Written evidence submitted by the Greater Manchester Combined Authority [PDE 032]

1. About the Greater Manchester Combined Authority (GMCA)

1.1  The GMCA comprises the ten Greater Manchester councils (Bolton, Bury, Manchester, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan) and the Mayor of Greater Manchester.

1.2  It is run jointly by the ten council leaders and the Mayor. A variety of boards, panels and committees address specific areas like transport, health and social care, planning and housing.

1.3  The ten councils, uniquely, have worked together voluntarily on strategic issues facing the city-region since 1986, following the abolition of the former metropolitan county council. Long before the various ‘deals’ with Government that have underpinned Greater Manchester’s evolving devolution package were signed, the ten authorities had been developing Greater Manchester-wide institutional capacity which enables resources to be deployed in line with consensual Greater Manchester strategies, based on independently-verified, high quality evidence. Devolution, English-style, has added to the mix rather than provided the recipe. Our devolution delivery model in Greater Manchester relies on strong local partnerships, including Transport for Greater Manchester and the Health & Social Care Partnership, but also our well established and effective joint working with businesses and the private sector; the voluntary, community and social enterprise sector; and the wider network of public services.

2. The Greater Manchester devolution process

2.1  In November 2014, the ten Greater Manchester authorities signed a historic and unique deal with Government which saw the start of devolution of a range of powers, budgets and responsibilities to Greater Manchester level and an agreement to move to the direct election of a city-region Mayor. Since that first deal, Greater Manchester and Government have signed a further five devolution agreements, the first Greater Manchester Mayor has been elected and – building on the Greater Manchester model – devolution deals have been reached with other parts of England.

2.2  Deals were agreed alongside national fiscal events, with discussions taking place across a range of departments, and HM Treasury taking a lead on the negotiations.    The range of policy areas covered by devolution broadened over time as appetite and ambition for reform grew.

3. The success and scope of devolution deals implemented, including the impact on local economies and health economies and the progress of all bids submitted by the September 2015 deadline. 

3.1  The use GMCA has made of the additional powers and resources agreed through deals processes has enabled it to achieve a range of improvements, including: greater alignment in strategic planning; flexible investment in a range of Greater Manchester priorities; the reform and integration of Greater Manchester services; and, new governance models, enhancing the co-design of services and more decision making centred around individual residents. In addition to the benefits flowing from specific powers and responsibilities, the profile Greater Manchester has achieved through being a devolution trailblazer in England has placed ‘Greater Manchester issues’ more firmly on the national agenda.

3.2  Outcomes in Greater Manchester have improved as a result of devolution.  For example, the Working Well programme to support long-term unemployed people in Greater Manchester into work has outperformed national programmes and is generating agreed savings for the Exchequer of nearly double the investment made, while the up-front Transformation Fund agreed alongside the devolution of health and social care has supported the delivery of locality-based care models, better population health outcomes, and better care standards, while also releasing a surplus from health services offsetting the original cost.

Impact – Aligning strategy and new ways of working

3.3  Devolution has enabled increasing alignment in strategic ambition and planning across Greater Manchester. Since the first deal was signed (or in the case of transport, in anticipation of the first deal), a range of Greater Manchester wide strategies have been agreed.

3.4  Greater Manchester has a vision, shared across sectors and set out in the Greater Manchester Strategy, to make the city region one of the best places in the world to grow up, get on and grow old. We have worked in partnership with Government to deliver that vision for the cities and towns of Greater Manchester.

3.5  GMCA has recently built upon these strong foundations with the joint publication, with Government, of the GM Local Industrial Strategy. We have also produced a model of Unified Public Services for the People of Greater Manchester, implementing a radical model for integrating services around people, places and their needs, focusing on prevention, developing new models of support and sharing information across the public sector. Our other Greater Manchester plans - including the Greater Manchester Health and Social Care Prospectus, the Police & Crime Plan, and the Future of Greater Manchester package (including the Spatial Framework) -  map out a path for how Central Government and Greater Manchester can work in partnership to raise productivity and put services on a more sustainable and efficient footing. Working in this way can be demanding but the level of debate required to reach consensus has ensured a deeper understanding of the range of perspectives regarding how Greater Manchester achieves its vision.  Building on the framework of alignment from the devolution deals between Greater Manchester and Government, has enabled Greater Manchester to continue to evolve this approach.

3.6  Devolution has enabled the delivery of some of the ambitions set out in the broader, more ambitious Greater Manchester Strategy. In some cases, this has built upon better sharing of delivery responsibilities between local and nationally-commissioned agencies. In others, it has relied upon the independent convening power of the Mayor himself, seeking the delivery of election commitments that relied upon support from a range of independent sources.

