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Housing, Communities and Local Government Committee 

Oral evidence: Progress on Devolution in England, HC 174

Monday 25 January 2021

Ordered by the House of Commons to be published on 25 January 2021.

Watch the meeting 

Members present: Mr Clive Betts (Chair); Bob Blackman; Ian Byrne; Ben Everitt; Rachel Hopkins; Mary Robinson.

Questions 196 - 240

Witnesses

I: Lord Kerslake, Chair, UK2070 Commission; Rt Hon Greg Clark MP; Cllr James Jamieson, Chairman, Local Government Association. 

 

Examination of witnesses

Witnesses: Lord Kerslake, Greg Clark and James Jamieson

Chair: Welcome, everyone, to this afternoon’s session of the Housing, Communities and Local Government Select Committee. It is a further session we are holding, with three witnesses this afternoon, on our inquiry into progress on devolution in England. We are pleased to have three witnesses with a great deal of experience on this subject and, I am sure, a great deal to contribute to our findings. Before I go through our witnesses, I will ask members of the Committee who have any particular interests relevant to this inquiry to put them on the record. I am a vice-president of the Local Government Association.

Ben Everitt: I am a councillor with the recently unitary Buckinghamshire Council.

Ian Byrne: I am a serving councillor in Liverpool.

Mary Robinson: I employ a councillor in my staff team.

Rachel Hopkins: I am a vice-president of the LGA. I am also a sitting councillor in Luton and I employ a councillor in my office.

Q196       Chair: I think we are expecting Bob Blackman to join us as well. He is just in for questions at present. Bob is also a vice-president of the LGA, to get all that on the record. That is appropriate at this stage, given the subject matter of our inquiry today.

Let’s go over to our witnesses. I will ask them to introduce themselves and say a bit about who they are and why they think they have been asked to give evidence today.

Lord Kerslake: I am Bob Kerslake, chair of the UK2070 Commission on regional inequalities. I am also president of the Local Government Association. Prior to that, I was head of the civil service and perm sec at DCLG, and I previously worked in local government as a chief executive in Sheffield and Hounslow.

Greg Clark: I am Greg Clark. I think the reason you have asked me to be here is that I was the Minister for decentralisation when the coalition was formed and then the Minister for cities, during which time we negotiated and came up with the idea of city deals. They were then followed by growth deals and the devolution deals that I know the Committee has been taking an interest in. During my time as Secretary of State at what was then DCLG and at BEIS, we continued some of that work.

James Jamieson: I am chairman of the Local Government Association. Until last week, I was also leader of Central Bedfordshire Council, which I was for nearly 10 years.

Q197       Chair: Thank you all very much for joining us this afternoon. Each member of the Committee will ask relevant questions. They may ask a general question, and any of you who wants to can come in, or they may specifically go to one of our witnesses first and ask them specifically to respond.

I have a general question to begin with. What is devolution for? We have had various objectives posed as the reason why powers might be devolved to various bodies in England—that is what we are looking at, rather than the UK as a whole—to address regional inequalities, bolster economies at a local level, improve public service, or just look at a better way of identifying people with their areas. Bob, you have led the commission and had a look at these issues. Do you want to come in and say what you think the purpose of devolution is?

Lord Kerslake: Its purpose is all of the things you have just said. The one I wanted to particularly focus on is the issue of economic recovery coming out of Covid, and tackling regional disparities. By almost every measure, we are one of the most unequal countries in the developed world economically. I would contend that the agenda of rebalancing or levelling up cannot be achieved without more devolution. It is central to any agenda of levelling up.

Why do I say that? Without local leadership of the economic agenda, we are unlikely to see the sorts of gains we need to make in productivity and wealth in this country. It is central to that. The very fact that we are so unequal means that any policy created from Whitehall or Westminster is never the right policy for any area. That is one of the problems with it. Housing is a great example of that. Coming up with one housing policy simply does not work. The very fact that we are so unequal is another driver for devolution.

Finally, Covid has increased the urgency of improving our economic performance and recovering from the impact of it. Particularly, it has increased the urgency and importance of the levelling-up agenda. For all those reasons, but specifically the economic one, devolution is essential.

Q198       Chair: To play devil’s advocate, some might say that, because we are so unequal, we need central Government to equalise.

Lord Kerslake: You certainly need central Government to intervene to equalise on resources. That is true. I do not think you need central Government to be the arbiter of all decision making. We have an overloaded centre and disempowered places in this country, on any measure. We have both inequality and centralism, which is a very bad combination.

Q199       Chair: Greg, when you were a Minister, you particularly concentrated on the economic aspects of devolution. Perhaps you would like to give us your views on the subject.

Greg Clark: I always saw it, and see it, as a matter of opportunities. For the 20th century, certainly for the second half of the 20th century, we centralised too much power in Whitehall and disempowered some of the great cities and regions of our country that, through most of our history, had been real dynamos of growth, progress and creativity. They were known the world over. If I think back to the 1970s, 1980s and 1990s, cities like Sheffield, Liverpool, Manchester, Birmingham and Bristol were known across the world. They had somehow been cowed and had their sense of initiative taken away, which was very outside our historical experience. My observation around the world, whichever country you are in, is that the most vibrant countries have pulsating, powerful cities. It seemed to me that there was no reason why we should accept the subjugation of our great regional centres.

Q200       Chair: Councillor Jamieson, you have a fairly wide perspective from the LGA, across a whole range of authorities. What is your thinking on the subject.

James Jamieson: I would agree. I agree with my president on this as well. It is all of the above. Fundamentally, if we are going to do right for our communities, and that is essentially why we are all in politicsbecause we want to do the best for communitiesit is about how we deliver in the most effective, efficient way that tailors to the needs of our communities. You cannot do that from 19 separate Whitehall Departments, coming with a one-size-fits-all, frequently unaligned strategy. At the local level, you can pull everything together about place to deliver for our communities in the most efficient and effective way possible. That is what it is about. It is about delivering for our communities.

Q201       Chair: Coming on to public attitudes, we will follow this up in detail in due course, but a generalisation is that, by and large, the public will say, “Yes, we think we should have more powers at local level. We think we ought to have more say in what happens in our area. When you say, “Are people entitled to the same level of service that they get in one area in another area? Are we all entitled to have the same service delivered for education, health or whatever it is?”, they will say, “Of course. The two things are not mutually compatible. How do we deal with that particular issue?

Greg Clark: You are right to point out that it is not simple. It would be simplistic to say, “Everything can be done at the local level. Some things should be done locally, and there are strengths locally that should be recognised. It seems to me that it is good to have the expression of that. I used to say, before we had any combined authorities and mayoral authorities, other than London, and Bob Kerslake will remember this from his time as permanent secretary, that the truth was that, when the Mayor of London, whoever it was, rang you up as a Minister, you took the call and took very seriously what was said there.

It seemed to me that there was no reason why London should be the only place in which that was the case. It ought to be the case for Birmingham, Sheffield and other places as well. That was not to say that everything was done locally, but at least you had a sense that you had a leader expressing the local point of view and, quite rightly, a Secretary of State or Minister expressing the national point of view. You went into a discussion, sometimes a negotiation, and came up with something that is best for that area.

Q202       Chair: James, do you want to come in from a local government point of view? How do we resolve this dilemma about the public perceptions?

James Jamieson: The issue is one of perception. People talk about a postcode lottery. I do not; I talk about local choice and local priorities. That is really important. As Lord Kerslake was saying earlier, a single, one-size-fits-all policy is not right. What is right for Cheadle will not be right for Sheffield or for Harrow. There will be different priorities and different needs. We need to be able to deliver those. Devolution is about two things. One is tailoring to the local needs of that community. Secondly, irrespective of that, it is just so much more effective to pull all the components together at the local level. It is almost impossible to do it if you have to do it via Whitehall.

Lord Kerslake: Let me make three points. First, centralism has not brought equality. This is really important to say. If you take, for example, the reductions in public health budgets, you find that £1 in every £7 was cut from the most deprived places, and £1 in every £46 in the 10 least deprived places. We know that services are not equal, despite centralism in this country. That is really important to recognise. Centralism does not necessarily produce consistency.

Secondly, there will be differences that come from devolution. It is really important for central Government, with local government, to agree on the areas where there will be a consistency, for example a National Health Service free at the point of delivery. You would not devolve that choice locally. You also would not say that, for very vulnerable people, there should not be an independent inspectorate to look at how services are performing. There will be issues that have to be determined nationally, but we determine too much nationally in this country.

