Devolution: the next five years and beyond Contents


93.Devolution to London, which occurred in 2000, has been a success. The Department for Communities and Local Government said it “has succeeded in improving policy outcomes across a number of different areas”.230 The Chair of the London Assembly, Darren Johnson, extolled London’s track record, saying it has been a “phenomenal success”.231 Our witnesses were not particularly concerned by the fact that the Devolution Bill did not apply to London, seeing it as a means of allowing other places to catch up. However, they all mentioned the current negotiations with the Government for new powers relating, for example, to skills and health.232 The Chief Executive of London Councils, John O’Brien, described how, with the Greater London Authority, the boroughs had submitted a set of proposals for further devolution and public service reform to the Government by the 4 September deadline.233 He said that, rather than a “big bang further London deal”, there would be an important piece of public service reform.234 The Secretary of State for Communities and Local Government said he was “not only open to, but in regular discussion with the leaders of London […] about what further powers can be given to what is clearly a very successful city”.235

Fiscal devolution

94.We heard about the challenges faced by London. The Deputy Mayor of London, Sir Edward Lister, said that London’s population was growing at a rate of just under 100,000 people a year and that “a lot is needed in London, in infrastructure and other things” to sustain that level of growth.236 The Chief Executive of London Councils said:

Clearly the level of growth in London does demand a sustainable model for investing to support that growth in terms of physical growth and hard infrastructure, but also soft infrastructure—things like school places […] It also requires reforming public services in a way that will make them fit for the purpose of the challenge we face around care and health integration.237

Our witnesses pointed to several reasons why fiscal devolution to the capital was necessary. Sir Edward Lister said that:

[Housing and infrastructure is what] we desperately need money for and the bit that we need to be able borrow and have certainty about. If we have certainty on funding, we can sort these things out, but when we are operating on penny packets of money from Government and in relatively short timelines, we can never assemble the kind of cash that we are going to need in order to grow the city. My argument is all about fiscal devolution for capital, not for revenue purposes.238

95.Our other witnesses and many of the written submissions we received also called for the devolution of greater fiscal powers to London and for the recommendations of the London Finance Commission (‘the Commission’) to be implemented.239 The Commission, which was established in July 2012 by the Mayor of London, concluded that, by comparison with other international cities, London had little control over its finances. The Commission recommended that the Greater London Authority and the boroughs should be allowed to borrow against their assets and income and that London should be allowed to design a property tax regime for its unique circumstances. Our predecessors considered the Commission’s report as part of its 2013-14 inquiry on fiscal devolution and came down strongly in favour of devolution of funds to cities and city regions.240 Our witnesses welcomed the Government’s announcement that business rates would be fully devolved. The Chief Executive of London Councils commented that a very large amount of responsibility could potentially accrue to London but also noted the need to address equalisation with the rest of the country.241 Sir Edward Lister said that the certainty of the funding stream produced by business rates would be advantageous for large infrastructure projects in the future.242

96.Devolution to London was successful because it enabled the city to meet the key challenges it faced in 2000. Sixteen years on, London faces a series of additional challenges including housing and skills, which are not addressed by the existing devolution framework. London is therefore not only ready for further devolution, but urgently needs it. In keeping with the recommendations of our predecessors, we believe fiscal devolution is essential to London’s continuing success. The scale of growth of service demand alone in London requires significant investment in infrastructure for which fiscal devolution is required. We also heard about the importance of London’s continuing success for the national economy and that “the emergence of a Northern Powerhouse, and stronger cities elsewhere in the UK, will only be achieved by continued investment in the capital”.243

Subregional devolution

97.John O’Brien said London’s governance structure required “a route […] for devolution and delegations that work for groupings of authorities”.244 He added that:

Some pieces of reform and devolution need to happen at a smaller scale. Some of the proposals around health or getting people back into work clearly are going to operate at a lower geographical scale than the whole of pan-London, and some of them will happen locally.245

Indeed, groupings of London boroughs, for example the ‘South London Partnership’, have put forward a number of plans for subregional devolution within London (to which the Mayor of London is a co-signatory), although they have not been formally published. Their proposals include devolving power to commission employment support to groups of boroughs; devolving small business support to redesigning probation, court services, youth offending and community rehabilitation; pooling of health, social care and public health budgets. Sir Edward Lister said that devolution of health in London was particularly far advanced and that, based around clusters of hospitals, it would be subregional by nature.246 He said that he was “quite comfortable with having, regional, subregional and local”.247 We also heard that the level to which things would be devolved would be approached case-by-case with a view to what made most sense: for example, John O’ Brien said:

Skills commissioning is going to work formally at a pan-London level, but informed by the intelligence that comes from groupings of boroughs and subregional economies. Employment support—getting people furthest from the labour market back into work—probably is going to be for subregional groupings of boroughs. The health propositions that we have been working on jointly operate at all of those different spatial levels.248

He concluded by adding “London has to recognise that complexity—there is no way out of it—and needs to adapt the way it manages that in that context”.249 The reality of London was its arrangements would be “messier and more complex” than other smaller urban areas.250 We agree that, depending on what makes most sense, certain types of reform and devolution in London will and should happen at regional or subregional level and that arrangements will be more complicated than in other areas. However, there is a real risk of confusion for the public, and indeed for officers, in having three levels of governance and particular efforts should be given to avoiding such confusion.