Impact – Flexible investment

3.7  A combination of the devolution deals and the work taking place in preceding years has been the establishment of a range of flexible investment funds.  Some funding sources were new. In other instances, funds to which Greater Manchester would have received have been guaranteed over longer planning periods enabling greater predictability and flexibility than would otherwise have been the case.

3.8  Greater Manchester flexible investment funds are enabling the pooling of investment decisions covering housing development, business support, transport infrastructure, skills provision, and science and innovation. The Earn Back deal for example, enabled the development of the A6 Manchester Airport Relief Road scheme, and the early stages of bus reform across Greater Manchester.

3.9  The GMCA was awarded two Regional Growth Fund programmes in 2012/13 totalling £65m for investment to support the creation of private sector jobs into the Greater Manchester area.  All funds were committed by 31st March 2016 and under the terms of the programmes, any recycled funds may be retained and re-invested for the same purpose.  To date, a further £35m of recycled funds have been, and continue to be, invested.

3.10          The finalisation of the RGF programmes provided the opportunity for the investment strategy to be reconsidered to ensure that the funds have a wider focus than job creation.  Earlier this year the business investment strategy was revised in order to align the business investment strategy with the LIS objectives and drivers the following sectors have been identified as key sectors:

• Digital and Creative
• Financial and Professional Services
• Advanced Manufacturing
• Life Sciences
• Green technology/services

3.11          The £71m of Local Growth Funding for skills capital projects is being used to develop world class industry standard learning facilities to improve the supply of skilled people to meet the ever changing economic needs of the Greater Manchester labour market.  Some of the other impacts of flexible investment funds are captured in the table below. It should be noted however as many of these funds have only been in place for a short amount of time, their impact will develop over time.

Impact – Decision making, co-design and collaboration

3.12 Devolution continues to change the way decision are made about strategic planning, investment and public services across Greater Manchester. A number of governance reforms have taken place to support this change:

• Establishment of GMCA – With cross-party support and required unanimty across all districts.
• Democratic accountability – The first Mayor of Greater Manchester was elected in May 2017. The GMCA and the Mayor hold a range of powers, but unlike some other mayoral models, the Greater Manchester model builds in a need for consensus with Leaders across the Local Authorities in a number of key policy areas.
• Rationalising governance - Devolution has enabled rationalisation and integration of governance arrangements, for example in relation to Police & Crime Commissioner and Fire responsibilities. This has included, integration of decision making and identification of back office efficiencies as well as supporting greater integration of services.
• Decision making responsibilities – As well as devolution of funds, Greater Manchester has taken on decision making powers in relation to European Funds (with discussions on-going regarding the post-Brexit Shared Prosperity Funds), Spatial Planning and (some) transport planning.
• Collaboration, co-design and public engagement – Collaboration between places, organisations, and sectors across Greater Manchester is now standard practice.  Co-design across sectors, with the voluntary, community & social enterprise sector, and with citizens is increasingly shaping our work.   Public engagement in shaping the future of Greater Manchester is increasing.  There is growing recognition that we all have our roles to play in making Greater Manchester the best place it can be.

4. The geographical spread of existing deals, including to non-metropolitan areas and the impact on adjoining areas. 

4.1  Greater Manchester is a diverse area containing a mix of cities, towns and smaller urban and rural areas, operating as a single functional economic area. Greater Manchester strategies have long sought to ensure that all areas and residents of Greater Manchester benefit from the changes that economic modernisation has brought about. Greater Manchester’s Combined Authority and LEP also work closely with and within organisations in the wider North West and North of England. Joint working with northern partners, such as the Science and Innovation Audit with Cheshire East, Transport for the North, the Convention for the North and the NP11 enables strategic alignment between Greater Manchester plans and those for adjoining areas.

4.2  Regional imbalances nonetheless persist, and Greater Manchester continues to aspire to close the gap in economic performance with London and the South East.  Further devolution of budgets and powers, set within a national framework for reducing disparities, remains the best way to boost local productivity and ensure that Greater Manchester makes the maximum possible contribution to UK prosperity whilst ensuring that all parts of Greater Manchester are able to benefit from economic change.

5. Further powers that local areas have accumulated over time and powers they should have which they don’t have already, including the specific case for London.

5.1  The impacts of the devolution package Greater Manchester has benefited from have clearly been positive, but there has been slower and more limited progress in some areas, particularly in respect of services for children, education, bus regulation, apprenticeships, criminal justice and a proposed Greater Manchester land commission.

