Written evidence submitted by the Centre for Cities [PDE 030]
1.1 Cities are where the majority of people in the UK live and where the national economy happens. Centre for Cities is the leading think-tank dedicated to helping UK cities achieve their economic potential and improve the life chances and opportunities for their residents. Our research focuses on the UK’s 63 largest urban areas, including some places such as Mansfield and Barnsley that are not traditionally called cities.
1.2 We are grateful to the Committee for the opportunity to submit written evidence to this timely inquiry and respond to the issues raised in the terms of reference below. We would be happy to give oral evidence if that would help further the Committee’s work.
1.3 Centre for Cities has long argued for devolution to cities to improve accountability and decision-making relative to local priorities. We welcome the progress made. The next stage for devolution policy in England is a clear commitment from government that it believes fundamentally in the benefits of devolution. That means moving on from the ‘take-it-or-leave-it’ approach used to date and entering a new phase where Ministers enthusiastically promote and incentivise places to take up the devolution offer. Without it, the Government will struggle to deliver on its desire to rebalance the economy and boost productivity and wages up and down the country.
2.1 As some of the metro mayors elected in 2017 are up for re-election next year after a short first term in office, it is important that any renewed commitment to devolution from the Government includes a clear commitment to the importance of these new institutions in local government. Devolution is a long-term project. Measuring the success of devolution in terms of its impact on local economies is challenging because it will take a number of years for this impact to be seen in the limited data that is available. Instead, the clearer measure at this stage is to look at the progress of devolving and using powers.
2.2 Since its original version in 2014, Greater Manchester’s deal is onto its fifth iteration, most recently adding greater flexibility from the Department for Work and Pensions in supporting over-50s back into work. Liverpool City Region and the West Midlands have seen their deals updated in 2017, including the incremental widening of remit and extra funding. In Liverpool City Region, moving control over the Key Route Network to the metro mayor was one element of the update, while in the West Midlands, funding for a Housing Delivery team to increase the rate of housebuilding has been set out. The Adult Education Budget has now been devolved too, although this was included in the original devolution deals.
2.3 All cities with a fully empowered metro mayor were in 2017 granted a no-strings-attached allocation from the £1.7bn Transforming Cities Fund to invest in transport to improve productivity. In Greater Manchester, this has been used to improve walking and cycling and purchase new trams to relieve congestion on the Metrolink network, while in Tees Valley this funding is being used to make the areas around Darlington and Middlesbrough station more attractive to high-knowledge businesses and as a destination for shopping and leisure.
2.4 In addition, there are a number of examples of where combined authorities and mayors have used their powers and remit to tailor policy that should help their economies:
2.5 Securing a deal in Sheffield City Region has been a struggle – the ongoing wrangling over a Yorkshire devolution deal has left the Sheffield City Region metro mayor with very limited powers compared to others. Meanwhile, it has left Leeds without a city region devolution deal, which is a big problem given the city’s size and importance to the UK economy.
2.6 Similarly, local political fallout has delayed devolution to the North East too. While a metro mayor is now in place, the coverage of the much smaller North of Tyne geography has resulted in the Newcastle conurbation effectively being split in half, with Gateshead and South Tyneside excluded even though they are part of the same local economic and built-up area, and share a transport system.
3.1 As we set out above, a number of metro mayors have agreed additional deals with government, including extra powers over crime, justice and health. While the expansion of powers is welcome, it is important to note that mayoralties outside of London still have far less power than the Mayor of London and that, internationally, the London mayor has a very limited suite of powers.
3.2 To address this, all metro mayors should have the following:
4.1 Domestic policy such as devolution has been squeezed out by Brexit’s dominance in Westminster and Whitehall. Promotion has been largely absent and the same appears to have been the case for monitoring. The beauty of having a directly-elected metro mayor is that accountability comes at the ballot box too. It is not just the role of Government to be monitoring progress but that of the electorate.
4.2 Data is a problem for two reasons:
4.3 That said, there could and should be much greater evaluation of specific policies, whether they are led nationally or locally. All policies should build in robust evaluation from the start, including allocating budget to perform an evaluation and any evaluation should be done using the principles recommended by the What Works Centre for Local Economic Growth to rigorously assess impact.
5.1 A clear benefit of having a directly-elected metro mayor is that it is a much more visible form of leadership than a council leader because the position is directly accountable to the whole electorate, not just one ward. Survey after survey finds that local politicians are more trusted than national ones. From central government’s perspective, there is clear responsibility given to an office that can be held to account by national politicians as well as local voters.
5.2 The turnouts in metro mayor elections in 2017 were in line with other local elections in cities. While in London, turnout in mayoral elections increased by 10 percentage points between 2000 and 2016 and now exceeds turnout for local elections in the city, suggesting growing interest in the role over time. We will be publishing research over coming months on the visibility of metro mayors.
The adequacy of existing sources of income and the potential need for more sources of income for local authorities that acquire more powers. Whether further business rate retention would provide additional funding for devolved services.
6.1 Although the Transforming Cities Fund is a good first step, the current funding resources allocated to metro mayors are inadequate for the significant economic task they have been given by government and the high expectations of the public. At the same time, as we and the Committee have made clear, local authorities must operate within the continuing constraints of rising demands on services such as adult social, falling grant income (down nearly 60 per cent since 2010), and limited freedom to raise funds locally through taxation.
6.2 Business rates retention provides a good incentive to places to grow their local economy but weaker economies will always need additional funding to deal with pressure on public services. It remains to be seen what the ‘end of austerity’ will mean precisely for local government but, in any case, the system for distributing local government funding should reflect the additional challenges cities face, being built around an objective assessment of need. Existing funding – both revenue and capital – should be un-ringfenced to allow metro mayors greater flexibility to pursue local priorities and metro mayors should have more opportunities to capture the value of economic activity in their areas – the Committee should note that city mayors around the world benefit from a suite of taxes that they can introduce and flex to solve local problems such as local sales, income and property taxes.
7.1 The fundamental rationale for devolution is that the handing particular powers down to a more local level will improve the efficiency of that policy because it can be tailored to meet local needs and priorities.
7.2 Although English devolution to date is often criticised for being piecemeal, the deals themselves are broadly similar and now cover 20.6 million people, some 38 per cent of the English population. Looking to the future, a clearer and more straightforward approach for government and cities would be along the lines of the original Scottish model of devolution – where government would set out its reserved powers and cities would be free to act in all other policy areas.
7.3 That is because a key benefit of devolution comes from the ability to choose between policy tools based on local knowledge and circumstances as they change over time. As we have alluded to above, this would be most clearly seen if metro mayors were given a single, un-ringfenced, multi-year budget. In this instance, the metro mayor could use the money on the policy areas that were most relevant to his or her area, meaning that they make an explicit choice, accountable to voters, about what to fund and what not to fund.
7.4 The geography of coverage is important and there is a deciding role for central government. Responsibilities should be devolved to spatial scale over which they are likely to be most effective. For many economic policies, that means devolving to the areas over which most people locally live and work – the functional economic geography – usually stretching beyond the boundaries of single local authorities.