed system
of targets and "earned freedom", but retain the rigorous
external audit by the NAO.
— Abolish rate-capping, but retain
a Treasury veto over borrowing.
— Use RDAs as independent venture capital
houses to assist local authority infrastructure projects—but
they would have to remain outside political control by local bodies
to maintain their independence.
— Possibly move towards uniform annual
elections for local authorities.
— Be accompanied by the elimination
of wasteful bureaucracy at Whitehall.
What powers are on offer?
1. There is no widespread desire for regional
government in England. Out of eight regions, only three indicated
the minimal interest required to trigger a referendum, and two
of these have since been dropped.
2. The policy impetus arises because, following
the formation of devolved bodies in Scotland, Wales and (intermittently)
Northern Ireland, the Government has created an "English
Question". Implementing some—any—sort of devolved
bodies in England is simpler than explaining why Scottish and
Welsh MPs should be permitted to vote on exclusively English legislation.
3. In the Preface to the Policy Statement
published alongside the Draft Bill, the Prime Minister says "This
policy statement and the Draft Bill which it accompanies are a
major step forward in delivering more accountable, more streamlined
and more effective government for the English regions". He
goes on to add "This Bill would give the regions an unprecedented
opportunity to have a greater say over the key issues that affect
them, as well as the power to devise their own solutions and set
their own priorities" (page 1).
4. The Prime Minister is notoriously careful
over his choice of words. To our great surprise, the Draft Bill
delivers none of the six features he promises in his preface.
Like the Emperor's New Clothes, when the detail is examined there
is nothing there.
More accountable government?
FAILED
5. The Draft Bill certainly creates more
government, which will be accountable in the sense that it is
subject to election. It does not create government which is closer
to the people.
— The proportional system for elections
(Clauses 5-11) dilutes the ability of electors to remove individual
politicians.
— Assembly constituencies will equate
to several Westminster constituencies and several dozen local
authority wards. Representation will be more remote.
— Powers are taken upwards from local
authorities on fire and rescue services (Clauses 84-87); cultural
affairs (Clauses 88-93); planning (98-100); and potentially on
housing (Clause 110).
More streamlined government?
FAILED
6. Superficially, the accompanying abolition
of county councils ought to streamline decision-making by removing
a layer of government.
7. However, electors in a given region might
vote both to introduce an Assembly and to retain their county
councils, increasing the layers of government in their area. Even
if county councils are abolished, they would be merely replaced
by an alternative regional layer of government, producing no change
(other than, of course, several years of administrative disruption
and associated financial costs).
8. In areas currently governed by unitary
authorities (ie where county councils have been abolished already)
the introduction of an Assembly will always impose an extra layer
of government. In the North East, for instance, the majority of
inhabitants currently live in unitary authority areas.
9. Furthermore, a wide range of issues covered
by the remit of an Assembly will remain subject to Whitehall guidance
and veto (see paras 18-21 below). There is no streamlining.
More effective government?
FAILED
10. An Assembly will be a body which issues
strategies and has no delivery responsibilities. If the intention
is to improve the delivery of public services, the introduction
of an Assembly is likely to be something of a non-event.
11. Clause 43 sets out three general purposes
for an Assembly:
— The promotion of economic development
is discharged by drawing up a Regional Economic Strategy (Schedule
4), a task currently undertaken by the RDA, and by drawing up
a Regional Spatial Strategy (Clause 98), a planning function currently
discharged by existing local authorities.
— The promotion of social development
(better health, housing, recreation facilities etc) by an Assembly
is somewhat unclear. The Policy Statement states that an Assembly
is actually not required to have a housing strategy (para 52),
although it will take over some powers to make grants currently
exercised by the Housing Corporation (Clauses 111-113). An Assembly
will have no power over public health, nor any role in the delivery
of health services (Policy Statement para 66). The Assembly will
appoint a regional cultural consortium (Clause 89), and gets to
approve its Regional Cultural Strategy (Clause 93)—but only
when the Secretary of State permits its establishment (Clause
88), and subject to guidance issued by him (Clause 93). The overall
impact is underwhelming.