5.2  The barriers that have constrained Greater Manchester’s ability to go further, faster, include:

• Devolution only gives Greater Manchester some of the levers to effect change: In a number of policy areas, devolution has, in reality, amounted only to the delegation of responsibilities. In other areas, Greater Manchester has been given responsibility for a specific programme or area of funding rather than the levers that can effect system-wide change. Working Well is an excellent example of where Greater Manchester has developed a local solution to tackling the wicked issue of long-term, health-related worklessness. However, DWP retains central control of other initiatives, such as the recently commissioned IPES service, creating a patchwork of narrowly focused and uncoordinated provision, rather than using the opportunity of devolution to create a system-wide approach.
• Administrative budgets and technical barriers to reform: Greater Manchester has not benefited from the transfer of administrative budgets that central authorities formerly drew upon when taking up new responsibilities. For example, the Memorandum of Understanding relating to the commissioning of Work & Health Programme explicitly stated that the grant funding from DWP could only be used for direct delivery costs, rather than administration and programme management. Technical barriers, such as inadequate information sharing arrangements, have also proved to be barriers to reform.
• Narrowly-based transformation funding: Transformation funding such as that which Greater Manchester received to support experiments in health and social care that could reduce future, acute medical costs tends to be time limited and to have specific, departmental criteria attached. The expectation that cost savings from public service innovation should accrue to individual departments rather than the exchequer as a whole limits the capacity of places to fund transformation in a sustainable way.
• The impact of inspection and regulation: Inspection and regulation is an important element of the public service accountability landscape. However, siloed approaches to inspection have at times meant Greater Manchester has been inspected against criteria that do not reflect the integrated approach to services that are increasingly the norm. For example the impact of inspection and financial health for a college system will trigger national intervention policies which do not necessarily take into account a place based need and solution. Ofsted has recently changed the inspection regime but as a local area GMCA has no involvement in the inspection and outcomes of schools and colleges, and it also does not appreciate the place based focus and what the institution is doing within the wider GM agenda.

6. The commitment to devolution across Government and capacity in Whitehall to promote and monitor devolution, including the Government’s ability to capture relevant data at the right level – for example, in city region and combined authorities to assess the effectiveness of deals. 

6.1  GMCA believes that devolution and the redirection of productive investment continues to be the best way to rebalance the national economy.   Existing processes too often disadvantage Greater Manchester and other places outside of London and the South-East, despite their having the potential to broaden investment opportunities and create economic growth.

6.2  The latest update of the Green Book (March 2018) makes the case for economic rebalancing, where investment decisions should take account of factors wider than simply the benefit cost ratio of the proposal. Wider regional / distributional analyses, it suggests, should be included as an attempt to capture the social welfare benefits of schemes.

6.3  Greater Manchester’s experience however, is that the way in which this is applied in practice by Government Departments over-emphasises narrow benefit-cost ratios rather than seeking to understand the wider benefits.  For example, for housing, the land value uplift approach is applied just on the site in question, and therefore sites in the South East become the ‘winners’ due to inherently higher land values. The MHCLG Appraisal Guide does provide annexes which explore how externalities to the investment may be considered (e.g. wider land value uplift), however as this is complex and often difficult to quantify, is seems generally not to be considered. It therefore often fails to capture the benefits of transformational investments – the Jubilee Line in London, for example, would not have been built if the assessment were based solely on a benefit cost ratio assessment.

6.4  While Greater Manchester’s devolution deals have had positive impacts, individually, so too has the deal process itself. Working closely with Government, the devolution deals struck between Greater Manchester and central Government have set a precedent for the approach to regional devolution within England that has subsequently been applied to a range of different places.

6.5  The deal process has also brought Departments to the table who previously had not been involved in devolution discussions. While HM Treasury held the ring within Government for the agreement of deals, individual departments led on agreeing the specifics of implementation.  At times this approach led to different rates of progress across responsibilities devolved to Greater Manchester, limiting the impact achieved in some instances.

6.6  Aligning deal processes with spending events provided a useful end point for discussions – giving pace to negotiations that might otherwise have continued for some time.  However, the cliff-edge created by this approach can lead to focus on the minutia of specific proposals rather than how to drive forward a framework for city-region wide flexible decision making. Deals have effectively been agreed ‘in silos’, addressing a specific issue with an individual department as opposed to addressing Greater Manchester’s outcomes more broadly and offering the flexibility ‘of how’ the issue is addressed.

6.7  Implementation of devolution deals, in our experience, has been limited by the understanding and interpretation of the specific form of words agreed under the devolution deals. Despite deals being signed off, elements of those deals have been an ongoing discussion with differences in understanding in the agreed wording and the spirit in which it was meant.   Recognising the current landscape, where the previous ‘deals based approach’ seems to have come to an end; in order to continue our devolution journey in Greater Manchester, we are now moving towards much closer partnership working with Government (as exemplified in the jointly-owned local industrial strategy), enabling further local control over resources and decision making.

7. