Devolution: the next five years and beyond Contents

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3Agreed deals

Greater Manchester

28.The Greater Manchester Agreement52 was concluded in November 2014 with health and other additional powers being agreed in February,53 July54 and November 2015.55 The extent of the deal and the interest and attention it generated made us want to look at whether it was a model for other areas.

29.The Centre for Cities argued that the Greater Manchester deal was a good model for other city devolution deals, especially for large regions, in that it “set out clear terms for the type of governance arrangements expected, and which of the powers that underpin successful city economies could be devolved from central government”.56 The New Local Government Network (NLGN) said that it appeared to provide a “de facto model for other cities”.57 However, both organisations were cautious about its applicability to other areas; the former saying it could “not be easily lifted and dropped on to other city regions, where the physical and economic geography may differ”58 and the latter saying the Government could not “simply roll out the same model everywhere”.59 Professor Copus of De Montfort University also struck a note of caution when he said that “in the spirit of devolution it is dangerous to look for a model”60 and the evidence we received warned many times against a “one-size-fits-all” approach.61

30.Many of our witnesses emphasised that the Greater Manchester devolution deal was the product of the city’s unique circumstances and was, therefore, not a model for other areas.62 The most significant difference compared to other places was the long history of joint working between the ten Greater Manchester authorities. The Greater Manchester Combined Authority said:

The ten Greater Manchester district councils have a long and unrivalled history of collaboration, characterised by consistent leadership and hard work over many years. Following the abolition of the Greater Manchester Council in the 1980s, the district councils established the Association of Greater Manchester Authorities, a non-statutory body, with the aim of securing collaboration and joint-working on pan-GM issues. In April 2011, the Greater Manchester Combined Authority was established to provide strong and effective governance, with responsibilities and powers covering the transport-related functions previously administered by the Greater Manchester Integrated Transport Authority and a remit in relation to economic development and regeneration.63

31.Joint working is bound to have been facilitated by the compact geography and structure of local government in the city region. South East England Councils said “The ten Manchester authorities have equal status and powers as metropolitan districts, cover a relatively small area and have one ‘core city’ as their major economic driver”.64 The NLGN agreed, saying “Manchester benefits from an unusually coherent geography, clear agglomeration effects in the city region’s urban core, councils that are all of the same tier and a very cohesive political culture”.65 Witnesses also mentioned the city’s “success story in political leadership” and its “prioritisation by particularly the Chancellor of the Exchequer”.66 We also heard that Greater Manchester’s functional economic geography,67 which aligns with the city’s boundaries, distinguishes it from other areas. Devolution to a functional economic area is the Government’s favoured approach68 and we support this. Where the objective of a deal is economic growth, devolution should be to areas whose boundaries follow the local economic geography, while recognising the challenges this can pose to established local government arrangements.

32.We also heard that Greater Manchester Combined Authority had a particularly strong vision and set of ambitions for the city and its residents, including a focus on “a game-changing investment in growth” and “taking demand out of the system through better joined-up public services”.69 The Centre for Public Scrutiny (CfPS) said “the development of a strong proposition to put to Government on devolution would have been far less of a challenge than elsewhere”.70

33.Alexandra Jones, the Chief Executive of the Centre for Cities, suggested that there were “strong lessons” for other places from Greater Manchester’s experience of devolution “in the way they have done things—the way they have learned to work together and establish trust”.71 The CfPS also identified some other ‘lessons’:

Devolution is a process, not an event. The continual nature of the discussions in Manchester over the devolution of more powers over time is something we think reflects the reality across England, that devolution will be a continually running process.

Devolution requires clarity on *why* devolution is a necessity. Manchester is unique in having long-standing subregional working arrangements. This allowed it to take a compelling, unified vision to Government about the future of the area.72

34.The Greater Manchester deal provides a prime example of the type of governance arrangements expected by the Government and the powers that might be devolved. As it is a product of the particular circumstances of that city which are unlikely to be reproduced in other areas in all their aspects, this deal should not be assumed to be a model for other areas pursuing devolution, even cities. However, other areas pursuing deals may wish to reflect upon and cultivate Manchester’s characteristics: a history of joint working between authorities, trust between leaders, acceptance that devolution will take place gradually and proactively presenting Government with ideas and solutions for their city.

