English Devolution White Paper
Released on 16th December 2024, just before the Christmas break, the English Devolution White Paper may set the framework for the delivery of economic development at a local level for the decade and possibly beyond. Whilst much of the White Paper covers, and in some cases clarifies, previous announcements in the Modern National Industrial Strategy Green Paper and the Get Britain Working White Papers, there are also significant proposals that join some of the dots and fill in some of the gaps in policy that could radically change Local Government in some areas.
The clear headline within the White Paper is clearly the ending of the two-tier system of Local Government within England, but there are a range of other key points that will have a long term bearing on local economic development.
The preamble states England’s regions are in a ‘doom-loop’ and the only way to break this spiral is to devolve more power away from Whitehall and give local areas the raw materials to develop their own routes to economic success and raising living standards. This echoes the narratives of devolution statements of many previous Governments, although the White Paper states the current devolution approach is taking place when the Local Government sector is perhaps in its weakest state for over a generation. To overcome inertia and deliver radical change, legislation and a central commitment will be required.
The target is for universal coverage of Strategic Authorities in England, designed locally and agreed between national and local stakeholders. However, if a devolution approach can’t be mutually agreed locally, it may be driven through. Devolution needs to be built on long term stability, improving standards, streamlined structures and an end of Whitehall micromanagement. The aim is for efficient and accountable local and regional government that can effectively support the Government’s national renewal and growth agenda, with houses matched with infrastructure, local public services that are well co-ordinated, skills/employment activity relevant to local jobs and a locally integrated transport system.
Devolution will be based around the creation (or redesignation) of Strategic Authorities, based around three tiers. Established Mayoral Strategic Authorities (Greater Manchester, Liverpool City Region, North East, South Yorkshire, West Midlands and West Yorkshire), other Mayoral Strategic Authorities, that will become Established MSAs when they meet the relevant criteria and Foundation Strategic Authorities, which will include non-mayoral Combined Authorities and any Local Authority designated as a Foundation Strategic Authority without a Mayor. The Government has made clear its preference for devolution to be based on a Mayoral led approach and there is a clear stated preference for any new Strategic Authorities to bring in more than one constituent Local Authority over a larger, functional economic geography.
Established Mayoral Strategic Authorities will have new powers including over housing, planning, transport, energy, skills, employment support – whilst receiving an Integrated Settlement providing more financial flexibility. Mayoral Strategic Authorities will also be expected to play a stronger role in health and public health and wider public service redesign. There are also proposals for Mayoral Strategic Authorities to move towards decision making by majority rather than unanimity.
Foundation Strategic Authorities will have their own dedicated local growth allocation, decided by a formula, with lighter sign off on funding decision making.
For its part, Government has pledged to realign public service boundaries, especially across Government agencies, to match the emerging devolution geography. This will begin with the Established Mayoral Strategic Authorities.
The financing of growth and infrastructure is set to change with a pledge to end the use of competitive bidding as a way of allocating resources and a reduction in the use of restrictive grants and capital focussed growth funds. Local Government overall will also move to multi-year financial settlements to allow for longer term planning of services, as stated in the recent Budget. There is also a review of Business Rates Retention proposed in the White Paper, with areas of lower growth and higher deprivation often cited as being put at a further disadvantage in terms of resources.
Established Mayoral Combined Authorities already have the powers to raise finance through a Council Tax Precept. The potential uses of this precept are to be widened and new Mayoral Strategic Authorities will also have access to this financing lever in due course.
There is a proposed streamlining of overall monitoring and evaluation requirements, changing audit and governance requirements and a streamlining of powers than need Secretary of State approval (including byelaws) and a simpler process where this is still required. There will also be a review of all ONS sub-national data, undertaken in conjunction with Mayoral Strategic Authorities.
The Devolution White Paper places a duty on every Mayoral Strategic Authority to produce a Local Growth Plan, with Foundation Authorities expected to develop Local Growth Plans as they become Mayoral Strategic Authorities. It is not entirely clear how Local Growth Plans will operate below this geography or their status if they are produced – especially in areas with large numbers of constituent Authorities or that may remain in two-tier systems in the medium term.