— The protection of the environment
is apparently discharged by the requirement for the Countryside
Agency to consult an Assembly before designating a new National
Park; before creating any new long distance foot paths, cycle
tracks or bridle ways; and before designating any new areas of
outstanding natural beauty (Schedule 9). English Nature is required
to consult an Assembly before designating a new site of special
scientific interest, but as the Government has since announced
that English Nature is going to be abolished this is of limited
use.
Greater say over the key issues?
FAILED
12. It would be fair to say that the three
Northern regions for which Assemblies were principally devised
have lagged behind "Southern England" (however defined)
in terms of economic performance. Research has indicated that
employers and public authorities in those regions have identified
four key issues to enable them to catch up.
(a) Transport
13. An Assembly will have no powers over
transport infrastructure. This is in direct contradiction to assurances
given by John Prescott MP and Nick Raynsford MP to regional newspapers
prior to the publication of the Draft Bill[21]
What is left is worthless.
— Clause 115 expressly prohibits an
Assembly from giving financial assistance for goods transport
by rail.
— Clause 116 expressly prohibits an
Assembly from operating rail franchises.
— Clause 117 merely requires the Assembly
to be given copies of all local transport plans.
— Clause 118 merely requires the Assembly
to be given notice of proposed roadworks which straddle local
authority boundaries.
(b) Economic regeneration
14. There are mixed views as to the merit
of Regional Development Agencies (RDAs) in practice, but it is
accepted that their one great advantage is that they are led by
outside businessmen and are therefore notionally free from partisan
pressures.
15. The Draft Bill purports to pass control
of the relevant RDA to a democratic body. However, there is little
doubt as to who in practice remains in ultimate control: the Secretary
of State. The result will be a confused mess with the RDA caught
trying to serve two masters at once. It is doubtful whether any
businessman would bother to accept appointment in these circumstances.
— The Assembly will appoint the members
of its RDA, but only after consulting the Secretary of State (Schedule
4 para 2 and 3).
— The Assembly will set the regional
economic strategy for its RDA, but it must first consult the Secretary
of State (Schedule 4 para 8).
— The Secretary of State can separately
give directions to the RDA and can override any aspect of RDA
strategy which is inconsistent with national policy (Schedule
4 para 8).
— The Draft Bill contains no reference
to the operation of the Small Business Service (SBS). The Policy
Statement contains a woolly reference to the fact that the SBS
already works closely with RDAs (para 45), which makes it fairly
clear that there will be no change in the structure of this agency.
— The Draft Bill contains no reference
to the distribution of European development funds. The Policy
Statement contains a vague promise that an Assembly would take
over some "administrative functions" (para 49), but
it is clear from the original White Paper (para 4.31) that this
is essentially a book-keeping role without any real say.
(c) Skills
16. In a public debate in Manchester on
22 January 2004, John Prescott MP floated the idea that an Assembly
would be able to "control" local Learning and Skills
Councils (LSCs)[22]
promises further reinforced by statements by himself and Nick
Raynsford MP.[23]
After such a build-up, the results are rather disappointing.
— Clause 119 permits an Assembly to
appoint 5 out of the 16 members of the LSC, but must consult the
Chairman of the LSC (himself appointed by the Secretary of State)
before doing so, and must also follow any guidance given by the
Secretary of State. By no stretch of the imagination does this
amount to "control".
— Clause 120 requires the LSC to consult
with an Assembly. However, the LSC is already required to consult
the RDA, which in theory is going to become an arm of the Assembly,
so it is unclear what this provision achieves.
(d) the Barnett Formula
17. This was another area subject to advance
hints from John Prescott MP[24]where
the Draft Bill fails to satisfy.
— There is no reference in the Draft
Bill or the Policy Statement to the Barnett Formula.
Power to devise own solutions?
FAILED
18. The following aspects remain subject
to a veto or central guidance or other form of control from the
Secretary of State:
— The exercise of Assembly powers (Clause
44).
— The Assembly long-term strategy (Clause
48)—cannot be inconsistent with "national policies".
— The form and content of the Assembly
annual report (Clause 51).
— The manner in which the Assembly
consults stakeholder groups (Clause 53).
— Charges by the Assembly for the provision
of any goods, services or accommodation (Clause 54).
