The agreements reached recently
between Whitehall and eight
of England’s largest cities on the devolution of selected budgetary powers
mark something of a milestone in the development of decentralisation in the
United Kingdom. On the surface, these deals represent a much-needed
rejuvenation of the Coalition government’s flagging localism agenda, in the
wake of the widespread rejection of plans for elected city mayors at the ballot
box in May. But buried in the terms of the new deals lie both the need and the
potential for far more radical reappraisal of the relationship between central
and local government than any proposal the Coalition has tabled so far.
One
major question which the agreements leave unanswered is how far the new powers
will actually increase cities’ decisive authority and policy control. While cities
will now enjoy clearly greater freedom of choice in making spending decisions
for local infrastructure, transport, and education, this freedom has come at
the cost of significant concessions to Whitehall in often unrelated policy
areas. In Leeds, for instance, the ‘carrot’ of control over transport policy
has been coupled with the ‘stick’ of a commitment to drastically curb the number
of NEETS in the city—a vestige of the bargaining process, perhaps, rather than
a sign of a coherent regional policy at either level of governance.
Such
disjointed reciprocity does little to achieve the Coalition’s aim of
‘rebalancing’ governance away from Westminster—rather, it tightens the centre’s
grip on policy, while offloading the primary responsibility for funding onto
the local level. A more thorough-going solution would see cities take over not
just budgetary and policy-implementation mechanisms, but the processes
and institutions of policy-setting as well. Cities must be given the
chance not only of accommodating their region to meet the requirements of a
‘national picture’ defined by the centre, but also of determining the direction
in which they want themselves to develop. In other words, cities
need not just power, but also directive authority to have a
meaningful stake in local political and economic development.
Similarly,
the reliance of the City Deal negotiations on the stated priorities of the cities,
and not the desires of government, raises the question of how symmetrical
this new decentralisation of powers is intended to be. Will certain areas of
policy, such as local infrastructure investment or transport, now be treated as
inherently local concerns, and thus devolved away from London across all
regions (reminiscent of German federalism)? Or will the exact nature of the
devolved policies depend solely on specific local demands—with the conceivable
result that nearby authorities end up in control of vastly different areas of
governance (an extreme version of the Spanish model)?
At
the same time, the inevitable concern with any such devolutionary project is
that of deciding where
to draw the line. Given the appetite for localism evinced by the City
Deals, it is unsurprising that both Greg Clark, the Decentralisation and Cities
Minister, and Hilary Benn, the Shadow Communities and Local Government
Secretary, have called for this devolution to be pushed even further, in the form
of ‘Council Deals’. But how is the ‘right’ extent of devolution to be
determined? And, even with major empowerment of local governance, how reliably
and autonomously can any sub-state authority be expected to meet the demands
placed on it at its particular level?
Perhaps
the clearest response to both the symmetry and extent concerns is that
governance units will only be effective in carrying out their responsibilities
if they can call on adequate resources to support their activities. Devolution
of political authority presupposes and relies on appropriate control over
fiscal powers—including budgetary powers—which makes the arrangements outlined
in the City Deals a prerequisite foundation for all future reforms. A plausible
next step might thus be an extension of something like the ‘devo-max’
alternative to Scottish independence to English local authorities. The block
grant (still present in the City Deals) could be replaced with a right to (part
of) the tax levied within the local authority, perhaps integrated into a
multi-tier tax system alongside the existing council tax and national
arrangements.
Any
move towards such a system is likely to require an overhaul of the types of
local authority available for empowerment. Not all existing tiers of sub-state
authority have the capacity either to raise the financial resources needed for
(relative) self-sufficiency, or to implement political decisions effectively.
The City Deals, however, offer two alternative models for solving such
‘natural’ asymmetries between localities: the ‘city-region’, piloted
by Greater Manchester; and the ‘combined authority’ of West
Yorkshire grouped around Leeds, an idea which Newcastle and Sheffield are
also interested
in pursuing. In both cases, a flexible approach to political geography, and
a policy-specific approach to improving delivery of results, could allow
similar models applied elsewhere to achieve the legal and administrative
coherence that strict faithfulness to existing regional boundaries would
otherwise prevent.
While
the City Deals are evidently just one development aimed at mitigating the
hegemony of unitary governance in English politics, constructing a whole
federal system is a rather more complex and delicate prospect. The conflicting
motivations of the centre to retain oversight and control, and of the locality
to reflect regional strengths and differences, can lead as much to
over-conservative centralism as to over-ambitious localism. Nevertheless, these
agreements have opened the door for future negotiations of a division of policy
competencies between central and local government, which will strengthen the
case for a formal constitutional settlement along recognisably federal
lines.