Thirdly, much of the devolution here is not necessarily about the standard. It is about how things are delivered. It is about the way in which people make their decisions. Too much of it at the moment is central Government-dependent. You can have common standards and allow variation in the way in which services are delivered. That is how innovation occurs.

Q203       Mary Robinson: Having discussed decentralisation, moving powers away from Whitehall and the importance of devolution, I want to focus in. Lord Kerslake, you mentioned earlier that Covid had increased the urgency of the levelling-up agenda. Within Whitehall itself, have Covid-19 and the completion of Brexit—because there have been two important events here—changed the debate about devolution? Lord Kerslake, I will begin with you, because you raised this in terms of Covid and the levelling-up agenda. What about Brexit too?

Lord Kerslake: Brexit is part of that conversation. There is reasonable evidence that it will impact differently in different parts of the country. Some parts of the economy are more vulnerable; we should say that. It should be part of the conversation. At the moment, we are lacking a clarity about the true intent of levelling up and a plan on how to deliver that intent. It is absolutely the right agenda. I applaud the Government for having it, but it needs a great deal more definition in terms of what they are seeking to achieve and how they are seeking to achieve it.

I would link that to a point that says it needs strong political leadership. That is how the devolution deals that Greg and George Osborne achieved happened. It was through very strong, I would say inspired, leadership at a political level, with Cabinet clout. Whitehall will not be doing that unless it gets that direction and clarity from Ministers, and particularly a Cabinet Minister.

Q204       Mary Robinson: Greg, you are uniquely placed to give a view on whether Whitehall attitudes have changed in the light of Covid and Brexit. What is your take on it?

Greg Clark: They have changed in the light of experience. Clearly, there is an important local dimension to the Covid response. We have seen the fact that the tiers have operated in different ways. It is quite hard to do, and there has been a lot of controversy about it. There is a sense in which that is perhaps just a banal reflection of the fact that not everything is always the same in every part of the country. You have to adapt things to what is right locally.

That will also be true when we think about the recovery. We cannot be passive in this. We really have to make a deliberate drive to power ahead. You cannot do that with an average policy across the country. You will know, Mary, that there are strengths in Greater Manchester that you want to recognise, which are very different from those in Cornwall, the south-east or around Cambridge, for example. To capitalise on the opportunities, it seems to me you have to have that ability to recognise what is different locally. We should draw that lesson from not just the pandemic but how things have gone in recent years.

James Jamieson: It is vital that we have a real, serious driver to make this happen. It is a feature of all organisations that no one wants to give up money or power. This is only going to happen with the Prime Minister and the Treasury fully backing it and making it happen. As Lord Kerslake and Greg were saying, the last 40 or 50 years has seen centralisation, not decentralisation. We need a fundamental change. It will require real impetus from the top to make that happen.

Q205       Mary Robinson: I wonder whether Covid has allowed Whitehall to see the benefit of local government working well. LRFs, the local resilience forums, have been closely involved with councils in the delivery of the packages that we needed to get down to people. Has that changed the way that Whitehall has seen the operation of local government?

James Jamieson: Without doubt, Covid has demonstrated that local councils, LRFs and so forth are far more effective at getting stuff done on the ground in a local way. If you look at some of the business funding that has gone out, it is paid by Government, but local government has passported £12 billion of funding to nearly 900,000 businesses, through 10 different schemes. Whitehall was incapable of doing that. That demonstrates what we can do, how flexible we are and how nimble we are at the local level. Covid has demonstrated that.

We could look at things like test and trace. An excellent job has been done in building up testing capacity at scale on a regional basis, but tracing, which is all about local knowledge, contacting the right people and getting them to respond, is a local issue. That is why local government and local councils have had an over 95% success rate in tracing, and the national system is down below 80%. It demonstrates that there is clearly an advantage to devolving things to the local level.

Lord Kerslake: I have seen the collaboration on the ground in Sheffield between the local authority, the health service, the hospital and the universities. That collaboration at local level just cannot be done in any other way. The fact that they have had the leadership there to do that has been quite a big lesson from Covid.

Q206       Mary Robinson: I would like to explore a little more how Whitehall Departments see the devolved areas. The metro Mayors of North of Tyne and Cambridgeshire and Peterborough told us that there were very varying attitudes towards devolution across different UK Government Departments. Lord Heseltine has proposed a Department for English regions. Would such a body help us to address this problem?

Lord Kerslake: Personally, I am quite sympathetic to the idea of a Department of devolution that would bring together oversight of the devolved nations and the agenda of devolution in England. It is worth exploring. It would need to have, as its central role, sorting out this issue, as well as of course responsibility for local government. It is certainly worth examining. As I said earlier, successfully delivering devolution requires leadership. It unquestionably requires strong leadership.

Departments vary, in truth. Some are open to the idea of devolution, some less so. The default, and I say this as a former head of the civil service, is to, on the whole, conclude that it is better centralised unless somebody has a compelling argument to do it locally. We need to turn that round. We need to say, “It is better done locally, unless you can come up with a better argument to do it centrally. That is a shift in thinking that cannot happen by Department. It needs powerful leadership across Government.

Greg Clark: To pick up Bob’s point, when we founded the cities unit, the original suggestion was that this should be in DCLG. My concern about that was that it would just become one of the objectives of a Whitehall Department and would not have the leverage I thought it needed to have. A lot of the policies rest, whether it is in health, education or skills, in other Departments. I said that it needed to be in the Cabinet Office, because that is close to the Prime Minister and has the ability and authority to rove across the whole of Government. I completely understand where Bob’s proposal comes from, but my concern is that it institutionalises it in a Department, when I think you want to spread the spirit across Government.

There are different Departments. On training, for example, it was always incredibly difficult, and Bob knows this, to persuade those who held the policy responsibility for skills to allow things to be done differently locally. It needs the authority of the Prime Minister and the centre for that.

Q207       Mary Robinson: Do you think that different Departments within Whitehall engage in better ways with local government, intrinsically?

Greg Clark: Yes, there are great cultural differences, but they can change. Interestingly enough, the Treasury was probably the most resistant to it until George Osborne made this a big plank of the policy. Then, although you would never have believed it, the Treasury became the place that was driving devolution, and actually doing it for economic reasons. The penny had dropped that, if you want to succeed economically, this could not happen in the abstract. It had to happen in particular places.

For the first time in my memory, the Treasury got the importance of place. Obviously MHCLG has that in its blood. I think the Department of Health and Social Care now has this. It was part of the devolution arrangements on an experimental basis with Greater Manchester. In my experience, the DWP and the Department for Education, thinking particularly about the skills side of things, were slow to be convinced of the advantage of trying things different ways.

James Jamieson: While it might be nice to have a Department to do it and facilitate it, ultimately, it has to have the clout and it has to have levers across Whitehall. Frankly, that is only going to happen in the Cabinet Office or the Treasury. They are the Departments that can make a meaningful difference, have a negotiation with another Department and have strings to pull. That is critical.

Q208       Ian Byrne: I will direct this one to Lord Kerslake to begin with. You touched on inequality earlier. The Centre for Cities today has written that levelling up will be four times more difficult post-Covid and that, as you said, it should be the epicentre of Government policy. What powers should be devolved to achieve this?

Lord Kerslake: There is a wide range of powers needing to be devolved. One that is crucial is around employment and skills. There are some very good examples of local approaches to this that have had more impact than national models. I strongly believe we can do more on the employment and skills side. Housing is an area where there could be more devolution of power. More decision making on things like transport and infrastructure could be done locally, as well as on the arts. Those are just a few examples, all of which could contribute to moving forward on the levelling-up agenda.

It is both four times more difficult and four times more urgent. That is the point I would make. There is a greater imperative, to my mind, than at any time since I have been in my public life to address this issue. It is not just about devolving more powers. It is also about more flexibility in the devolution that has already happened. Much of the devolution that has happened is decentralisation, where there are strings attached to the funding and responsibilities passed down. Mayors, metro Mayors in particular, will say that they need the ability to move money between funding lines as well. We need both more powers and more flexibility on those areas already devolved. One way of looking at this would be to say, “How much have we devolved to the devolved nations?” and ask the question of why we would not go in that direction.

Greg Clark: One of the areas I would emphasise is the local industrial strategies. Part of the original driver for decentralisation was the idea that, if you wanted to attract businesses, perhaps from overseas, to come and locate here, or businesses within the country to expand, it was not sufficient just to have a national environment that was attractive and predictable, and tax rates and all the rest of those things. Businesses need to locate in particular places. They want to know just as much locally whether it is going to be a good place to be. Do we have supportive leadership? Do we have the infrastructure in place to be able to succeed? Too often you can have the conversation at a national level—"We will try to be competitive”and then get tripped up at the local level.