Health devolution

35.The announcement in November 2014 of devolution of health and social care to Greater Manchester, and the subsequent signing of the Memorandum of Understanding73 by the Greater Manchester Combined Authority, the Government, NHS England and 12 Clinical Commissioning Groups, have attracted a great deal of attention. We received convincing evidence that, as with the Greater Manchester devolution deal, health devolution to the city (which we discuss in further detail in chapter 6) was a product of its unique circumstances. The British Medical Association (BMA) said that “Few, if any, of the other areas which might seek devolved health and social care settlements have such a long history of collaboration and partnership working between local authorities”.74 In addition, the Local Government Association pointed out that the broad health challenges facing the 10 local authority areas were similar, making the agreement of key strategic health and wellbeing priorities easier, and that there was a “high degree of congruence between the Greater Manchester Combined Authority and the health economy, with the majority of patient flows occurring within the Greater Manchester area”.75 Rob Webster, the Chief Executive of the NHS Confederation, said:

Clearly it provides some themes and learning, but it is not a model for everywhere. […] the Greater Manchester organisation has been working together since 1986. The footprints are different in terms of service from other places. Relationships are different. The financial and population issues are different.76

36.The BMA and NHS Providers said, respectively, that “learning from the Greater Manchester deal could be considered by other areas”77 and that it was a “valuable example” of how health devolution could work.78 Due to the city’s unique circumstances, and also the fact that the population, their health challenges and the health economy are different from other places, health devolution in Greater Manchester is not a model for other areas. What is happening in Greater Manchester is, however, something for other areas to learn from.

Other places: how bespoke is devolution?

37.During the course of the inquiry, devolution deals have been agreed with the North-East, Tees Valley, the West Midlands, Liverpool and a further deal with Sheffield. Although the Government has frequently articulated its commitment to bespoke devolution,79 the deals concluded share a number of common elements; for example, the powers to be devolved and the requirement for an elected mayor (see table). However, there are some bespoke elements appearing in individual deals, for example ultra-fast broadband in the North East. We found the extent of the similarities surprising.80

Table 1

		Greater Manchester	Sheffield	North-East	Tees Valley	Liverpool	West Midlands	Cornwall	West Yorkshire
Common elements
Further education and skills	Redesign post-16 FE system	Devolved	Devolved	Devolved		Devolved	Under discussion	Devolved	Devolved
	Apprenticeship Grant for Employers	Devolved	Devolved						Devolved
	Adult skills funding by 2018-19	Under discussion	Devolved	Devolved	Devolved	Devolved	Devolved
Transport	Devolved, consolidated transport budget	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved	Under discussion
	Bus franchising	Devolved	Devolved	Devolved	Possible	Devolved	Devolved	Devolved
	Joint working with Highways England and Network Rail	Devolved	Devolved	Devolved			Devolved		Devolved
	Local roads network		Devolved			Devolved	Devolved	Cornwall CC1
	Smart ticketing	Devolved	Devolved	Devolved		Devolved	Devolved	Devolved	Devolved
Business support	Growth Hub to align local and national business support services	Devolved	Devolved	Devolved	Devolved	Devolved		Devolved	Devolved
	Joint working with UKTI	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved		Devolved
	Devolved approach to business support services from 2017	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved
Employment support	Joint commissioning of support for harder to help claimants	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved
	Possible full joint commissioning from 2017	Devolved	Devolved						Devolved
Land and housing	Public land commission	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved	Devolved
	Housing Loan Fund	Devolved	Under discussion		Under discussion	Under discussion	Under discussion
	Compulsory purchase orders	Devolved		Devolved		Devolved	Devolved	Cornwall CC
	Mayoral Development Corporation	Devolved	Devolved		Devolved	Devolved	Under discussion
	Planning call-in powers		Devolved			Devolved		Cornwall CC
	Statutory spatial strategy	Devolved	Devolved	Devolved		Devolved		Cornwall CC
Health and social care	Integration	Devolved
	Commission / business plan for integration			Devolved				Devolved
Policing	Mayor to become Police and Crime Commissioner	Devolved					Under discussion
Fire service	Mayor to take over	Devolved					Under discussion	Cornwall CC
EU structural funds	Intermediate body	Devolved	Under discussion	Devolved	Under discussion	Devolved	Under discussion	Devolved
Finance	Investment fund (per year)	£30 m	£30 m	£30 m	£15 m	£30 m	£36.5 m
	Single funding pot	Devolved	Devolved	Devolved	Possible	Devolved	Devolved
	Retention of 100 per cent business rates growth	Devolved	Devolved	Devolved	Devolved		Devolved

1 Denotes power held by Cornwall Council in its capacity as a unitary authority
Source: House of Commons Library analysis