With regards to transport, the process to bring bus operation into public control where this is desired is likely to become faster and simpler. Mayoral Combined Authorities will have a statutory role in governing, managing and planning local rail networks, with the right to request control over local assets such as stations where they can add economic value. There are also proposed powers for Mayoral Combined Authorities to designate Key Route Networks, allowing these roads to be strategically managed. MCAs will also co-ordinate road networks with their constituent Authorities and National Highways and will have a role in sustainable and active travel planning and delivery.
The government aims to devolve all non-apprenticeship adult skills funding across Strategic Authorities and the majority of Adult Skills Fund is already devolved to Mayoral Strategic Authorities. The Integrated Settlement for Established Mayoral Combined Authorities will combine Skills Bootcamps funding and Free Courses for Jobs funding. These funding sources will also be devolved to Foundation Authorities but remain ringfenced.
Strategic Authorities will also take on joint ownership of Local Skills Improvement Plans with their relevant employer representative bodies. As identified in the Get Britain Working White Paper, all funding for employment support will be devolved to Strategic Authorities and all Mayoral Combined Authorities will have a role in the co-design of any future non Jobcentre Plus employment support and a role in delivery.
Mayoral Strategic Authorities will have an important role working with employers to promote pathways for education and training into work for 16-19 year olds, will collaboratively design, develop and test the National Jobs and Careers Service and have a role in delivering the Government’s Youth Guarantee, of which there are a number of previously identified trailblazer areas.
With regards to planning, all areas, whether part of a current devolution arrangement or not will need to produce a Spatial Development Strategy and support the Government’s desire to build more homes. Mayors will be given development management powers, including ability to call in planning applications of strategic importance and will be able to charge developers a Mayoral Community Infrastructure Levy to support development infrastructure requirements. Mayors will also be given control of funding for housing and regeneration activity within their areas, and over the longer term, the ability to set the strategic direction of any future affordable housing programmes. There are also proposals to increase Homes England’s accountability to Mayors and move the agency to a more regionalised structure over time.
Mayors will be handed control of all future retrofit funding as part of their Integrated Settlements to strengthen the local delivery of Government’s Warm Homes Plan. Strategic Authorities will also have a role in the delivery of Great British Energy’s Local Power Plans, providing localised renewable energy generation capacity. Devolution will also expand Strategic Authorities’ role in leading Local Nature Recovery Strategies.
There are also proposals around business and innovation support, including Growth Hub funding being rolled into Integrated Settlements for Mayoral Combined Authorities. Established MCA’s will also be invited to develop future regional innovation funding programmes as part of second phase of the spending review, which will subsequently be extended to other Mayoral Combined Authorities. This will take place in the wider context of the Department of Business and Trade producing a Small Business Strategy, which will form the framework to a new approach to national, devolved and local business support.
The Office for Investment will work with Mayors to develop and market strategic investment propositions and Strategic Authorities have also been identified as key partners in supporting and growing the offer around culture, heritage and the visitor economy.
Government is currently consulting on a duty for Local Government Pension Scheme administering authorities to work with Strategic Authorities and other stakeholders to identify suitable local investment opportunities – with a reciprocal duty on Strategic Authorities to engage as part of the English Devolution Bill. There will also be scope to work collaboratively with the National Wealth Fund.
Hidden within the small print include the immediate closure of the Office for Local Government with a more simplified Audit process to follow. There is also a recognition of the hollowing out of the Local Government workforce, something that has been a key message from CEDOS in relation to Economic Development for some time. Action has already been taken by Government to address a significant gap in planning workforce and skills, we would be keen to see this across regeneration and growth services. The White Paper proposes the establishment of a Workforce Development Group for Local Government.
Also in the small print is a proposal to reform the Long Term Plan for Towns into a new area based regeneration programme, investing in 75 areas and drawing from and using the lessons of the New Deal for Communities programme.
Relationships and engagement between Government and Local Government will also be strengthened, although heavily focussed around engagement with Mayors through the Council of the Nations and Regions (which will be opened up to all Mayoral Combined Authorities), the Mayoral Council and the Leaders Council for Local Authorities.
Local Government Reorganisation
“(Government will)…facilitate a programme of local government reorganisation for two tier areas and for those unitary councils where there is evidence of failure or where their size or boundaries may be hindering their ability to deliver sustainable and high-quality services for their residents.”
This element of the White Paper will clearly set the framework for much of the focus of CEDOS over the next 12-24 months. We have a number of members who have transitioned relatively recently from a two-tier to Unitary structure and we hope to work closely with these Authorities to understand the process, the potential and the pitfalls involved in drawing together a range of economic development functions into a single, consolidated Authority.