One of the features of decentralisation and devolution so far has been the real sense that you have people with power and influence able to improve the local economic conditions and infrastructure. For example, if someone is going to locate in the west midlands, they can get in touch with the Mayor and talk about where they would be and whether you need new road junctions put in place.

This has a heritage. I remember the approach of Sir Howard Bernstein, the then chief executive of Manchester City Council, when we started on this. If ever he heard that there was some international investor in the country, if he had heard that they were having meetings in London, he would be down on the train, muscling into the diary and saying, “Have you thought about Manchester? Come up here. You need some land to develop. Come and see what we have. He was very active in attracting them. We have a bit more of that now across the country. There will be even more opportunities and the need to do that to prosper in the future.

James Jamieson: I am not going to disagree with my two colleagues on this, but there is some real opportunity to ask, pretty much, what does not need devolving, rather than what does. We talked about skills funding. That clearly should be done at the local level and linked to much of the stuff that DWP does, which should be devolved to the local level. You look at education. Why do we have regional schools commissioners? That should be done locally, and it would be done much better.

There are so many funding pots and so much bidding going on for little bits of money, and sometimes big bits of money. Why not have a single pot? We have a whole raft of funding streams associated with growth and housing, whether it is HIF funding, growth funding or town regeneration funding, but also basic needs grants for schools and local transport funding. You have funding associated with the environment. Why not put them into a single pot and say, “For every house you build, here is £40,000”—or whatever the relevant sum is—“and it is down to you, local authority, to fund the schools, road junctions and affordable housing out of that, and make your own priorities”? That is instead of having hundreds of bids for different bits of money that you are uncertain of getting, so you cannot plan. Do that, and we can plan long term to support funding.

We have the reorganisation of health now and some very sensible moves that I would support, but ICSs need to be locally driven. The health devolution that has happened in Manchester has been very successful in improving cancer rates, access to public health and so forth. There are some stats we can provide you on its success. Why can we not have that level of health devolution throughout the country? By the way, it does not need a Mayor. It just needs devolving with local solutions.

There are public assets. As a council, if we want to do some growth and there happens to be an ex-RAF base or a redundant hospital that has not been used for the last 10 years, trying to access that asset for local growth or local facilities is an incredibly arduous task. Why do we not simply say, “If you have a redundant public asset, the local council can acquire it at the county valuer’s valuation or something, provided that it uses it”? There are quite a few things there that would be immensely helpful.

Q209       Ian Byrne: I am going to touch on framework now. Should there be a devolution framework that states the principles about the objectives that devolution is designed to achieve? Can this framework avoid being top-down and excessively rigid?

James Jamieson: I personally like frameworks because they set, literally, as the word says, a framework you can deal with. It is critical that it is done properly and is bottom-up. The underlying premise has to be, “Why is this not devolved?”, not, “Why is it devolved?” We need to go through and look at everything, and say, “Why can this not be devolved? Why can skills not be devolved? Why can education not be devolved? Why can assets not be devolved? Why can we not have a single funding stream?” A framework that does that is great.

My worry about frameworks is the one you highlight. It becomes top-down and it is a bit of a chicken and egg. As we have seen so much in the discussion about devolution, it starts off with looking at structures, rather than the underlying function, which is to get improvements to our communities through devolving powers. We need to focus on the devolution bit. There is an exam question that has to be answered; we may need to come up with a structure that addresses the question, “Can you guarantee that the devolution will deliver what it says on the tin? Who is accountable?” That is a separate question that needs to be solved locally.

I see no reason why health cannot be devolved to a large county, without the need for a Mayor or anything else. Conversely, if I take the local situationBen will be aware of this, as well as Rachel—if we are going to have serious health devolution in Bedfordshire and Milton Keynes, which is the ICS, we will have to find a way of co-operating between central Bedfordshire, Bedford, Luton and Milton Keynes. It would be a different solution in our area to Kent. The principle is to get the devolution done. The framework should be about enabling, not restricting.

Ian Byrne: That was a good answer.

Greg Clark: This goes to the essential point the Chair started with, about how you combine the idea that people want to have national standards, but they also see the benefits of local knowledge. That is why, in my own view, devolution as a blanket policy, where you just devolve one area of policy, whether it is health or skills, to every local authority in the country, is not the right approach. A framework is better, because it may be the case that things could be done better in skills policy locally, but it is not guaranteed that it would be the case. You can think of authorities that may not make a particularly good fist of it. You would want to be convinced that, actually, there was a good plan for doing this better.

It is exactly the same with health. Health is hugely important. You would not want to hand the NHS over, untried and untested, to a collection of local authorities, unless you had really good reason to think this was going to be better. I would have the opportunity there, perhaps, as James says, through a framework. The test of devolution is whether you can make a convincing case that this is going to improve things. If you can, you should do it. I suspect, as we have been talking about during this conversation, a good relationship between the national and the local would probably come out of that. You would be working together and pooling your strengths, rather than just handing it all over to every authority in the country.

Q210       Ian Byrne: On that, looking at the test and trace debacle, if it had been handed down to a local level from the beginning, we would not have had what we have now. Once we move on to post-Covid, that is a real example of how we can devolve things that actually work. That is a wonderful example of what we should have done and what we did not do. Where we are now is because we did not do it.

Greg Clark: That is a good example of Covid having lessons for this. As you know, I chair the Science and Technology Committee. We will be looking precisely into this, on test and trace. Interestingly, on the vaccine roll-out, the fact that we are doing it at pace, quite explosively you might say, is making use of a lot of local networks. This question of the national and the local is very relevant. On this, I suspect it is a combination of the two working together. We may draw some lessons from this for your inquiry.

James Jamieson: I have a subtle potential disagreement with Greg, which I rarely do. It was the phrase that you need to justify why you can do it better. My fear is that, the moment you say that, you open a Pandora’s box that Whitehall can exploit to not do things. An alternative would be to say that Whitehall needs to justify why you should not be able to do it. It is a subtle difference, but it is very important. I completely agree that you would not want to devolve something if there were real concerns that whoever you were devolving it to was not capable of doing it. I would much rather the onus was in Whitehall to justify why you could not do it, rather than the local level having to justify why it is better.

Lord Kerslake: I absolutely endorse the point that James made there. The risk is that central Government put the bar too high and therefore things do not change. I certainly support a framework. Much has been achieved through the deal-based model that Greg introduced. To move to the next stage of devolution, we are going to need more of a framework than we have had hitherto. Does that mean it has to be the same devolution everywhere? No. You almost need a menu of choices where the conversation happens between central Government and local government. It is co-produced.

Places that think about it will not want to take on something that they feel they are not equipped to do, or they are not equipped to do now. They might be equipped to do it in a few years’ time. I strongly believe in what I would call a stepping-stones approach. You allow places to move at the pace that is right for them and to move on, learning from other places. Those that are at the front carry on moving, so you carry on looking at new ways to devolve in Manchester and London, but you do not let everywhere else just stagnate while you are doing that. That is the sort of model I would like here. We need a framework with some principles that will guide that process. That is going to be necessary.

Q211       Bob Blackman: Looking at the comments that all our witnesses have made up until now, one of the issues has been that different areas have moved at different paces. Different deals have been put in place at different times. Thinking specifically about London and Greater Manchester, where do our witnesses see the future of devolution? Is more devolution needed? If so, what devolution and what powers would our witnesses seek?

Greg Clark: It has to come from them. I can see the attraction of a menu from the centre, but I would prefer to see devolved Administrations saying, “We have done this. This is the next thing we want to do, and we need the powers over that.” Bob, you are a London MP and I am not, so you will have a better idea of this. On infrastructure, for example, it seems to me, as someone who works in London at least, that the idea that you should be able to promote new infrastructure without needing to go through the Department for Transport to get things authorised would be valuable. The essence of this is that it needs to reflect what the local areas want. They should be able to propose it and, one way or another, it should not be blocked if there is a good reason why it should take place.

Lord Kerslake: I certainly think they should go further. I touched on this in my answer to the previous question. The Mayors, if you talk to them, want to go further. I have spoken to Andy very recently in fact. He has quite significant ambitions to go further, not least in the move towards what James talked about and a single-pot approach to funding. There are quite a few areas where they could do more.