— The establishment and operation of
any trading companies (Clause 55).
— Block grant paid to the Assembly
(Clause 56).
— Additional grant paid to the Assembly
(Clause 57).
— The Assembly Budget on which the
council tax precept is calculated (Clause 63).
— The establishment of a Regional Cultural
Consortium (Clause 88).
— The appointment of the chairman of
a Regional Cultural Consortium (Clause 89).
— The approval of the Regional Cultural
Strategy proposed by the Regional Cultural Consortium (Clause
93).
— The Regional Spatial Strategy (Clause
100)—cannot be inconsistent with "national policies"
(Clause 104).
— The appointment of members to the
Learning and Skills Council (Clause 119).
— The appointment of the chairman and
board of the RDA (Schedule 4).
— The Regional Economic Strategy adopted
by the RDA (Schedule 4)—cannot be inconsistent with "national
policies".
— The route of any new long distance
foot path, cycle track, or bridle way proposed by the Countryside
Agency (Schedule 9).
— The designation of any new area of
outstanding natural beauty proposed by the Countryside Agency
(Schedule 9).
19. There may well be perfectly sensible
reasons why the Secretary of State needs to retain such extensive
powers to guide an Assembly—but the result cannot be described
as an Assembly which has the power to devise its own solutions.
Power to set own priorities?
FAILED
20. An Assembly will remain dependent upon
the Secretary of State for its funding and subject to his direction
in the exercise of its functions:
— Grants will be determined by the
Secretary of State and subject to such conditions as he thinks
fit (Clauses 56 and 57).
— An Assembly may raise funds by a
precept on council tax, but the Secretary of State retains a power
to override its budget (Clause 63).
— An Assembly cannot do anything prohibited
by the Secretary of State and must have regard to any guidance
issued by him and any relevant national policy (Clauses 44, 48,
51, 53, 54 and 55).
21. There are defensible arguments as to
why Whitehall should retain these controls over an Assembly's
budget and expenditure plans—but the result is that an Assembly
cannot be said to be free to set its own priorities.
What would genuine devolution look like?
22. A serious and worthwhile devolved authority
would have four features:
(a) Legitimacy—voters have to think
it matters;
23. Artificial local government entities
do not work. The unhappy experiences of the counties of Avon,
Cleveland, Humberside and even Hereford and Worcestershire demonstrate
this.
24. Previous attempts at devolution broadly
satisfied the legitimacy criterion. Scotland, Wales and Northern
Ireland clearly have distinct cultural identities, and while these
are not uniform, the differences between inhabitants are seen
as less significant than those between inhabitants and the rest
of the UK (not least by the inhabitants themselves). Greater London
is a less clear cut case.
25. The current eight non-London regions
have no historical or sentimental legitimacy. They are the accidental
results of an internal administrative reform in 1994 to co-ordinate
the delivery of services by several (but not all) Whitehall departments.
Their boundaries apparently derive from civil defence planning
to handle a German invasion during the Second World War.
26. The logical consequence of the Government's
devolution policy would be to introduce an English Parliament,
which may not be an attractive proposition for the Government
politically, but perhaps they should have thought of that before
they started. From a structural point of view an English Parliament
would have dominant power within whatever is left of the UK. Without
a very robust form of federalism the scope for deadlock between
an English Government and a UK Government elected on Scottish
and Welsh votes is unappealing.
27. There is however a straightforward solution
to this problem, because there already exist local entities with
legitimacy. They are called county councils and unitary authorities.
(b) Effectiveness—it has to have powers
which matter;
28. The Draft Bill contains a variety of
"soft powers" such as those concerning regional cultural
consortia or environmental consultation. There is no reason why
they could not be discharged just as adequately at a county/unitary
level.
29. "Hard powers" relating to
economic regeneration are handled already by the RDAs, which in
practice co-operate sensibly with existing local authorities,
who have their representatives on their boards. We have an open
mind on the matter of Learning and Skills Councils—perhaps
these should be transferred to the RDAs outright?
