Government must address concerns as devolution laws move forward

18 December 2016

The Public Accounts Committee report says that Government must specify what it is trying to achieve through devolution and communicate this clearly to citizens and service users.

Vital taxpayers can understand who is spending their money and where responsibility lies

In the report, Devolution in England: governance, financial accountability and following the taxpayer pound, the Committee highlights the continued failure of central government to define its objectives for devolution in England.

It also reiterates its concerns about scrutiny, transparency and accountability, stressing that "taxpayers must be able to understand who is spending their money, how that money is allocated and where responsibility lies if the system fails to deliver good value or things go wrong".

This includes the 'opaque' nature of accountability for the activities of Local Enterprise Partnerships—designed to bring together the public and private sector—which are now negotiating local growth deals funded by a £12 billion fund over a five-year period.

Department must do more to show link between devolution and economic growth

The Department of Communities and Local Government (DCLG) must do more to demonstrate the link between devolution and economic growth, says the Committee, which warns against neglecting other factors in growth such as housing, land, education and skills.

It again highlights the potential impact on taxpayers inherent in the "considerable scope for tension" between local government, which is required to deliver and maintain services within a devolved budget, and central government which provides funding.

In particular, at a time of severe financial pressure on health and social care, the Committee warns that central government must not "absolve itself of its responsibility to ensure that devolved areas receive adequate funding for sustainable services".

Devolution must work for all local areas, not just cities

DCLG must also act to ensure devolution benefits work for all local areas and not just central zones or key cities covered by combined authorities, says the Committee.

The report is published following the laying before Parliament on 28 November of Orders establishing the legal framework for combined authorities to hold mayoral elections, as well as provisions for scrutiny, access to information and audit.

Chair's comments

Meg Hillier MP, Chair of the PAC, said:

"Devolution in England has significant implications for the lives of millions of people.
Yet even at this late stage, and despite concerns raised by us and others in Parliament, the Government still has serious questions to answer.
Generalisations about the potential benefits of devolution just don't cut it with taxpayers worried about real-world issues.
The public care about the future of vital local services; about jobs, housing, education. They want to know not just who is spending their money and to what end, but also how well it is being spent.
When things go wrong, they want to know who is responsible and how they will be held to account.
And, when they elect their first mayors in May, they want to be confident the Government has done all it can to protect their interests.
The Government's annual report on devolution, published this month, does nothing to address these concerns nor to set out a detailed strategic vision for the programme.
Instead, as laws move forward to enable mayoral elections to be held, it appears content simply to document processes.
The message is clear and the implications dangerous: combined authorities have signed up for devolution; now it's over to them—full stop.
This high-risk strategy is squarely in the sights of our Committee, which exists to scrutinise the value for money of public spending.
Our concerns are not addressed to the policy of devolution but rather the risks inherent in its implementation.
Every pound of public money spent by an elected mayor, Local Enterprise Partnership or other body must be a pound Parliament can trace. Spending must face robust scrutiny.
Transparent and easy to understand information should be available to the public so they too can hold to account bodies spending money on their behalf.
At the same time, central government must take responsibility for ensuring devolved areas receive adequate funding to maintain services.
The point is well-illustrated by the devolution of health and social care. Time and again our Committee has raised concerns about the sustainability of NHS finances.
Devolution is not a miracle cure and central government cannot expect to wash its hands of problems to which it has no solutions.
Its obligations to local citizens do not end with the signing of devolution deals; it can and should be doing more.
We again call for it to properly acknowledge its responsibilities and respond meaningfully to our concerns."

Summary of report conclusions

The Department of Communities and Local Government needs to be clearer about what it is trying to achieve through the devolution agenda. If it is not clear to elected representatives, how can it be clear to local citizens and service users who are the ones directly affected by these reforms?
Taxpayers must be able to understand who is spending their money, how that money is allocated and where responsibility lies if the system fails to deliver good value or things go wrong.
The Department needs to more demonstrably understand the link between devolution and economic growth. Devolution is being considered in isolation, with less importance placed on housing, land, education and skills, which play key roles in promoting economic growth.
The Department has not fully addressed our concerns about local scrutiny and accountability and the resources and capacity needed to rigorously oversee spending.
The devolution of health and social care must not allow central government to absolve itself of its responsibility to ensure that devolved areas receive adequate funding for sustainable services. With budgets stretched increasingly thin, local bodies must ensure value for money when delivering vital services.
The Department must ensure that the benefits derived from devolution are for all local areas and that we do not see a form of 'local centralism' where power and decision making sits in the dominant city heart of a combined authority.

Background

The Government's Cities and Local Growth Unit, together with HM Treasury, has recently overseen the negotiation and implementation of 12 bespoke devolution deals in England (although three have broken down) granting powers, funding and responsibilities to local areas.

This Report builds on the Committee's previous work on devolution, in particular its inquiry into Cities and Local Growth and resulting report on 1 July, which raised new concerns about the oversight and implementation of devolution deals in England.

The Committee subsequently held discussion events on 12 July and 21 October, at the City of Westminster and City of Wolverhampton respectively, examining a broad range of devolution issues.

These included eight panels of speakers from academia, local government, businesses and local stakeholders and a summary of discussions is included as an annex to the attached Report.

The Committee has published a substantial body of work on NHS finances, summarised in the Chair's letter to the Prime Minister of 3 November and the Chair's Annual Report, published 15 November (here).

Further information

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