In London, housing is the critical one. We are never going to solve London’s housing problem unless we empower the Mayor with more tools at their disposal to deliver the needs of London. It includes things like, for example, the rules around licensing of private landlords, which at the moment still requires Secretary of State approval. That could be done through the Mayor and a devolved model. There are plenty of things where you could go further on devolution in both London and Manchester. Then we would learn from that for other places that are coming along but further behind.

Q212       Bob Blackman: How would you answer the concern that will be expressed about the tension, especially in London, between the boroughs and the Mayor? Irrespective of different political parties, the powers and capabilities are of concern. How would you deal with that particular strain, which is already there under the existing powers? If you give more powers, do they go to the boroughs? Do they go to the Mayor? Where do they go?

Lord Kerslake: They should go to both. I do not think it is necessarily to the Mayor. On the whole, you should ask the question of what is the lowest practical level to devolve powers. I am strongly of that view, so things should go to the boroughs as well as to the Mayor. Yes, of course there are tensions there between Mayors and boroughs. There always have been and there always will be. What matters is that, when the chips are down, they have demonstrated, as have the metro Mayors and their constituent councils, that they will work together in the interest of their place. On almost every count, we have seen that happen. I would kind of trust them to know how to move that forward, alongside a principle of devolving to the lowest practical level.

James Jamieson: I very much agree with the point that Lord Kerslake has just made, that you devolve to the lowest practical level. That is important. This should not be seen as about devolving to Mayors. There is plenty that boroughs can do more of if powers are devolved to them. I completely agree that we should continue to devolve to combined authorities and Mayors, but we must not let it be seen that that is the solution and everyone else needs to catch up by being a combined authority. It is not right solution for lots of the country. A mayoral model works in an urban area with a clear identity. If you take rural areas where there is not a clear centre, there are different models. We need to accept that that is the case and get on with devolving. You keep asking the same question: “Why not? Why should this not be devolved?”

Q213       Bob Blackman: James, I think this is your particular field. What about the effect on the areas of local government immediately adjacent to these devolved areas? For example, in London you have the whole of the inside of the M25 region straightaway, where Transport for London has stations in authorities that are beyond the Greater London area. In Manchester, you have a similar set-up with road networks and such like. What has been the impact on those areas of devolution going not to them but to the area immediately adjacent to them?

James Jamieson: Not unnaturally, there is a tension when you have significant devolution to one authority, and its neighbouring authority does not have it and roadblocks are put in the way of that. This is quite critical. We should not slow down devolution to combined authorities, but we must speed up devolution to everywhere else. We need a more flexible attitude to that. As you rightly say, there are a number of non-Greater London authorities that are inside the M25 and that are all clamouring to get devolution. There is no reason why they should not have it.

Q214       Bob Blackman: Coming back to you, Greg, if you were now in the position of Secretary of State for this, where would you be looking to press for greater devolution to those areas that have already had a devolution deal, particularly those like London and Manchester that are well established in that sense?

Greg Clark: One thing that has happened in these institutions is that they have developed a track record and experience. You are not taking a risk, such as I described, by having a policy of devolving everything everywhere. You should look at their ability to take projectsI mentioned transport projectsand get on with them perhaps more quickly and with greater agility. Living through the next few years, we are going to need to be much more responsive than in the past. Covid is going to accelerate a lot of the changes that were already under way in how we work and what types of businesses are going to be there. Nationally, things can be slower than a very well-organised and agile local response. Whether it is on transport or on economic development, I would look to those areas in particular.

Q215       Bob Blackman: We are going to come to finance a bit later. Bob, the UK2070 Commission suggested that there needs to be an enhancement of sub-national devolved bodies. Is there a potential here for administrative chaos?

Lord Kerslake: I do not think there is a potential for chaos. I would not advocate the creation of a new tier of government, though. I do not advocate that. I would look for greater collaboration at pan-regional level, such as the northern powerhouse and the midlands engine, only developed to a higher level and introduced across the whole of the country.

I say that because, even with the combined authorities, there are decisions that will go beyond their, quite large, geographic areas that need to be addressed on transport, inward investment and so on. You either say, “Those will be made nationally,” or you have to look at pan-regional collaborations. I personally favour the latternot a new tier of government but collaboration between combined authority Mayors and leaders at that pan-regional level. We have already seen what is possible there, and a lot more could be done to drive forward that economic agenda that I spoke about.

Q216       Bob Blackman: Finally, James, there are suggestions, if Greg and Bob get their way, of more transport and other decisions being taken by these bodies. I do not want to get into the party politics of this. Given that we have commuters coming into London and Manchester from beyond the Greater Manchester and Greater London areas, what say should local authorities outside those areas have about what happens for decisions, for example, on fares or any charges on motor vehicles, or for other decisions that are being taken in those areas? How do the local authorities that are outside those areas get involved?

James Jamieson: This is a classic boundary issue, where a decision of one authority impacts another. That is where we need a levelling up and enhancement of devolution. Councils and local authorities across the country have demonstrated that, when asked, they work together to deliver projects. As Lord Kerslake and Greg Clark said, there are plenty of things that go beyond the boundary of a local authority. Maybe we have to have an informal co-operation. Maybe it needs to be more formal. When you talk about things that impact significantly another authority, if you devolve things properly, authorities will work together to deliver those things. It is a bit of a grey answer, but it is about genuine devolution. It is not about devolving to just one party. That is why it is so important that devolution goes effectively to everyone.

Q217       Chair: I began by asking questions about public attitudes to devolution. When we looked at it before as a Committee, some years ago, we said that it was really important that you engage with the public, and get them to have an input into devolution and to understand what is happening. I will probably address this to Greg first. One of the criticisms was that, when the city deals were donethe devolution arrangements in Manchester and then the other combined authoritiesdiscussions were between civil servants and local authority officials, then between Ministers and council leaders. The public were only brought in when they were told what had been agreed. Can we do better?

Greg Clark: It is a fair criticism. In response, these were negotiations about moving significant sums of money and significant powers, in some cases, there. You literally needed to have people in a room who were debating these things. It is quite difficult to do that including everyone there. Having said that, the way to address that is, whether it is for existing authorities or any new proposals for devolution, perhaps to have a greater phase of engaging the public. “What is our negotiating mandate with Government for this?” you might ask. “As an area, what do we want to do differently?” Then, the team you have, your elected team, goes in to negotiate that. That would be one way of addressing it.

One feature, in terms of public support and interest for these things, is that, with due respect to members of this Select Committee, for people outside Select Committees of Parliament, charged with looking into questions of devolution and decentralisation, it can seem quite abstract and dry. In London, for example, I do not detect a great sense that we should not have a mayoralty of London. In fact, if you were to propose abolishing it, I think people would say, “No, London needs its voice.” I hope this might be the case in other parts of the country. The experience of it might engage people perhaps more easily than the planning of it.

Q218       Chair: Bob, you were probably around at the time that some of these issues were being debated in Government.

Lord Kerslake: I certainly was, working for a Minister called Greg Clark at the time, I think. The challenge is right. In the process of negotiating deals, exactly as Greg said, you ended up with small numbers in a room and others felt, to a degree, excluded. You learn from that. If we did more devolution deals in other places, we would learn from that. In particular, exactly as Greg says, you would try to have an engagement, before you went into the negotiation, about what mattered most to local people in the outcome of the process. Some actually did do that, but probably not enough, in all truth.

I personally never saw the deal negotiated as the end of the matter. Devolution is a process, not a destination. There should be an opportunity for open dialogue and discussion at local level: “This is what we ended up with. How could it be refined and improved?” Let us not see the deals negotiated as the last word. I certainly did not see that at the time. I do not think you did either, Greg.

Greg Clark: No, absolutely. The deals that were struck were very much initial deals, for all the reasons we have been talking about. As you get more mature with the arrangements, you may be able to, and want to, do other things as well. There was a sense in doing things one bite at a time, but you need to keep extending it.

James Jamieson: In the analysis that we do as the Local Government Association, we regularly poll the public. From the last polling we did, 72% of residents trust their council, compared to 18% trusting Whitehall, to make the right decisions locally. There is a huge pent-up agreement that making decisions closer to the people they impact is a good thing. As a broad principle, I think there is huge support for it.

Where one gets a little more finessed is if that involves a restructuring of local government, which clearly the mayoralty did, maybe involving more local opinions. The problem is that a lot of the deals were based on, “If you have a Mayor, you can get these powers.” That is where I am a little concerned about the top-down nature. We need to think a little more about how this is about localisation of powers and doing the right thing for the communities, and then come up with a structure that enables that to be delivered.

