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Dale’s Devo Diary: Councils cash in on localism, if they play to Chancellor’s tune

Dale’s Devo Diary: Councils cash in on localism, if they play to Chancellor’s tune

🕔05.Aug 2015

Britain’s local government landscape has changed significantly and continues to change at a rapid rate as the Government delivers on a promise to devolve powers to councils that are prepared to play to the Chancellor’s tune, writes Paul Dale.

Who would have thought five years ago that the UK, one of the most centralised nations anywhere in the developed world, would willingly embark on a process of devolution from Whitehall to long-supressed councils on the basis that local decision making is better than top-down imposition by national government?

Claims by the Conservative-Liberal Democrat coalition in 2010 that the Government would deliver localism on an unprecedented scale were treated with predictable cynicism. After all, that’s exactly that type of thing all incoming governments promise but never quite get around to delivering, primarily because they don’t trust councils to run their own affairs.

Clearly the result of the Scottish independence referendum threw a useful rocket into the devolution debate. The Government had offered the Scots Devo-max in return for staying in the UK and Prime Minister David Cameron went further by insisting that maximum devolution would also be on offer to English councils, Wales and Northern Ireland.

Even then there were doubts about how far Cameron would really be prepared to travel along the devolution highway. Those doubts were expunged in November 2014 when the Chancellor, George Osborne, took charge of the agenda by announcing a ground-breaking deal with the Greater Manchester combined authority.

Osborne declared that in return for accepting an elected mayor, Labour-controlled Greater Manchester would be handed wide-ranging powers including:

  • Responsibility for integrating local health and social care budgets.
  • Apprenticeship grants for employers and the ability to reform local further education provisions.
  • Control of business support budgets, including the Growth Accelerator, as well as the UKTI Export Advice and Manufacturing Advice services.
  • Overseeing the Working Well pilot with financial incentives for successful delivery.
  • Establishing a land commission for the area.

Greater Manchester’s directly elected mayor will take on the responsibilities of the police commissioner and oversee local fire services, control a £300 million housing investment fund, and will be handed strategic planning powers. The mayor will also oversee transport funding and be responsible for local bus service franchises and smart ticketing across all modes of transport.

The deal took the political world by surprise, particularly the Labour party which failed to put forward any coherent response to such a pioneering advance in devolution six months before the General Election and even today appears to be struggling to come to terms with localism.

Labour leadership contender Jeremy Corbyn has condemned Mr Osborne’s Northern Powerhouse vision of devolution to a network of combined authorities, which he declared to be a “cruel deception”. Mr Corbyn said the Chancellor’s plan involved little more than devolving responsibility for imposing public spending cuts.

The Greater Manchester deal set the English devolution ball rolling and councils have until September 4 to submit bids to Mr Osborne for devolved powers under combined authorities.

At least seven proposed combined authorities in the north of England are in advanced talks with the Chancellor, who has been tirelessly promoting his Northern Powerhouse vision of devolved local government which he says will transform economic development, local transport links and create hundreds of thousands of jobs.

The West Midlands has been something of a late arrival at the devolution races. A combined authority prospectus was launched recently and Chamberlain Files has reported how the region’s seven metropolitan authorities propose to ask Mr Osborne to respond to two questions – what powers would we get without an elected mayor, and what could we get with an elected mayor?

Opponents of mayors were given a glimmer of hope when Mr Osborne approved a Devo-max deal for Cornwall and agreed the county did not have to move to an elected mayor.

The deal is similar to Greater Manchester’s in that Cornwall council will become responsible for integrating local health and social care budgets, will deliver and develop new apprenticeship opportunities and adult education opportunities and will work with the Government to establish a low carbon enterprise zone and support the delivery of energy efficiency improvements locally.

The council will oversee local bus franchising and be appointed as Immediate Body status for EU structural funds with responsibility to deliver regeneration projects from 2016.

The passage of the Cities Bill through the House of Lords has raised the slim possibility that combined authorities may not have to opt for a mayor to obtain maximum devolution. Labour and Liberal Democrat peers were able to secure a number of amendments to the Bill including one which removes the pre-condition of directly elected mayors in return for more powers.

The Government will hope to use its slim majority in the House of Commons to remove this amendment, but Mr Osborne could be in difficulty because a number of Conservative MPs reportedly do not share his enthusiasm for mayors. Whether the amendment stays or goes may depend on the ability of Government whips to kick any rebels into line.

Concerns have been raised in the Lords about the concentration of power that the mayor will have and that lack of checks and balances. Given the nature of the Bill, it will ultimately be up to the local authorities putting forward their proposals, and the secretary of state will decide what is appropriate for each area. It is likely that we will see different arrangements across the combined authorities following the delivery of new powers.

Peers were also critical of the lack of fiscal devolution being offered to councils and tabled a number of amendments to permit mayors and combined authorities to borrow and raise their own revenue.

Briefly, across the UK nations here is what’s happening on the devolution front:

Scotland

The Scotland Bill will trump the Scotland Act 2012 as the biggest transfer of powers away from Westminster in over 300 years. The Scottish Parliament will be directly responsible and accountable for raising 40 per cent of taxes in Scotland.

As of 2016 the Scottish Parliament will have control over the Scottish Rate of Income Tax and the ability to adjust these by up to 10 per cent. Any change must be replicated in all tax bands.

The Scottish government will have new powers over welfare worth £2.5 billion and control over the frequency of Universal Credit payments, Disability Living Personal Independence Payments, Attendance Allowance, Carer’s Allowance, Winter Fuel Payment, Discretionary Housing Payments, Severe Disablement Allowance, Industrial Injuries Disablement Benefit, Funeral Payments and Sure Start Maternity Grants.

The Scottish Parliament is able to borrow up to £2.2 billion a year although it is yet to use any of the additional funding available. The Scottish Government now has the ability to adopt new taxes, subject to approval from the UK Government.

Wales

The Wales Bill was announced in the Queen’s Speech, designed to deliver a swathe of additional powers. Wales will move to a “reserved powers” model as in Scotland and this would mean that any powers not specified as remaining at Westminster would automatically fall under the remit of the National Assembly for Wales.

The Assembly would also receive powers to allow it to change its name, the number of assembly members to reflect its increased competences, and become a permanent institution in statute. Much of the work was based on the Silk Commission, and builds upon the Wales Act 2014, which devolved further powers in the last Parliament.

This act provided additional powers to Cardiff Bay, over a number of areas including:

  • Stamp duty, land and landfill taxes
  • The ability to borrow up to £1bn for infrastructure projects
  • A referendum could be called over income tax powers. If called and passed, the introduction of a Welsh Rates of Income Tax would make the Welsh Government responsible for raising twice as much as they do at present.

Northern Ireland

The power-sharing Northern Ireland Assembly has been at an impasse in recent months following Sinn Féin’s decision to withdraw its support for the Stormont House Agreement.

The agreement, if approved, would deliver a five-year funding package of £2 billion as well as public sector and welfare reforms and devolution of corporation tax.

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