30. Dismantling the Department for Transport's
monopoly grip on infrastructure would be an obvious benefit of
devolution. Why should the extension of the Manchester Metro to
Oldham and Rochdale be subject to a veto by a Secretary of State
in Whitehall? Why are local authorities in the North East unable
to ensure that the A1 has dual lanes throughout their areas?
(c) Independence—it has to be treated
as if it matters;
31. The Comprehensive Performance Assessment
process has usefully highlighted deficiencies in services throughout
local government (incidentally, consistently awarding the highest
marks to county councils). But this is accompanied by a raft of
imposed targets which cramp discretion. The Whitehall attitude
is one of "earned freedom" where a council obtains discretion
once it has passed its targets—rather like a child being
promised ice cream provided he has eaten up his greens.
32. The greatest incentive to attract credible,
high quality people to become involved in local government would
be the prospect of actually being allowed to run something. Not
everyone wants to be Prime Minister; nobody wants to waste their
own time as someone else's tea boy. Abolition of central government's
rate-capping powers would be a real act of devolution.
33. The most effective restraint on a local
authority is the need to seek re-election. Annual rolling elections
for county councils and unitary authorities (already pre-figured
in recent boundary changes) would achieve more to improve accountability
than the invention of new artificial regional bodies.
34. Any government will rightly wish to exercise
a measure of control over local government expenditure. The Treasury
should retain a long-stop control of borrowing, so that an extravagant
authority which could not justify its projects commercially would
be forced to go to its voters to fund its expenditure.
35. The Government is independently proposing
in the 2004 Spending Review to boost the funding available to
RDAs. They could take on a role as regional venture capital houses,
backing liberated local authorities with capital and outside commercial
experience. If the Government lacks confidence in the ability
of RDAs to fulfil this role, why is it escalating their funding?
(d) Cost neutrality
36. One of the arguments for devolution
is that it improves the quality of public services and decision-making
by following the modern business practice of reducing hierarchical
structures and passing initiative to the lowest effective levels.
Any devolution must be accompanied by a thorough and genuine attempt
to cut administration costs and eliminate wasteful duplication
and confused delivery.
37. Previous attempts at devolution have
failed on this count. The costs for the Scottish Parliament, the
National Assembly for Wales and the Greater London Authority are
all considerably greater than were predicted prior to their establishment—before
one takes into account their adventures in modern architecture.
Promised streamlining in bureaucracy has not occurred.
38. Independent research by Michael Chisholm
of the University of Cambridge leads to the conclusion that abolishing
county councils in the North East would cost £88.1 million[25]—without
adding a single nurse, doctor or teacher (or for that matter,
cultural consortium).
39. It might be argued that a county council
or unitary authority is too small to discharge increased responsibilities.
We do not believe that this is correct, although there may be
scope for re-absorbing some of the unitary authorities into county
councils. The real issue involving size is that certain infrastructure
projects will of their nature extend beyond the boundaries of
a single local authority. But in such a case the relevant local
authorities would co-operate and form a joint venture.
SUMMARY
40. Credible devolution would therefore:
— Give powers to the existing local
authorities and not waste money establishing new and artificial
entities.
— Transfer powers currently exercised
by the Highways Agency downwards to local authorities.
— Permit local authorities to operate
rail franchises.
— Abolish the Whitehall directed system
of targets and "earned freedom", but retain the rigorous
external audit by the NAO.
— Abolish rate-capping, but retain
a Treasury veto over borrowing.
— Use the RDAs as independent venture
capital houses to assist where required in supporting local authority
infrastructure projects—but they would have to remain outside
political control by local bodies to maintain their independence.
— Possibly move towards uniform annual
elections for local authorities.
— Be accompanied by the elimination
of wasteful bureaucracy at the Whitehall level.
21 See for example the Newcastle Journal dated
8 May 2004. Back
22
See Manchester Evening News dated 23 January 2004. Back
23
See Newcastle Journal dated 8 May 2004 and 20 May 2004. Back
24
See for example Yorkshire Post dated 22 January 2004. Back
25
Chisholm "Reorganising Two-tier Local Government for Regional
Assemblies", Public Money & Management, April
2004. Chisholm's estimate of a cost of £91 per inhabitant
has been scaled up for a population of 307,190 in Northumberland
and 493,470 in County Durham. Back
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