The deals were great for Manchester, London and elsewhere. As we get to the more geographically complex parts of the country, we cannot afford to say, “Here is the organisational structure that you will have and here are the goodies we are prepared to give you.” We need to think about how, fundamentally, this should be done on a local level. Now, how are you going to ensure that you deliver?

Q219       Chair: In terms of the wider constitutional issues that that has regard to, we have a very centralised country in terms of powers, but our constitution, though unwritten, is very much about parliamentary sovereignty. Anything can be done at local level only with the approval of Parliament. What Parliament or Government give, Government can take away. The slight exception to that—it is still there that Parliament has sovereignty—has been the case of Scottish devolution, Welsh devolution and the Mayor in Greater London, where all those changes have been made with public support through a referendum. Is that a course that other forms of devolution should follow?

James Jamieson: There is a lot of devolution that can happen that probably does not need restructuring. It just needs Whitehall willing to devolve. It requires local government potentially to co-operate on a wider basis. That should not need a referendum. If you are going to have major local government reorganisation or restructuring, that would be an entirely different matter. The principle is to devolve, and there is much you can devolve without the need for restructuring.

Greg Clark: I do not see this in constitutional terms. The strongest case for decentralisation of powers is that you can do things better. You can work together and get local knowledge in. It is quite pragmatic and it is over particular things, rather than it being an in-principle constitutional change, such that the relationship of this city to the nation is altered permanently.

You can have those conversations, but in my view it would delay things a lot and make it quite a high-octane conversation. You can get along practically and do a lot of things in a much less centralised way than we have done now and in the past. Let us not forget that, for most of the existence of our parliamentary democracy, with the unwritten constitution you described, our cities, towns and counties managed to flourish and sometimes had worldwide famous flourishings without there being any great constitutional settlement that was descended on them. They worked within the system, very effectively, and they can again and are again.

Lord Kerslake: I feel that referendums should be used sparingly. That would be my conclusion over the last few years. I would not be rushing too many more of them. You would have to be making some major constitutional change, as was the case in Scotland, London and so on, that would justify a referendum. I do not think what we are talking about here constitutes that, as I think James has said.

There is a different point about whether Parliament ought to legislate for stronger protections for local government and its rights. That is another debate, and there is a case for exploring that. That would not be about a referendum. That would be about the Government, with local government, agreeing a stronger constitutional position of local government. There is an issue of what I call parity of esteem in this country about local government that we should recognise, I am afraid.

Q220       Chair: How can we explore that, Bob? Central Government and local government sit down to have a nice conversation and reach agreement, and the next Government or Parliament just change it. How do you make that constitutional settlement something above simply an Act of Parliament, which can be changed next time round, or can you not?

Lord Kerslake: I am not sure you can. The only thing you can do is to have simple majorities. That is another option on things like that. Given that it had been legislated, particularly if it got consensus support across the parties for the principle of it, it would be hardnot impossible, and nor should it be, in a wayfor a future Government to change it. It would be more resilient than what we have at the moment.

Greg Clark: The best way to entrench something is to make a success of it so it would be unthinkable to get rid of it. We cannot and should not change the essence of our parliamentary democracy, which is that Governments are elected and can undo the things previous Governments did. You want to have a situation in which it would be so unthinkable, because you have done the right thing and it works. That is the best protection. You should aim for that, rather than to have various barricades to defend what you have done.

Q221       Ben Everitt: James, I am going to start with you, predominantly because you have covered a lot of the ground I wanted to talk about. Let us talk firstly about the difference between the types of area where powers are devolved. Specifically in one of your answers, you talked about the difference between rural and urban areas, and how things necessarily need to be different, because they simply are different areas. Do you think there are lessons we can learn from the different deals we have, thinking of Cornwall, West of England, Cambridgeshire and Peterborough, as compared to those more metropolitan areas? How can we take those lessons forward for further devolution?

James Jamieson: Absolutely, there are lessons to be learned every time you try something and do it. There are things you learn. There has been a lot of learning about health devolution in Manchester. It had a few hiccups to start off with, but it is now delivering. You can learn lessons. In the West of England and Cornwall, we are still in the early phases, but you can learn.

The key thing—there is a bit of a conundrum in devolution—is that if you look at devolution in geographies, there are three essential geographies. One is the economic geography, one is the public sector geography and the other one is what I would call a cultural, heritage, place geography. The great thing is that, in London and Manchester, those are pretty much coterminous. As you know from your own experience in Milton Keynes, those three geographies are really quite different. Sometimes you are in the east of England; sometimes you are in the midlands, from a public sector point of view. On cultural heritage, where does Milton Keynes sit? If you look at the economic area, it overlaps with Oxford, Northampton and so forth. It is much more complex, and we have to accept that.

That is why a simple solution—if I may be so bold, a combined authority and a Mayor is a relatively simple solution—does not work in these more complex areas. That is why we need the areas to come up and answer the exam question, which in essence is this: “If we devolve all these powers, how are you going to be able to convince us that you can deliver the outcomes we want? Who is the accountable person or group of people for this?” Those are perfectly reasonable exam questions that need to be answered.

The bit I have a problem with is saying, “The answer is a Mayor,” because I really think it is not. When you talk about devolution in these more complex areas, you may work with different partners depending on what is being devolved, and your geographies may be slightly different. It comes down to what it is you are devolving and what the solution is. Forgive me for using an area local to me and Ben, the Oxford to Cambridge arc. Quite simply, if we are looking at transport, we need an arc-wide mechanism of working together. If we look at health, it will be potentially a different mechanism, but that is local. That is no reason why you cannot devolve those powers, particularly if you focus those powers on outcomes.

This is a key thing for successful devolution: what the outcomes that you want arenot what the process is, not what the bidding process is or which boxes you will tick. What are the outcomes you are trying to achieve? That would allow you to be much more flexible with things like funding. I think it was Ian who was saying earlier that having little pockets of budget that are devolved but that can only be used for x is nowhere near as good as saying, “Here are the five outcomes I want you to achieve. Get on with it.

Q222       Ben Everitt: I agree entirely with the premise of where you are coming from. I am going to add a bit more to that line of thinking and pose a question back to you. That is all well and good, but we would end up with something that, in the structure of local government and how people perceive and interact with their authorities in any different area, is going to be completely asymmetric. We are going to end up with different levels and tiers of devolutionI said “tier”; I try not to say “tier” nowadays. There will be different areas and layers of devolution where authorities of different types have different powers. From a user perspective, for an everyday person interacting with their public services, is that not going to be really complicated?

James Jamieson: The opportunity is to have pretty similar levels of devolution. It will be delivered in different ways. Quite frankly, if you ask the man or woman on the street today to explain which local authority does what, I think they would have a hard job of explaining it. They care about what is being delivered to them and what the outcome is. That is the essence of it.

Q223       Ben Everitt: Bob, what are your thoughts on that line of argument?

Lord Kerslake: It is an interesting point you raise. I personally support Mayors. Where we have had Mayors, and they have made a real impact, but I am absolutely with James that they are not the right solution for everywhere in the country. We should allow, and be confident enough to have, divergent and different models of how we govern and devolve power. I fear that, in central Government, there has been almost a view that we will not trust devolution unless it fits our model. That has been the mantra, and it is wrong. We should be confident enough to think that alternative models could work.

We could allow more open debate in local places about the right governance, as to whether, in areas where they have counties and districts, they want to move to a unitary model. If we allowed those debates to happen in the context of greater devolution, we would get very mature responses. I am not one of those who thinks that would not happen. It is just that we never let this happen. We fix on a solution at central Government level, the Mayor, and then, if Mayors work in Manchester, of course they are going to work in Suffolk. Well, they may not. We should be open to different choices there. If it is asymmetric, so be it.

Q224       Ben Everitt: That is really interesting, because I have some personal experience of unitarisation, having gone through that with Buckinghamshire. It is a good way to get the ideas flowing from the bottom up, but it is not a natural way of generating local consensus, let us put it that way. How much of that would scupper the whole thing? Last year, the Government floated the idea of making devolution in a unitary model for local authorities quite central to passing powers down from central Government.

Lord Kerslake: They did, and I do not agree with that. You should not start with a condition of unitary government. I have worked in unitary government. Most of my local government career was in that, and I personally think it is a better model. That is not the point, really. It is about setting preconditions on how things happen. To give you one example, in my view, the idea that you were going to have a Mayor for Norfolk and Suffolk, as I just touched on, did not fit the local geography and, not surprisingly, did not actually come off. We must resist this temptation to impose a single model and say, “Anything less than that, we will not devolve”. There is no evidence that that is the best way forward here. It does not happen in other countries in that way. They are perfectly relaxed with different models for different geographies.

