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Devolution should be at the heart of 2015 election

Devolution should be at the heart of 2015 election

🕔12.Feb 2014

LEP WeekLEPs are still evolving, says Centre for Cities chief executive Alex Jones, and cities need to be given the tools to grow their economies, reform public services and respond to their distinctive local circumstances.

The election may be 18 months away but early warning shots are already being fired across party bows, as politicians start to turn their attention to May 2015. From immigration to tax, floods to public service reform: all the parties are seeking to make their mark and demonstrate why they are the ones to vote for. And, in the year of the Scottish referendum on independence, it’s striking that ‘devolution’ is, unusually, a hot topic for political debate – particularly given the UK is one of the most centralised advanced democracies in the world.

So why the focus on devolution? Scotland and Wales have much to do with it. With Wales being offered powers over tax and Scotland set to get more powers, regardless of which way the vote goes in September, attention is turning to what more devolution could and should look like for England.

Over the past few years, devolution in England has focused on a growing role for private sector-led Local Enterprise Partnerships (following the demise of the Regional Development Agencies) as well as City Deals – “something for something” agreements with cities across the UK whereby powers and funding have been devolved to areas in exchange for specific local delivery commitments. These are now becoming Growth Deals negotiated with all LEP areas, underpinned by Strategic Economic Plans and a new Local Growth Fund worth a total of £2bn annually over the next five years.

The approaches that underpin City Deals and the Local Growth Fund are starting to change the relationship between central and local government, and some individual measures, such as Housing Revenue Account reform, represent the provision of important new powers to local areas.

But, despite some progress, councils in the UK continue to have very limited autonomy to make decisions about their local economy. In the UK councils raise just 17% of their budget locally, compared to an average of 55% across other OECD countries. Despite some recent progress, too many strings remain attached to the centre and our cities still don’t have enough freedom to shape policy to their specific needs, or take the big local decisions on transport, jobs and skills that could really drive their economies forward.

This is reflected by the fact that too many of our cities are still failing to fulfil their economic potential. The Centre for Cities’ latest analysis shows that while London is booming, accounting for 80% of all private sector jobs created since 2010, Bristol is the only other large city outside that performs above the national average on a range of vital indicators.

This is bad for the national economy. Manchester should be the UK’s answer to Munich, and Nottingham performing as well as Nuremberg. But neither make the contribution that their German counterparts do to national economic output.

As we head into the General Election Campaign the big focus for politicians and decision makers must be on how we can ensure our cities are able to punch their weight economically. That means capitalising on their strengths, whether it be Cambridge (the most innovative city in the UK), Derby (with its strengths in manufacturing) or Brighton (in the top three for start-ups).

And we need to make the most of our next largest cities too, which account for over a quarter of the UK’s Gross Value Added, but could contribute much more. We have already seen policy powers handed to Wales, while Scotland is likely to see greater devolution whatever the outcome of this year’s independence vote. But despite having economies larger than the entirety of Wales, Greater Manchester and Greater Leeds have comparatively little flexibility to adapt policy to their specific challenges.

In the short term, cities and their surrounding areas must focus on making the most of the opportunities before them. That means using the raft of new powers at their disposal to the max and pursuing strong local relationships and partnerships to find new ways of delivering services and driving growth.  Local Enterprise Partnerships look set to stay whichever party is in government after 2015, which means cities and surrounding areas need to make the most of these institutions.

Many LEPs are still evolving against a backdrop of rapidly increasing responsibilities. Many have spent the first few years focusing on getting “a strategy which everyone is signed up to”, as Andy Street noted about Greater Birmingham and Solihull, or on bringing local authorities together, as in the North East where they have had the Adonis North East Review and the area is now forming a combined authority (despite a few bumps in the road).  Strategic Economic Plans are the next phase.

Over the years ahead the role of LEPs is likely to evolve still further. Cities need to be clear about how they can best use the private sector expertise of the LEP while ensuring accountability for the money the LEP spends. Combined Authorities, already in Greater Manchester and now being established in Sheffield, Leeds and the North East, are one solution; there will be others.  Government needs to ensure that it is not overloading responsibilities on LEPs or confusing their remit. Government also needs to ensure that support is available for the struggling LEPs, while holding the most successful LEPs to account for pursuing locally agreed strategies, without getting too involved in the detail. Getting this right matters, and one of the issues that the Centre for Cities will be focusing on in the months ahead is where next for LEPs.

Overall if we want cities to play a larger role in the national economy over the longer term, then they have to be given the tools to grow their economies, reform public services and respond to the distinctive local circumstances they face. This is why devolution – in different forms for different places – needs to remain top of the agenda into the 2015 election and beyond.

Alexandra Jones is Chief Executive of the Centre for Cities thinktank. 

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