38.Cllr Jeffrey, Leader of Redcar and Cleveland Borough Council, said about Tees Valley’s experience of negotiating the content of a deal that:

I suppose it is wrong to say we came across difficulties, but it was not easy to get in new stuff, so anything that had not been in other deals was very difficult to do. We talk about having a bespoke deal for the Tees Valley, but just how bespoke it is at the end of the day I do not know, because our deal includes a lot of things that have already been in other places. Indeed, that was something that came back to us: has another area done it? Has it been done elsewhere?81

She said that “we had some very specific things we wanted to do” but that it had been “difficult” to agree devolution for 16-to-18 further education and funding for culture.82 When we asked our Greater Manchester witnesses whether they got everything they wanted in the deal, Cllr Kieran Quinn, Leader of Tameside Metropolitan Borough Council, said “I don’t think there was any secret that our ambitions were much larger than the deal itself”.83 The witnesses indicated that they would have liked more freedom to work on criminal justice, fiscal and education powers.84 It has been observed that devolution in England looks “like a menu with specials: certain options are available to all areas, but at the same time each area has been offered a few items that mark them out from their counterparts”.85 These include the Tees Valley working with Arts Council England to examine how its funding for culture could support Tees Valley’s economic growth and Cornwall working with the Government to support the development of deep geothermal energy resources.

39.The Minister for Local Growth and the Northern Powerhouse, James Wharton MP, denied that the Government was prescribing what should be in devolution deals but also acknowledged that “It is easier to work through things that have been agreed in other areas, where you can look at an example and say ‘That is how it is being done there’”.86 Later on in the discussion, he said “The reality is that a lot of deals have commonality”.87 However, at various points, he also emphasised that the Government was “keen not to force areas to have an identikit approach”, the need for “a genuinely bottom-up process where different areas will ask for different things” and “imagination and ambition, and different things to come in”.88

40.We appreciate that there will be areas of commonality between deals as certain powers, for example transport and business support, are natural candidates for devolution to local areas because of their role in driving economic growth. However, we have heard that areas are making imaginative and ambitious requests for specific powers only to have them turned down, which leads us to question the commitment across Government Departments to truly bespoke devolution (we consider this issue further in paragraphs 41-45). In each deal, we would expect to see more than “a few items” that are not common to other deals being devolved and are devised by an area as a unique response to its geography, economy or social needs. In addition, we would expect to see that commonly devolved powers reflect and respond to the geography, economy and social needs of the local area to which they pertain.

General observations

Commitment to devolution across Government Departments

41.While we do not doubt the Treasury’s and the Department for Communities and Local Government’s commitment to devolution, the evidence we received suggested that some Government Departments are less keen to devolve powers to local areas. Cllr Quinn’s impression was that the Chancellor had “managed to bully, cajole or persuade lots of his other ministerial colleagues to give up some of their powers”.89 Sarah Ayres, University of Bristol, who based her written evidence on interviews she conducted in 2012 and 2015 with Government officials working on decentralisation, said “there is a perception in Whitehall that the big delivery departments—health, education and welfare—remain quietly cautious about decentralising budgets and functions locally”.90 James Wharton said that every Department recognised the importance of devolution, with the only challenge being “finding workable ways to deliver the asks that come forward”.91

42.During our visit to Working Well, a welfare to work programme in Manchester, co-commissioned with the Department for Work and Pensions (DWP), staff told us that the DWP believed that it was easier to run welfare to work nationally and the ‘joint bit’ of joint commissioning was missing. They also said that it was acting as a brake on what they wanted to do. Although still in its early stages, Working Well is, however, achieving high levels of success in getting its clients into work. When we asked the Minister for Employment, Rt Hon Priti Patel MP, whether she would like local areas to take the lead on future programmes, she said “We will work with them, obviously, in terms of co-design, commissioning and bringing together many of the potential services people need”92 and, later, that “It is working together. It is working in partnership”.93 There is an obvious difference between joint working and devolution, namely that devolution involves a transfer of responsibilities from, in this case, the DWP to a combined or local authority. With ‘joint working’, there is a risk that Departments will carry on without changing their practices. Devolution, on the other hand, leaves decision-making in the hands of local politicians, with accountability to local voters. We recommend that, where the terms ‘joint working’, ‘joint commissioning’ and ‘co-commissioning’ appear in a deal, they are challenged and defined in practical terms. In such cases, we would expect to see local areas actively involved in designing the project, performance management and its integration with existing local services. Joint working on or co-commissioning of services should be considered as a first step towards eventual fuller devolution.