Q225       Ben Everitt: Greg, I am interested to find out whether this is new to you and how many of these arguments you have heard before, back in the golden days of localisation and decentralisation, when you were getting that push from George Osborne’s Treasury. Did these arguments come up? Were people saying, “Actually, we are worried about it being asymmetric”?

Greg Clark: Yes, all the time. If you went back decades, you would probably have the same discussions that took place. It is one of the reasons why I am not in favour of a grand constitutional change that, in some uniform way, takes powers from central Government and puts them on a certain tier of local government. Every place is different, and it should be about their capability. It does mean to say that it can be inconsistent across places. That is partly to do with the way that we are.

We are a messy country in that respect. We have cities. Stoke-on-Trent consists of six separate towns. Then we have other cities that are much more uniform. We have counties. Cornwall, for example, was very clear that it did not want to have a Mayor. Different places are different, and it would be paradoxical in the spirit of decentralisation to have a completely rigid Napoleonic imposition: “This is how it is going to be right across the country.” It is true to say that, where other countries moved to a very coherent, less inconsistent system, it was sometimes done through a wholesale reset. That is not the right approach here.

Q226       Ben Everitt: How much of the current policy agenda do you think is pulling apart on that? Just take some examples. James mentioned the BLMK strategic health partnership and, in a later answer, the one to me just then, the east-west Oxford to Cambridge arc. They are two distinct geographical areas. They overlap, but they are not the same. The public services are completely different, and the objectives are potentially different. Where is the consistency between what we are doing on those large-scale strategic sub-regional projects and the thinking about what happens to devolution of powers to local government?

Greg Clark: They are very different. It goes to show that devolution and decentralisation do not mean one identical thing. If you are talking about the devolution of powers to Greater Manchester or the west midlands, that is about an area, whereas, taking the Oxford-Cambridge arc, there is something that connects very disparate authorities on the way. It seems to me that, rather than trip over constitutional inconsistencies, you should design something that works for that purpose and get us into a way of being able to work together that is cooperative and recognises common interests, even if you have different levels of authorities coming together perhaps just for that purpose.

James Jamieson: There is one quite important issue here. There is a tendency for Government to focus on form rather than function. Local government devolution last year was not local government devolution. It was about reforming the shape of local government, with no additional function or devolution. It is critical as we go forward. Anything that involves a change in form should be led by function: what do you need in order to take on this extra power? That would have made life a lot easier for you in Buckinghamshire had it been associated with genuine devolution.

Ben Everitt: Speaking in my local government role, there is always a suspicion that whenever any change happens it does not necessarily come with the money associated to do it.

Q227       Mary Robinson: Greater Manchester Health and Social Care Partnership has been mentioned. The integration of health and social care was one of the functions that has been taken on. I wonder to what extent the differences between budgets and the way budgets are handled is going to be instrumental in the success of this being rolled out elsewhere. For instance, a local authority with responsibility for social care has to set a balanced budget. They are very constrained. In health, there is a very interactive relationship between the local health trust, Whitehall and Government. Is that a constraint, and is there a real tension there potentially?

Greg Clark: There is, and it goes to the national conversation that there is about health and social care. They operate according to quite different rules, and laws in some cases, as well as traditions and cultures. That can then be reflected locally, but I hope it is one of the big policy tasks of this Parliament to deal with that.

Lord Kerslake: I share the view that it will be harder for those areas other than Manchester to make the ICSs work. They can work. I do feel that local government has not had a sufficiently big role in them. If they are going to work, local government needs to be a much bigger presence around the table than it is at the moment.

James Jamieson: The key to all of this is that ICSs need to have a genuine partnership at the local level and at place. That means that central Government need to compromise. You cannot have the ICS as the accountable body for the NHS that is dictated to by the centre, which is setting priorities. That is not compatible with a genuine partnership, where place is setting the priorities and you can ask, “What are the best health outcomes I need for my area?” I use the example I have used many times. If someone has asthma and has breathing difficulties, is the right solution to prescribe them an inhaler or is it to give them a place to live in that does not have mould on the wall? When we can start making that sort of decision at the local level, we have got the partnership right.

Q228       Chair: To come on to the issue of geography, I know Greg got involved in this problem, and I will call it the Sheffield problem, because we had a lot of discussion. Bob will know it as well. We talked about the economic basis on which devolution ought to be operating: levelling up, trying to get better decisions at local level to get better productivity and performance. Then you have the issue of place and people’s association with it.

When we started looking at the Sheffield city region, naturally parts of north Derbyshire and north Nottinghamshire are in the travel-to-work area. People live in those areas and work in Sheffield. They come to Sheffield for other services. The people in north Derbyshire and north Nottinghamshire have administrative, historic and cultural links with Derbyshire and Nottinghamshire. You have a boundary there, which cuts across economic entities. Even when you used to have regional government or regional administration, those areas were in different regions.

You have just talked about the ICS. The ICS for Sheffield includes Bassetlaw, which is in north Nottinghamshire. How do you square these circles? We spent a lot of time in Sheffield, and it did not work in the way we thought.

Greg Clark: That is right. This, again, reflects the reality that Britain is messy. There are no neat administrative, cultural and travel-to-work boundaries. We did not have our Napoleon moment of reorganising everything on a rational basis. We have inherited traditions and affiliations. In my view, that is the way it is. I am not going to pretend that I have the answer to it. In some ways, this was frustrating, but when I was Secretary of State at what was then DCLG, I would not impose a solution when there was disagreement locally.

My doctrine was that these devolved powers and budgets were available, but it had to be sorted out locally, partly because it seemed to follow from the essence of it: that there is no one who knows the travel-to-work area and the cultural connections better than local people. The idea of the man or woman in Whitehall saying, “Right, this is your boundary” was wrong. As you point to, Clive, that was a very painful process without resolution for a long time, which was a great frustration to me in Yorkshire.

Q229       Chair: Bob, do you have anything to say on that, being a local resident?

Lord Kerslake: How long do we have? The truth is that, while you would want it to happen locally, exactly as Greg said, not always is there agreement locally. We have had a long debate, as you know, about whether you should have South Yorkshire, West Yorkshire or a Yorkshire authority, and very passionately felt views across the piece on that. Personally, I was disappointed we did not achieve a Sheffield city region incorporating those parts of Derbyshire into it. In the end, there was not a basis of agreement.

I feel Government can encourage. Sometimes, when it cannot be resolved locally, they are probably going to have to decide. On the whole, you should try to work towards economic footprints if you can. That is my view, and it is not a complete answer. You will know that debates have gone on in West Yorkshire about the right authorities to be in the area for the combined authority. If only we could completely reconcile people’s constitutional views versus the economic arguments. I used to say that nobody in Chesterfield said, “I will not get a job in Sheffield because it means I have to cross the RDA boundary”. It does not work that way, but we still get caught up in all these local fights.

I agree with Greg. Government should try to avoid intervening and imposing a solution, but sometimes maybe that is just the only way forward.

Greg Clark: Looking back, historically, when Government did that in the 1970s, we had Avon, we had Cleveland, we had Humberside. With some enthusiasm, they were thrown over later on, so it is a cautionary tale.

James Jamieson: The reality is that you will always have a boundary. Wherever that boundary is, it will not be perfect and there will always be problems with it, whether it is a cultural, economic or public sector boundary. We have to accept that, in this crowded island, where people and businesses move around, there is not a perfect boundary where you can say, “Nobody crosses this line.” Even if you go to the Isle of Wight, I know that people commute to Southampton. As both Clive and Lord Kerslake have said, we need the local solution. At the end of the day, it will be an element of compromise.

Chair: That is one difficult problem that we are probably not going to solve immediately. We will go on to an easier matter to solve, which is financial or fiscal devolution.

Q230       Rachel Hopkins: We were told by metro Mayors, “There is no chance of devolution working unless fiscal devolution comes with it—none whatsoever.” Do you agree? How should it work?

James Jamieson: I am going to agree with fiscal devolution, but we also need to think about the elephant in the room on this. If we look at local government, depending on how you account for it, around 70% of our costs are associated with children’s and adults’ social care. We need a sensible financial solution to social care if we are going to address the wider fiscal devolution. Quite frankly, another penny through a tourism tax or something else will be swallowed up by social care. I understand why the Mayors, who are not responsible for social care, might look at that slightly differently. Yes, we need genuine fiscal devolution, but we also need a long-term solution to adult social care. If we can do that, it makes everything else on finance so much easier.