The Mayor of London and the London Assembly

98.Our London witnesses were enthusiastic about the impact the Mayor of London has had on the city. We heard that the mayoralty provides a “strong voice for London”,251 and “an ambassador”,252 was an “advantage and an asset [with] convening power and visibility”253 which also had had the ability to take on opponents and bring in reforms like the Congestion Charge and the low emission zone.254 The Chair of the London Assembly said that London’s size also played a role in the success of the London Mayor, saying:

London has been big enough as a political entity to really make an impact. There are economies of scale on a strategic level. […] Having one for Greater London as a whole means that there are the economies of scale to lever in investment, negotiate with Government and to co-ordinate.255

99.The evidence we heard accorded with our predecessors’ conclusions about the office of Mayor of London: they described the operation of the London Assembly and the division of powers between it and the Mayor in 2013 and said it was a “local government success story”.256

100.London’s governance arrangements are different from those in the Devolution Bill which, as discussed in chapter 5, sets out a ‘first among equals’ mayoral model, with overview and scrutiny committees made up of councillors from the constituent councils. The London Assembly, on the other hand, is a separate body with a democratic mandate to scrutinise the Mayor on behalf of all Londoners. Perhaps not surprisingly, the London Assembly’s Chair described it as a crucial formal check and balance on the London Mayor and scrutineer of the forward plan.257 He said that the London Assembly had genuinely added value to the governance of London and that, for example, during the Olympics “it had helped put the pressure on—having a very high profile body like the Assembly, which can get on the evening news, asking these awkward questions”.258 Sir Edward Lister also had praise for the London Assembly, saying that it worked and that he was “totally supportive of it”.259 Sir Edward thought London’s scrutiny arrangements would be sufficient to cope with more devolved powers,260 but Darren Johnson identified various ways in which these arrangements could be strengthened: call-in powers over mayoral decisions, the Mayor’s Police and Crime Plan made subject to veto, the power to reject mayoral appointments and the power to summon witnesses from other public agencies.261 John O’Brien also suggested that scrutiny arrangements in the London Boroughs and the London Assembly as a whole might need to be revisited following receipt of more devolved powers.262 But we heard that scrutiny was not well developed and was being carried out through boroughs’ individual arrangements.263

101.Both the current Mayor of London and his predecessor have been judged to be successful in their role. It remains to be seen whether elected mayors for combined authorities are similarly successful. Not having the same profile, they are unlikely to enjoy the same level of influence and leverage as the Mayor of London. However, the office does demonstrate what an elected mayor can do for an area. In keeping with our predecessors,264 we are persuaded that the London Assembly’s scrutiny of the Mayor is effective, but recommend that it is given the power to call-in mayoral decisions, veto the Police and Crime Plan and, if necessary, reject the Mayor’s appointment of a Deputy Mayor. We further recommend that, as London acquires more devolved powers, the arrangements are kept under review.

102.Darren Johnson noted that the London Assembly was “comparatively well resourced, compared with the London boroughs”.265 Indeed, adequate resourcing is an issue which was cited as a potential problem for overview and scrutiny committees in combined authorities. The GLA Conservatives believed there were other problems with the scrutiny arrangements set out in the Devolution Bill. They said that the proposed model in the Devolution Bill had nothing like the London Assembly’s level of scrutiny or expertise and that:

The assembly or city-council model is much better at scrutinising at a city-wide level than a single scrutiny committee drawn from the respective component parts.

The London Assembly, amongst other things, produces between 30-40 policy reports every year; hosts 11 Plenary Meetings each year to hold senior public servants to account; and scrutinises the Mayor of London at 11 Mayor’s Question Time events that are televised and open to the public (often more than 100 are in attendance). A single scrutiny committee could not possible have this level of influence or power.266

We believe that the overview and scrutiny committees in the Devolution Bill should be a framework for more robust arrangements developed by local areas as a result of active discussions at local level. In developing their own scrutiny arrangements, local areas might wish to adapt or adopt some of the methods used by the London Assembly, such as broadcasting question times and public meetings, to hold the Mayor of London and Greater London Authority to account.

230 Department for Communities and Local Government (DEV 027) para 32

231 Q195 [Mr D Johnson]

232 Q192 [Mr D Johnson, Sir Edward Lister, Mr J O’Brien]

233 Q192 [Mr J O’Brien]

234 Q192 [Mr J O’Brien]

235 Q292

236 Q195 [Sir Edward Lister]

237 Q195 [Mr J O’Brien]

238 Q197

239 See, for example, Core Cities (DEV 014) para 5.2, the Centre for Cities (DEV 031), the London Chamber of Commerce and Industry (DEV 015) para 8 and the Mayor of London (DEV 042)

240 Communities and Local Government Committee, First Report of Session 2014-15, Devolution in England: the case for local government, HC 503

241 Q198 [Mr J O’Brien]

242 Q198 [Sir Edward Lister]

243 Mayor of London [DEV 042] para 6

244 Q192

245 Q200 [Mr J O’Brien]

246 Q200 [Sir Edward Lister]

247 Q200 [Sir Edward Lister]

248 Q195

249 Q195

250 Q200

251 Q202

252 Q202

253 Q203

254 Q209

255 Q209

257 Q204

258 Q205

259 Q207

260 Q211

261 Q211

262 Q211

263 Q212

264 Communities and Local Government Committee, Fourth Report of Session 2013–14, Post-legislative scrutiny of the Greater London Authority Act 2007 and the London Assembly, HC 213

265 Q205

266 GLA Conservatives (DEV 005)

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Prepared 29 January 2016