Alice Pugh discusses the West Midland Combined Authority (WMCA) Deeper Devolution Deal and the main issues local institutes face.
This article was written for the Birmingham Economic Review.
The review is produced by City-REDI / WMREDI, the University of Birmingham and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.
For more than a decade there have been several issues with the ability of local institutions to effectively tackle local challenges and opportunities. These issues have accelerated inequalities both inter and intra-regionally and revealed both strengths and weaknesses in the resilience of regional institutions and decision-making structures. The main issues which have plagued local leaders include:
- Centralisation: Britain’s governmental system is highly centralised, leaving its sub-national governmental systems with limited resources, capacity, and responsibility for improving local economies.
- Reductions in funding: Local institutions have seen their long-term funding dramatically decrease following successive government implementation of austerity measures, reducing funding and removing single funding pots, such as the Revenue funding pot.
- Competitive Funding: Local governmental institutions are dogged by highly competitive funding puts, where local institutions are forced to bid and compete for funding. Local institutions may not win, leading to highly wasteful processes and loss of capacity. In addition, local institutions bid on projects that they think the government will approve of not projects that are needed to meet the current challenges and opportunities facing constituents.
- Fragmentation and quality of local government structures: Local governance structures have changed multiple times over the last 20 years, creating disjointed levels of governance that struggle to operate effectively and retain skilled staff.
Fixing these issues requires the government to decentralise resources, capacity and responsibility to subnational institutes through devolution. This is why the trailblazer deeper devolution deals are such an opportunity for subnational governance institutions. Each deal differs depending on need and current structures already in place, the main policies of the West Midlands Combined Authority devolution deal though are outlined below:
- A new departmental-style long-term single settlement (single funding pot) budget arrangement.
- Fiscal devolution of 100% of business rates to the WMCA for 10 years, worth an estimated £45m per year. Alongside, a 25-year business rate retention within up to six levelling up zones.
- Devolution of non-apprenticeship adult skills functions and grant funding, with the establishment of a joint governance board to provide oversight of post-16 technical education.
- Strategic Place partnership between Homes England, WMCA and local leadership to deliver the Affordable Homes Programme, for the first time outside of London. Alongside the devolution of funding for the regeneration of brownfield sites in the region.
- Devolution of net zero funding, including for retrofitting of buildings through allocation rather than competition from 2025 onwards.
- A new rail partnership with Great British railways, devolution of the bus service operators grants, and establishment of the West Midlands as a ‘sandbox’ for transport innovation.
- Greater measures to tackle digital exclusion, through a new digital infrastructure group to accelerate the rollout and take-up of high-speed digital connectivity.
- A new partnership with national arts and culture organisations to shape investment in regional cultural priorities.
- A new data partnership and commitments to boost WMCA’s data capacity and capability, to underpin and support local decision-making, enabling to local leaders to make data-driven decisions, leading to the development of evaluation policies and programmes with greater impact.
Main Policies
These main policies do go some way to correcting some of the main issues which have stifled subnational governments. For instance, single pot funding will provide greater funding in the long term for the WMCA, increasing the capacity of the WMCA, as well as allowing them to strategically plan to meet challenges and opportunities rather than competing for piecemeal short-term funding. It will also reduce reliance on competitive funding bids, reducing waste and boosting capacity, as the WMCA can focus on achieving goals and meeting the needs of its populace, rather than writing bids for funding they might not win.
The greater capacity and responsibility enabled by this deal will give the WMCA greater legitimacy as a subnational institution with the capabilities to effectively tackle challenges facing the region. Alongside bringing together a fragmented group of local authorities which have long been competing against each other for patchy often small funding pots.
Regions and places have differing needs in terms of housing requirements, skills and transport infrastructure. The decentralisation and devolution of some of the powers in these areas will enable the WMCA to develop long-term plans relevant to the WMCA to more effectively tackle challenges and opportunities, which the WMCA has a better comprehension of than the national government.
Deepeer Devolution Deal
The Deeper Devolution deal for the WMCA offers many opportunities for the WMCA, providing them with the resources, capacity and responsibility that centralisation took away over the last decade. These new powers will enable them to tackle challenges and opportunities, which they have had restricted capabilities to tackle in recent years. Though it is integral to the effectiveness of these new powers that the WMCA works collaboratively with local partners, businesses, educational institutions and service providers, beneficial gains will be lost or reduced, and key opportunities may be missed. The deal is certainly a step in the right direction to tackling levelling up and inequality challenges within the region, which the WMCA and collaborative partners have a greater comprehensive knowledge and understanding to tackle more readily.
This blog was written by Alice Pugh, Policy and Data Analyst, City-REDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI / WMREDI or the University of Birmingham.