Lord Kerslake: I did not want to jump in, but I agree with the Mayors that you cannot achieve meaningful devolution without fiscal devolution. I also agree with James that we have an urgent need to sort out the funding of care, which is over half of local authority spend and yet serves a much smaller portion of the community. It is unstable at the moment without that issue being sorted in local government.

The existing tax base of local government, council tax and business rates, even with greater business rate retention, is still not a robust enough base on which to sustain an expanded role for local government. We need to look at other options, such as assigned income, as they use in other countries, to provide that stable base. That is not for today, but it has to be part of the conversation. In the UK, we have a wide range of services and a very narrow tax base. That is not a stable model. It will need to be revisited. In the 2017 report, we argued for some form of independent commission to look again at this set of issues in a measured way over time.

Greg Clark: In my view, fiscal devolution is a bit of a euphemism. Fiscal policy is about tax and spending. In the discussion that we have been having, a lot of the powers and budgets that have been devolved have been spending budgets. There is a lot of money that can go there, and authorities can have a lot more power and influence over that, whether they are Mayors, combined authorities or local authorities.

Really, when we are talking in this way about fiscal devolution, we are talking about tax-raising powers. I have always thought that, certainly in the early days of decentralisation and empowering of cities, towns and counties, if this became about higher taxes in people’s minds, that would not do justice to the opportunities here. There is a lot that can be done. I do not agree that the Mayors and the devolved authorities cannot do a lot with the powers that they have.

Of course, in the future, I do not have it as an article of faith that people should not be able to raise money locally, obviously not, because local councils do it through council tax. It can be a bit beguiling, this idea that fiscal devolution equals tax-raising powers. Talking to Bob about infrastructure in London, the Northern line extension was paid for by a supplement to the CIL for those properties that are affected in London. That is a way of getting things done. The money is for a purpose, not just a general inflation of budgets by putting up taxes.

Q231       Rachel Hopkins: Building on this, we understand that an approach taken in several European countries is to allocate a portion of revenue from specific taxes to each area, which then deals with the problem of different revenues being raised across the country. What are your thoughts on that as a better approach?

Greg Clark: In effect, that is the approach we take through money being devolved from central Government to be spent locally. It is also in essence what the business rates system is. Because it is a uniform rate now across the country, through the localisation of the proceeds of that, it is returned to the local authorities. That is probably the best way to start, rather than having new tax-raising powers to devolved authorities.

Lord Kerslake: That is really what I meant with assigned income. It is the same model. In fact, it is used in Spain with the autonomous regions quite effectively. It allows you to get greater stability of the finances without, as Greg says, bringing in a whole raft of new taxes. Of course, in the metro Mayor areas, they have an ability to levy a precept now. There is some tax-raising power but, for a range of reasons that everybody understands, the current base is so difficult that the Mayors do not use it very heavily. Some do not use it at all. I am in the camp of saying, “We should explore the assigned income model”, as I would call it.

James Jamieson: This is a key point. We have demonstrated time and again that devolving funding and powers to local government leads to better outcomes for less money. I point to the public health budget as an example, where it has been reduced over the last several years, yet outcomes have improved. Meanwhile, had it stayed in the NHS, its costs would have gone up if it had gone up in line with the rest of the NHS. Actually, we do not need to raise more money, because we will deliver more efficiently if we are assigned that funding that is already raised.

I quite like incentivisation. By assigning a proportion of income that is raised locally, it can incentivise people, for instance, to support growth and so forth. That is why the social care element is so important, because I would hate to have various income streams assigned to local government and for them to be swamped by the cost of social care. Social care needs a separate solution. Then we can focus on devolving and assigning funding, and delivering better at the local level for everything else. Obviously, we want to do very well with social care as well.

Q232       Rachel Hopkins: At present, different areas of the UK can be seen as competing against each other for resources from central Government. This nurtures a bit of disunity and antipathy. It has been suggested that Mayors are grant chasing. How can spending be allocated in such a way as to reduce this divisive tendency if they are competing for pots of money?

James Jamieson: The point I was trying to make earlier is that we focus too much on bidding, grants and process, and not enough on outcomes and rewarding outcomes. There are one or two schemes, not many, where you reward outcomes. For instance, the new homes bonus is directly related to the number of houses built, although it does not cover the full cost to the local authority of building houses. The troubled families programme is directly related to the number of families you turn around.

Aligning income with outcomes, in many ways, is a much fairer way of doing it. It avoids all of that bidding process, which, frankly, is a bureaucracy that does not add to the public. At the end of the day, all we should care about is how we improve—I know it is a bit of a technocrat word—outcomes for our residents. How do we improve the lives of our residents?

Lord Kerslake: I am not a fan of where we tend to end up, which is centrally run competitive bidding processes. I liken them to rabbits in a field. The Government let these rabbits out in the field, and local government runs after them. It is really not a very good way of doing things, and it exhausts local authorities. It leads to distorted priorities. I much prefer an allocative model, as James has said, ideally linked to outcomes. We definitely need to move away from that. I was, in that context, disappointed that the levelling-up fund ended up being run as a traditional, centrally run competitive bidding process, which seemed to be moving in the wrong direction. It was a very welcome £4 billion, but it was not so welcome to run it in a very old-style way.

Greg Clark: There is a danger that authorities compete over micro-pockets of money that are basically meeting central Government objectives, when part of the promise of devolution is people being able to do things in different ways, seeing some people streaking ahead because they have hit on something that works really well. I agree with what has been said about avoiding that.

Because of that, a bit of competition between places is not a bad thing. I remember when we struck the first city deal, which was with the City of Liverpool. Bob will remember this. There was a view at the time that Greater Manchester was the top dog in the north. “What is this about Liverpool coming forward?” The reason they were there was that they came forward with a good and ambitious package of measures. You can be damn sure that Manchester was straight down and, within months, followed it. To that degree, a sense that not just cities but places are striving to think hard about how they can do things differently and better will be a good thing, rather than everyone doing things the same.

Q233       Rachel Hopkins: I have a very quick question here. We have touched already on business rate retention. Would you support additional business rate retention?

Greg Clark: Business rate retention has been very important in establishing that central connection between the leadership of a place and the businesses there. We should advance that agenda.

Lord Kerslake: I would, but I would also say that both council tax and business rates, as taxes, are in need of quite significant reform. The challenge is that it is politically difficult to do that, if we are honest. Yes, I would advocate more retention, but we should not see that as a panacea to the financing of local government.

James Jamieson: That is the key point to me, if you look at the financing of local government, with 70% of our costs associated with social care. I apologise to keep going back to that.

Rachel Hopkins: I am with you on that, James. You know that.

James Jamieson: Social care is going up, effectively, at three times the rate of GDP or inflation. That is fantastic news because of demography: we are all living longer. Business rates and council tax are essentially a GDP-linked tax. You end up having 70% of your costs and an income base that is not aligned. Yes, it is good to have more business rate retention, but that is not the solution to a fundamental issue we have with council funding. If we can address the social care funding, which should essentially be based on cost and need, we can have a very interesting conversation about how we fund everything else and align incentives with the income.

Q234       Rachel Hopkins: How can Government be incentivised to deliver on financial devolution?

James Jamieson: I would not like to say we have a one-off opportunity, but this pandemic has highlighted the need for us to do things differently. It has demonstrated that where we do things differently, it is far more successful. We have to recognise that we really need to kickstart recovery. Government finances are going to be under pressure as we come out of this. Therefore, we need to find better solution, and we need to deliver better.

That can only be done, in my view, by something that is bottom up, not top down. If you look at devolution and funding in the rest of the OECD countries, time and again we demonstrate that, in many areas, and I would not say all, doing it at a local level gives you better value for money, it is nimbler, you get better recovery and you get better local solutions. If ever we needed that, it is now.

Greg Clark: There is a strong economic and political incentive for this. For a Government elected on a commitment to level up, which is to say to improve the conditions of places that have not been in the vanguard of economic growth, that could not be clearer. This conversation this afternoon establishes that an essential part of that has to be to first unleash and then increase the motor that there is in different places across the country. The stakes are rightly very high from this. Its prominence has been elevated, and that is a good thing.

Lord Kerslake: I would endorse what Greg has said. Going back to our work on the UK2070 Commission, the big prize is to raise productivity outside London, in our other regions. We have some regions whose productivity levels are lower than parts of East Germany at the point that it unified with West Germany. We have a massive challenge, which has been made much harder by Coronavirus. The big incentive is to devolve and work with local places, and we might be able to restore and recover our economy in this country.

