In December 2022, the Labour Party published a new report which promised to decentralise political power in the UK by putting “the right powers in the right places”. Dr Charlotte Hoole and Dr Matt Lyons evaluate how Labour’s proposals differ from the current system and what it could mean for the West Midlands.
In December 2022, the Labour Party published a new report: A New Britain: Renewing our Democracy and Rebuilding our Economy promising “the biggest ever transfer of political power out of Westminster and into the towns, cities, and nations of the UK”. The report was produced by The Commission on the UK’s Future, an organisation chaired by former Prime Minister Gordon Brown, and provides 40 recommendations across a range of themes covering various facets of the UK’s constitutional arrangement. In this blog, we attempt to unpack one of the major themes of the report on ‘Devolution within England’ found in Chapter 7. We do this by responding to four key questions:
- What are the main problems with the current system of subnational governance?
- What does the report say on English devolution and what powers are included?
- How do the proposals compare to the current government’s approach to devolution?
- What could this mean for the West Midlands?
What are the main problems with the current system of subnational governance?
Work carried out by the LIPSIT project, involving Professor Simon Collinson and Dr Charlotte Hoole from City-REDI/WMREDI, examines the challenges of the current organisational arrangements of local and regional governance in the UK in the context of ‘levelling-up’. Based on research from 59 interviews across 8 case study UK regions, together with practitioner workshops and statistical analysis, in the final report published in 2021 it was concluded:
“… the UK’s existing system of subnational governance makes what is already a difficult task levelling up – even more difficult. This is because levelling up is a multi-level and cross-sector agenda that requires long-term and strategic interventions at the local level, often requiring close coordination and partnership working by government agencies and the private and third sectors. However, the UK’s subnational system is geared towards short-term and fragmented interventions, with much of it controlled by central departments, often themselves poorly coordinated. In addition, there is a disjointed and unsettled system of spatial governance.” (Newman et al., 2021)
The key challenges highlighted were:
- concern about the way that funding is distributed from the centre;
- problems with the organisation, interaction and separation of the various layers of government in the UK, and with the institutions themselves;
- problems with how subnational institutions interact with local stakeholders.
What does the report say on English devolution?
To bring “the right powers in the right places” the report makes 10 recommendations:
- Towns and cities in England to be given new powers to drive growth.
- A radically reformed suite of place-based, innovation-led R&D programmes, with Mayors and local leaders in all parts of the UK playing a key role in design and delivery.
- The UK Infrastructure Bank should be given an explicit mission to address regional economic inequality in infrastructure provision.
- The British Business Bank should be given a new remit to promote regional economic equality in access to investment capital.
- An economic growth/prosperity plan for every town and city to contribute to shared prosperity, owned by Councils, Mayors, towns and cities working in partnership.
- 50,000 civil service jobs should be transferred out of London, saving at least £200m per year, and more Agency and Public Bodies Headquarters moved out of London.
- Local government should be given greater long-term financial certainty.
- Local government should be given more capacity to generate its own revenue.
- Local leaders should be able to take new powers from the centre.
- There should be “double devolution” that pushes power closer to people.
The powers proposed cover: skills & further education (FE); full employment; transport and infrastructure; energy and the environment; wealth within communities; housing and development; childcare; culture and sport; and accountability and scrutiny.
The devolution of new powers and responsibilities is one which has been called for by regional studies researchers and policy groups. However, the devolution of new responsibilities without new funding could stretch sub-regional governments beyond their institutional capacity. Therefore, there is a tension between more or better decentralisation.
“Like a tennis player cannot play without a suitable racket, subnational governments cannot fulfil their responsibilities or functions if they are not accompanied with the sufficient and adequate funding.” (Rodrígues-Pose & Vidal-Bover, 2023)
Labour criticises the ‘highly fragmented, centralised and inefficient’ nature of skills funding and provision in the UK. They also criticise the recently implemented Local Skills Improvement Plans (LSIPs) as ‘side-lining democratically elected local leadership’ by giving too much weight to employer input. Instead, they propose merging current centrally run skills funding streams and devolving them to the sub-regional level (metro mayors and combined authorities). The logic is that governance at that level will prioritise which qualifications to fund based on local needs, informed by local businesses and universities. They also call for a new UK-wide skills survey with the findings to provide local governments with better data about the skills needs across different sectors at the regional and national levels.
Regarding full employment and good jobs, Labour criticises the move in 2011 to use private contractors to run Job Centres. Their solution is to devolve the administration of Jobcentre Plus into functional economic areas. These centres will be responsible for bringing together information on the local jobs market, integrated into local health services, to create centres of excellence for local and regional labour market information able to inform regional and national policy. The funding will come from a mix of DWP, the UK Shared Prosperity Fund (SPF) and other skills funding. The aim of this is to provide an approach more tailored to the needs of regional labour markets.