Government has stated the processes of reorganisation and devolution will operate in tandem and should be complementary.
The process of reorganisation could also relate to some existing Unitary authorities. This aspect of the proposal is low on detail and wide open to interpretation of what ‘failure’ or ‘hinderance’ means, how it is defined and who is ultimately the arbiter of this. Is this simply a financial sustainability measure, is it a governance measure, is it a systemic population imbalance or is it something else more intangible and wide open to interpretation?
There is also a subtle mention of a target for new Unitary Authorities of a population base of around 500,000. There are currently a considerable number of existing Unitary Authorities with a lower base than this population base, and it is not clear whether just new Unitary Authorities need to meet this criteria or whether it will also apply to ‘failing’ Authorities. It could mean large Authorities being disaggregated or smaller areas amalgamated. There may even be relatively large existing Unitary Authorities falling into this category. As an example, Greater Manchester, population almost 3m, has ten Unitary Authorities, whilst West Yorkshire, 2.4m population, has just five.
It may prove to be a minor footnote to the White Paper, but has the potential, depending on the Government (or local) definition of failure, to also be seismic. Government have stated they want proposals as swiftly as possible, so January is already looking like a busy time for some two-tier areas.
Timeframes will also be important across the Devolution process, especially where progress is related to passing legislation. A Devolution Priority Programme will be launched that will focus on devolution proposals received in September 2024, especially those areas that proposed a Mayoral approach. Timeframes for reorganisation are likely to be longer term, but Government have stated they will facilitate delivery of an ambitious first wave of reorganisations during this Parliament. There is a footnote that Government may also intervene in the process if progress is deemed too slow.
Alongside the logistical challenges of boundary changes, political agreement and election cycles, there will be specific challenges for Economic Development such as funding commitments, regeneration schemes underway, ongoing partnerships and LEP and Growth Hub integration, potential contract novation and relationships with the evolving devolution process.
Reorganising Authorities are expected to show a proactive approach in neighbourhood engagement and citizen empowerment. There is a mention of a rewired role for Parish and Town Councils, the importance of Business Improvement Districts and supporting communities to own and operate community assets. Government also plans to consult during 2025 on a National Youth Strategy, which will empower young people to have a stronger voice in issues and Local Government.
There is a stated desire for Local Authorities to look at enabling more preventative services to reduce long term cost of service delivery, which within the economic development sphere is most likely have an impact within the employment and skills sphere. This approach has already been intimated within the Get Britain Working White Paper as a route to reducing the national welfare bill.
Without being explicit, there does appear to be, in parts within the White Paper, an emphasis on spatial regeneration and tackling spatial inequality as a barrier to wider national economic growth, such as new area based regeneration programmes and a review of the fairness of Business Rates Retention.
One of the key debates across a range of CEDOS sessions has been the balance between interventions that operate strategically where there is an aggregated demand across a broader geography and the need for locally tailored or micro-geography interventions. The White Paper is clearly a strong nod towards the former, with the distribution of resources to Strategic Authorities and Local Government reorganisation.
Devolution is clearly a work in progress and the creation of new strategic architecture to deliver local growth will clearly direct much of our professions work over the next five years and probably beyond. However, whilst there is more central push to get devolution done and a potentially more radical approach to Local Government reorganisation, there will still be a two or even three speed approach and there is scope that some areas could be left behind in the ongoing process. There is a short term emphasis on deepening powers and flexibility within current Mayoral Authorities in major urban conurbations.
The extension of some economic programmes of the previous Government may provide some respite in terms of management process, but there is clearly significant time and resources needed to be expended on unpicking the devolution and reorganisation process. On already stretched services, it will make the day job of serving our residents and businesses that little bit harder and make longer term commitments and decisions harder to enact.
Whilst over the longer term devolution should make the organisation and delivery of economic growth services easier to plan and implement, and hopefully more efficient, delivering sub-national economic growth will still be highly dependent on national growth prospects. Success will partly depend on the physical level of resources channelled to devolved areas to overcome market failures (whether these are devolved or not) and the supply of key economic capital such as long term labour supply, finite land availability (especially in light of housing targets) technological change and macro-economic opportunities – all of which are beyond the control of Strategic Authorities.
Interesting and challenging times ahead!