Q235       Mary Robinson: With more power being devolved down to local authorities and combined authorities, inevitably there must be more scrutiny. How can a culture of scrutiny and accountability be embedded in combined authorities? There are different models. We have received differing opinions on whether the London Assembly constitutes a good model for accountability. Should that be initiated elsewhere, or would you say other models are better?

Lord Kerslake: I should declare an interest. I am chair of an excellent organisation called the Centre for Governance and Scrutiny, which has made some submissions to you on this issue.

It would not be sensible to say the assembly is the right answer for all the other councils. We are still early days in combined authorities and mayoral combined authorities. The right way forward in this would be to let different models develop in each of those places and then test how they are working and whether they are providing the genuine approach to scrutiny that is needed. You are quite right to say this is not about particular structures. It is about a culture of openness and willingness to be scrutinised. That is why I would quite like to have that as the core part of the story and then try different models.

Just to give one illustration, partly because I am working with them, in West Yorkshire they have changed the make-up of the combined authority to bring opposition members on to the combined authority, which would not naturally have happened if it were just the leaders from the local councils. That is a really interesting approach to sharpening scrutiny. There are others. I would like to try a few of them and then, in a few years’ time, do an evaluation and see which ones really provide the genuine scrutiny that is needed here.

Q236       Mary Robinson: How would you measure the success of that scrutiny if you were looking across it? For some combined authorities or mayoral authorities, it may not be in their best interests to have that level of scrutiny.

Lord Kerslake: I would like to ask local councillors, probably through a survey, at least at one level, whether they think they have an opportunity to challenge how the combined authority is working. Do they think the mechanisms are meaningful? I would also ask stakeholders, local businesses and local community voluntary organisations. Part of the evaluation ought to be just asking those parts of civil society whether they think the combined authorities are adequately scrutinised. That would be my way of doing it.

James Jamieson: This is a slight red herring. Scrutiny is incredibly important. I completely agree with that, but we are actually talking about transferring powers from Whitehall Departments and officials, with decisions largely being made by unelected people, to elected local councillors, Mayors and assembly members. By very definition, devolution of these powers will lead to greater scrutiny and greater accountability, even with no other changes happening.

This is all about local accountability and greater accountability. I referred earlier to the regional education commissioner making decisions. If you pass that decision making to a local council, by definition you make it more accountable. In the first instance, there is no need to start thinking about all sorts of new structures. This of itself provides greater transparency and local accountability of locally elected people. However, I completely agree: one should always be mindful that one could improve things further.

Q237       Mary Robinson: Is the accountability every so many years when people go to the polls locally? Is it electoral accountability, or should there be a body or framework in place that we can agree is a good one?

James Jamieson: My key point is that, at the moment, there is no local accountability for decisions made by Whitehall officials. I appreciate you can go and do it via Parliament, but a lot of these decisions are not big, national decisions. Deciding where a roundabout goes, deciding on the funding of a local FE college, deciding on some skills funding, deciding priorities in the local health service, is all done at official level. By devolving those powers, you open them up to transparency and locally elected people. Just that one move to devolution massively improves accountability.

To your second point, on whether accountability could be improved further still, clearly, yes. We already have, within local government and within the mayoralties, existing structures for scrutiny, accountability and public meetings. By definition, devolution improves accountability.

Q238       Mary Robinson: Lord Kerslake mentioned the West Yorkshire devolution deal having the additional members of the combined authority beyond the council leaders, to reflect the political make-up of the local authorities in the region. Is that a sensible move?

James Jamieson: That comes back to the bit we were saying earlier about coming up with sensible local solutions that deliver what is being asked of us.

Greg Clark: James makes a very important point that where these decisions were previously taken was much more opaque in terms of who was taking them and why. Having them taken locally, we will be more likely to have them scrutinised, not least by local papers and websites, as to why we did it in that way. The mayoralties, for all their pros and cons, have a big advantage. You clearly have an individual who can be held directly to account for his or her record. You have an opponent when the elections come who is going to be looking at their record. One of the big advantages of the mayoral model is that scrutiny.

It is fair to say that, for most combined authorities, what you have there are leaders of councils of different political parties. It is not usually a uniform party that is there. That injects a bit more potential for scrutiny and debate than there otherwise might be. The expectation is that the authorities behind this will hold to account their leader, if it is the leader who serves on the combined authority board. They will have to answer for their participation in it. There is more scrutiny than the alternative, in exactly the way that James describes.

Q239       Mary Robinson: The Centre for Public Scrutiny proposed introducing local public accounts committees to bolster oversight of combined authorities. Lord Kerslake, you will have something to say on this. Is this the right idea?

Lord Kerslake: It is an interesting idea. You would expect me to say that, as chair of the CFGS. It is worth exploring. While I agree absolutely with James and Greg about the intrinsically greater accountability at local level than you get at national level, nevertheless, we can and should aspire to look at new and different models that take this further, if we are going to build trust and confidence at local level. It is not that it is not stronger. It intrinsically is, but we always want to push the bar and see if we can go further.

It would be interesting to have a go at some local public accounts committees, not least because it would provide a way of looking at not just local authorities but the wide range of public services in a particular area and holding them to account. Some local authorities do that anyway, but a local PAC might well be another way of doing it. I would not say, “Let us introduce it everywhere tomorrow.” I would say, “Let us try it in a few places and see how it works.

James Jamieson: I come back to my central thesis that you need the right solutions for the right area. There already are various scrutiny mechanisms in place within every council and every combined authority. We do not have our heads in the sand. We recognise that the world moves on and there may be better methods, but I am not keen on prescribing—“You must have this”—particularly when you do not look at the wider field.

The last thing we should do is seek to introduce more bureaucracy. Let us look at it and think how it fits in with the existing system. Maybe we can do some tidying up. Definitely, I am always open to enhancing something, but fundamentally the biggest enhancement you will have in scrutiny is coming from unelected, unseen officials to elected local leaders.

Greg Clark: I would put the emphasis on the public in these local public accounts committees. You want the public to scrutinise these bodies by having transparency over the decisions, the spending and its impact. As we get more data into the public domain, you can have this kind of scrutiny. With the assistance of organisations like the Centre for Cities, for example, which has published its annual report today, more data is available and you can see how different authorities are doing. If some are streaking ahead and seem to be making the most of their situation, and others are lagging behind, rightly, you want the spotlight to fall on that. I hope and expect that we will see more of that. The more data that is made available, the more possible it will be to hold these authorities to account.

Q240       Mary Robinson: Should the Government then consider publishing an annual analysis of income, expenditure, operating costs and other data by combined authorities and Mayors in England?

Greg Clark: That seems to be a reasonable idea, because all this information is available, so it is a question of publishing it and combining it. Anything that is spent by an authority, it seems to me, should be available for scrutiny. That would be a good way to present it.

Lord Kerslake: I would share that view. It should be done collaboratively, though, not by Government saying, “This is the right way to do this, but as a co-produced exercise.

Greg Clark: You might want to make it comparable though, Bob, across authorities. All that information is there, but the more comparisons you could make between places, the better. You might want to have some guidelines to allow that.

Lord Kerslake: Yes, it needs to be consistent, but do not just impose a model without having properly consulted with the mayoral authorities on what is sensible to publish. That is my point.

James Jamieson: I might do an LGA plug here. The LGA has a very good interactive database called LG Inform, which produces a huge amount of comparative data on councils across the country, and it is more than good enough to deliver much of that information. I do not see the need for Government to replicate what we are already doing. In accounting terms, there may be some advantages for greater clarity and consistency of the underlying data, but that is a huge exercise and should be co-produced. I am happy to provide any member with access to the LG Inform database so you can do any comparisons that you would like.

Mary Robinson: Thank you, that would be useful.

Chair: I thought for one minute we were going to get into a discussion about what the Audit Commission used to do and whether we should bring elements of it back. We will go there another day, perhaps. We do not have time this evening.

Thank you all three of you very much for coming and giving us lots of information, ideas and views, which will really help us in our final report. I am sure this is not the end of the process or of the discussion. At some point, we are going to have a Government White Paper. As I say, there are challenges now beyond England, as to how English devolution fits into the wider United Kingdom picture. I am sure there are issues that we as a Committee, as well as others, no doubt, will come back to. Thank you very much indeed for coming this afternoon and giving us this excellent evidence.