43.With regards to other Government Departments, we heard from Cllr Derbyshire, Leader of Stockport Metropolitan Borough Council, that education is the “most frustrating” area.94 Her experience echoed Cllr Jeffrey’s comment that it was very difficult to get devolution of 16-to-18 further education in the Tees Valley deal95 and, of course, the evidence from Sarah Ayres above. Given that the current policy trend is for reduced involvement of local authorities in education, it is perhaps unrealistic to expect much commitment from the Department for Education to devolution.

44.The Devolution Bill is just one part of enabling devolution. There also needs to be an enthusiasm for it across all Government Departments and a commitment to it as the ‘default position’, resulting in the devolution of substantial powers. Devolution should be as of right, not subject to the fluctuating enthusiasm of central government. The Devolution Bill should be seen as a first step towards a more comprehensive devolution framework for the whole of local government, covering significant spending and tax raising powers. Without this, economic growth, real public service reform, service integration, or any of the other objectives cited for devolution, will not be realised.

45.We would like to see a culture of devolution embedded in all Government Departments. The annual report on devolution, which is required under the Devolution Bill, should be prepared with input from a wide range of Departments, such as the DWP, the Department of Health, the Department for Education and the Department for Business, Innovation and Skills. A section of this report, left unedited by Government, should comprise local authorities’ reports back on the Government’s commitment to devolution and rating their experience of different Departments, in terms of what the Department was like to work with and whether it fulfilled its part of the deal. The Committee will use the report as a means of scrutinising the Government, and it may also be of use to other stakeholders in holding the Government to account.

Government capacity

46.After the 4 September 2015 deadline for devolution proposals, the Secretary of State for Communities and Local Government announced that “38 areas have submitted proposals for devolved powers and budgets. We will work with every area over the coming months to negotiate transformational devolution deals”.96 Although an analysis of city deals, the evidence from the Centre for Urban and Economic Development Studies said that central government has found it “challenging from an institutional and individual capacity perspective—despite the creation of a specialist policy unit—to conduct simultaneous and complex negotiations with a large number of cities and city regions”.97

47.By the time we came to take oral evidence, witnesses were able to comment on the progress of devolution deals. Ed Cox, the Director of IPPR North, said “The big problem we have seen in the deal-making process at the moment is that local authorities are expected to have bilateral conversations with lots of different departments” and said there should be a “cross-departmental team with which you can have a single conversation”.98 He also said:

Some Departments then renege when they hear what other Departments are doing. The Treasury holds the final veto on virtually anything that might have taken a long time to decide.99

When we asked the Minister about this, we were told that the Cities and Local Growth Unit was “cross-cutting across a lot of Departments” and took on a “large part of that coordinating work”.100 He said that:

In some of the deals, the Treasury has been a lead Department in terms of pulling it together, but in other deals, DCLG is very much taking on the role of seeing how we can get all the different pieces to add up. Because different areas ask for different packages, the challenge is that you cannot say, “This will always be the lead Department for every deal,” or, “This will always be the Department with which we work most closely.”101

All contact and communications about a deal with a local area should be made through the Cities and Local Growth Unit, regardless of which Department leads a deal. This would ensure consistency of approach across Government Departments and have the practical advantage of being a single channel of communication for local authorities.

48.Our evidence did not reveal particular concerns about the Government’s current capacity to negotiate deals; for example, in the Mayor of Liverpool’s experience, it had not been a major problem.102 However, witnesses speculated on what might happen when there were more deals under discussion. The Director of Core Cities, Chris Murray, pointed out that the bulk of the work might take place after the deal was agreed, saying “Even once a deal is signed, getting it through the system can still take an awful lot of work”.103 This was a concern for the Mayor of Liverpool, who said:

How we move forward after the deal. How we pull this together and deliver that. That is something that is a bit woolly, a little bit vague because clearly we are going to need more people, for instance, to deliver across the piece.104

The Chief Executive of Wakefield Council, Joanne Roney, said:

I do think if we talk about 30 deals being negotiated with Treasury and a number of those having some degree of fiscal devolution attached to them in various models then there will be a challenge to try to capture this.105

Lord Kerslake, the Chair of the CfPS, doubted it would be possible to agree large numbers of bespoke deals and thought that, in these circumstances, “some form of framework” and “consistency of approach” was needed.106 Ed Cox suggested a “loose core settlement, basic framework or whatever you want to call it about the key elements you might want to have”.107 Chris Murray suggested:

We might take a moderate approach to using the deals that are being done now, say, for example, on skills or housing and understand how that works systemically within Whitehall and across its agencies and within local government. Seeing if we can bank that as a model, so you are not starting everything from scratch every time when you come to negotiate and deliver future deals.108

49.We asked the Secretary of State whether he was confident that his Department had the capacity to negotiate all the deals coming forward. He said there was “a lot of excitement about it” in the Department109 and that “People are seeing it as part of their job and their role to engage in these negotiations”.110 We are not at all convinced that the Government will have the capacity to work through all the bids that have been submitted and also to return to agreed deals to negotiate additional powers and then go on to deal with a ‘second wave’ of devolution proposals at a later date. Extra capacity will also be required to consider the wider, long-term implications of devolution for the Government and how it will change its modus operandi to deal with these. While it appears that the work is currently being adequately resourced, the Government should make an explicit commitment to provide the necessary additional resources as the number of deals under negotiation increases and, as discussed at paragraph 27, work on more extensive devolution develops. A programme of secondments of staff from the Cities and Local Growth Unit to local authorities, and vice versa, would aid sharing of knowledge, best practice and understanding of the different environments.

52 HM Treasury, Greater Manchester Agreement: Devolution to the Greater Manchester Combined Authority and transition to a directly elected mayor, 3 November 2014

53 NHS England, Greater Manchester Health and Social Care Devolution Memorandum of Understanding, 27 February 2015

54 HM Treasury, Further devolution to the Greater Manchester Combined Authority and directly-elected Mayor, 8 July 2015

55 HM Treasury, Spending Review and Autumn Statement Update, Further devolution to the Greater Manchester Combined Authority and directly-elected Mayor, 27 November 2015

56 Centre for Cities (DEV 031)

57 New Local Government Network (DEV 053) para 5

58 Centre for Cities (DEV 031) para 3

59 New Local Government Network (DEV 053) para 10

60 Q25

61 See, for example, Greater Manchester Combined Authority (DEV 009), Chief Economic Development Officers Society and the Association of Directors of Environment, Economy, Planning and Transportation (DEV 013) para 12, Core Cities (DEV 014) para 1.3, British Property Federation (DEV 028) para 6

62 See, for example, Centre for Public Scrutiny (DEV 041), County Councils Network (DEV 052), South East England Councils (DEV 026), Core Cities (DEV 014)

63 Greater Manchester Combined Authority (DEV 009)

64 South East England Councils (DEV 026) para 3.2

65 New Local Government Network (DEV 053) para 8

66 Q25 [Professor C Copus]

67 City of Wakefield Metropolitan Council (DEV 010) para 1.6 and County Councils Network (DEV 052)

68 Department for Communities and Local Government (DEV 027) para 7c

69 Greater Manchester Combined Authority (DEV 009)

70 Centre for Public Scrutiny (DEV 041)

71 Q25

72 Centre for Public Scrutiny (DEV 041)

73 NHS England, Greater Manchester Health and Social Care Devolution Memorandum of Understanding, 27 February 2015

74 British Medical Association (DEV 003) para 5

75 Local Government Association (DEV 021) para 5.3

76 Q111

77 British Medical Association (DEV 003) para 5

78 NHS Providers (DEV 046) para 2

79 See, for example, HC Deb, 14 October 2015, col 329 [Commons Chamber]

80 “Exclusive interview: Clark promises bespoke deals amid ‘big push’ on devolution”, Local Government Chronicle, 20 May 2015

81 Q167

82 Q168

83 Q56

84 Q56 [Mr T Lloyd, Cllr K Quinn, Cllr S Derbyshire]

85 House of Commons Library, Second reading blog, Devolution deals and the powers offered to localities: a menu with specials?, 9 September 2015

86 Q274

87 Q275

88 Q274

89 Q56

90 Sarah Ayres (DEV 006) para 2.2

91 Q269

92 Q221

93 Q222

94 Q56

95 Q168

96 HC Deb, 14 September 2015, col 739 [Commons Chamber]

97 Centre for Urban and Economic Development Studies (DEV 023) para 2.9

98 Q171

99 Q171

100 Q266

101 Q266

102 Q87 [Mayor of Liverpool]

103 Q87 [Mr C Murray]

104 Q86

105 Q87 [Ms J Roney]

106 Q172

107 Q171

108 Q83

109 Q277

110 Q278

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© Parliamentary copyright 2015

Prepared 29 January 2016