In relation to powers over transport and infrastructure, the report is critical of the poor provision of public transport, particularly in the poorest areas. Labour proposes that control and funding over bus services need to be at a local level, with increased use of franchising to bring bus operation into public hands. They suggest local leaders have partnership agreements between local authorities, national rail and rail operators, with rail operators required to collaborate with partners on issues such as integration and smart ticketing. They outline the need for long-term infrastructure budgets.
To address energy and the environment, Labour proposes that some mayors will have the power to set energy efficiency targets for new buildings. There will also be opportunities for electric vehicle points and retrofitting to be funded by consolidated block grant funding. To address housing issues, compulsory purchase orders will be made easier to acquire and local authorities will have increased power to regulate short-term and holiday lets.
How do the proposals compare to the current government’s approach to devolution?
Some of the recommendations are a continuation of the current government’s plans to level up the country, while others are directed to a more fundamental change of the subnational governance system.
- Power is to be devolved to existing mayoral combined authorities and elsewhere to partnerships between local authorities.
- Most of the powers to be devolved, such as those relating to skills, FE and transport, are a continuation of current proposals.
- A move away from competitive bidding processes towards 3-year block grants.
- A commitment to neighbourhood-level devolution.
- Local institutions are to be given rights to take powers from central government.
The continuation of the combined authority/regional partnership model avoids adding a new layer of spatial governance to an already complex subnational governance landscape. However, this setup presents challenges in terms of disputes over boundaries and priorities. The biggest gamechanger is the promise of block funding instead of relying on competitive bid processes, with currently short-term, ad hoc competitive funding being the biggest barrier to building capacity and capability in regions. Another significant change is the changing relationship between central government and regional partnerships with local institutions given the right to take powers away from central government. However, the caveat that local institutions need to demonstrate the capacity and capability to take on these could pose a barrier. On the commitment to neighbourhood-level devolution, more detail is needed to understand how it might work.
It is welcome to see the report proposing a new skills survey and emphasising the devolution of some aspects of skills and training. Previous reports have called for a greater understanding of local skills gaps and conducted research across various fields to better understand the issues facing regional skills. In December 2022, the City-REDI / WMREDI Universities and Regions Forum Policy Briefing suggested devolution could play a key role in addressing some of these issues. Furthermore, as part of an ongoing project with the Creative Industries Policy & Evidence Centre, an upcoming report finds that regionally focused skills approaches can be beneficial to close skills gaps and boost productivity.
On transport and infrastructure, Labour has made bolder and more detailed proposals, notably on bus franchising. Under Labour’s plans, it will be easier for local governments to take control of bus operations allowing for greater control over routes, ticketing, and prices. Broadly, this has the potential to be positive for regions with lower bus prices a significant benefit to low-income households and boosting productivity.
On energy and environment, the report is light on detail for significant topics that need direct policy action. While electric vehicle points are required, and new build housing should be more energy efficient, plans could have gone further – for example, bringing forward the ban on gas boilers for new homes, requirements for rooftop solar or conditions on housing density.
Housing is acutely in a crisis of supply and affordability in some regions and much less so in others. Different regions may want to take different actions to tackle their local issues. Compulsory purchase to develop vacant sites and regulation of holiday lets is a welcome step forward. However, for such a critical issue for many regions, the proposals are too small in scope. Powers over council housing targets funded through consolidated block funding could have been a more significant action to increase the housing supply.
What could this mean for the West Midlands?
Labour’s proposals on devolution could see positive changes in the West Midlands and should be welcomed as steps forward on a journey to greater regional autonomy. For example, powers over training and skills provision would allow the WMCA to respond better to its specific local skills needs and future projections. This is potentially very consequential for the West Midlands with its core industry, manufacturing facing significant turbulence in the coming years. One projection suggests a 40 per cent reduction in manufacturing employment by 2040 alongside a significant increase in demand for digital skills. There are, however, still key powers that will be retained in Westminster. Perhaps the most important example is those relating to housing. In short, poor control of a region’s housing stock can have negative social and economic impacts. While Labour’s proposals on housing appear to be an improvement on the current approach, they do not give local leaders the power to scale up private and social housing developments to the extent the current housing crisis demands, particularly in relation to affordable housing. Shortages of housing over time can negatively affect regional in-migration which in turn can have consequences for growth and productivity uplift. More generally, there is the issue of what happens in the West Midlands beyond the WMCA that requires further attention going forward.
Under current government plans, the West Midlands Combined Authority (WMCA) has been named as a ‘trailblazer’ of a new devolution deal (alongside Greater Manchester) that promises more powers and funding for the region. The West Midlands will benefit from a model that continues to favour a Mayoral model of sub-national governance, and it is important that the WMCA share policy learning with and from other mayoral combined authorities. In the short-term, it would be hoped that new proposals do not slow down the process towards potentially more powers and funding for the WMCA (albeit none have yet been defined or agreed). On the face of it, Labour is offering more devolution with block funding being the most significant departure from the current system for the region. However, with the Chancellor’s Spring Budget 2023 just around the corner, the extent to which Labour’s proposals are different from what the current government’s ‘trailblazer’ devolution deal will offer the region may change.
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WMREDI or the University of Birmingham.