A New Phase in the Devolution Debate
As the Government presses ahead with devolution reforms and its ambition to unlock growth across the country, a crucial question remains: what does it take for places to turn devolved powers into meaningful economic and social outcomes?
In preparation for a fringe event at the Labour Party Conference, the Local Policy Innovation Partnership (LPIP) Hub published a provocation drawing together evidence from across the UK and internationally on fiscal devolution, governance capacity and place-based growth. The subsequent conference discussion, which brought together mayors, researchers, local government leaders and practitioners, largely reinforced the evidence base while providing practical insights into how devolution is working on the ground, was used to produce a second report.
Taken together, the two reports make a powerful case that successful devolution is not primarily about transferring powers from Whitehall to local areas. Rather, it is about creating the institutional capability, leadership, relationships and resources that enable places to improve outcomes for people, businesses and communities. The debate has moved beyond whether devolution should happen. The challenge now is ensuring that it delivers.
Focusing on Outcomes Rather Than Structures
A central theme running through both reports is that devolution should be judged by outcomes, not structures. Too often, discussions focus on governance arrangements, funding settlements or constitutional reforms. While these matter, speakers at the conference argued that the real test of devolution is whether it gives places greater control over the factors shaping prosperity and wellbeing.
Issues such as transport, health, skills, housing and employment are deeply interconnected. Tackling economic inactivity, for example, requires much more than employment support alone. It demands integrated solutions that address health challenges, childcare, transport access and skills development simultaneously.
The provocation paper reaches a similar conclusion through its review of fiscal devolution. Evidence from England, Scotland and OECD countries suggests that devolving powers can strengthen local decision-making and investment. However, greater autonomy does not automatically lead to improved economic performance or reduced regional disparities. Simply transferring responsibility without building the conditions needed for success might create “risk devolution” rather than meaningful empowerment. The key lesson is that devolution should build capability, not simply relocate accountability.
Why Capacity Matters
The issue of capability emerged as perhaps the strongest thread linking the research evidence and the conference discussion. Across the UK, many local institutions have experienced years of resource constraints and reductions in economic development capacity. As new responsibilities are devolved, there is a growing recognition that places need more than funding. They need skilled staff, strong organisations, analytical capability, strategic expertise and institutional memory.
The LPIP Hub’s research highlights the importance of what it describes as “institutional thickness”. This concept refers not only to formal institutions such as combined authorities, local councils and partnerships, but also to the informal relationships, trust and collaborative cultures that help organisations work together effectively.
While formal structures can often be established relatively quickly, the informal networks that underpin successful governance take much longer to develop. Yet these relationships frequently make the difference between places that successfully translate powers into action and those that struggle to deliver.
Building Stronger Local Institutions
Conference participants repeatedly returned to the importance of capacity-building. It should not be treated as an optional extra or something that follows devolution. It is a prerequisite for success.
Practical solutions discussed included greater use of secondments between central and local government, stronger professional networks, shared specialist expertise and increased investment in local analytical and strategic capability. The message was clear: places need the people and institutions capable of exercising new powers effectively.
There was also recognition that the success of devolution depends on long-term investment in local capability. This means creating opportunities for learning, knowledge exchange and leadership development that extend beyond individual programmes or funding cycles.
The Role of Distributed Leadership
Leadership featured prominently throughout both documents. However, discussions challenged any assumption that successful devolution is simply about strong mayors. While visible political leadership remains important, effective place-based development requires a much broader ecosystem of actors.
Local authorities, universities, colleges, businesses, health organisations, community groups and voluntary organisations all have critical roles to play. This reflects a model of distributed leadership, where responsibility for shaping local growth is shared across institutions rather than concentrated in a single organisation.
Such an approach recognises the complexity of modern policy challenges. Economic development, health improvement, innovation, transport and skills do not align neatly within institutional boundaries. Successful growth strategies therefore depend on collaboration across sectors, organisations and geographies.
Growing Through Local Strengths
Another important finding concerns the need to build growth strategies around the distinctive strengths of individual places. Examples discussed during the conference demonstrated how long-term investment can build on existing industrial and economic capabilities to create new opportunities.
Rather than attempting to replicate models developed elsewhere, successful places often grow by extending and adapting their established strengths. This aligns with wider LPIP Hub evidence suggesting that place-based growth is most effective when it reflects local assets, capabilities and opportunities.
Different places have different economic histories, industrial structures, skills bases and institutional environments. A one-size-fits-all approach risks overlooking these differences. Instead, national policy should provide a clear strategic framework while allowing local areas the flexibility to determine how best to contribute to wider economic goals.
Skills and Innovation as Drivers of Growth
Skills and innovation were also identified as central components of a place-based growth agenda. Participants argued that skills policy must connect immediate labour market needs with longer-term economic ambitions. Employers can often identify current shortages, but future economic opportunities require longer planning horizons.
Better coordination between employers, colleges, universities and local leaders can help align skills provision with emerging opportunities. This is particularly important as places respond to technological change, the transition to net zero and shifting patterns of economic activity.
Similarly, innovation should be understood as more than research and invention. Universities and colleges play a vital role as anchor institutions, supporting not only knowledge creation but also the adoption and diffusion of innovation throughout local economies. Strong innovation ecosystems help businesses access expertise, improve productivity and create better jobs, but they require sustained support and investment.
Ensuring Fairness Through Fiscal Devolution
The discussion also highlighted the importance of ensuring that fiscal devolution does not widen existing inequalities. While greater local autonomy can encourage innovation and responsiveness, areas with stronger tax bases are often better positioned to benefit from devolved fiscal powers.
Both reports therefore stress the need for equalisation mechanisms and national safeguards to ensure that all places have the resources needed to provide services and invest in growth. Devolution should enable local flexibility without creating a system in which prosperity becomes increasingly dependent on pre-existing advantages.
This balance between autonomy and fairness will be essential if devolution is to contribute to reducing, rather than reinforcing, regional inequalities.
Why Whitehall Must Change Too
Perhaps the most significant conclusion from both the provocation and the conference discussion is that devolution requires change in Whitehall as well as in local government.
Too often, debates focus exclusively on what local institutions need to do differently. Yet effective devolution depends equally on how central government behaves. This includes improving cross-departmental coordination, sharing data more effectively, building stronger relationships with places and moving towards models of co-design and partnership.
The evidence suggests that devolution succeeds when national and local institutions work together rather than operate in isolation. Central government retains an important role in setting strategic direction, ensuring fairness and supporting capacity-building. At the same time, local areas bring knowledge, relationships and insight that are essential for effective delivery.
From Evidence to Action
The combined message from both reports is clear. Four decades of regional policy have demonstrated that short-term initiatives, fragmented funding streams and continual institutional change rarely produce lasting results.
If the next phase of devolution is to succeed, it must be long-term, collaborative and rooted in the realities of place. Powers matter, but they are only part of the story. The real challenge is building a more capable, connected and adaptive system of governance that enables every place to contribute to national growth while shaping its own future.
Putting place at the heart of growth is not simply a question of devolving responsibility. It is about creating the conditions that allow local leaders, institutions and communities to work together effectively. The evidence and discussion highlighted by the LPIP Hub suggest that when those conditions exist, devolution can become a powerful tool for delivering both economic growth and social progress.
Generative AI was used to write this blog based on the reports from the LPIP Hub fringe event.
Find out more about the Local Policy Innovation Partnership Hub.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI or the University of Birmingham.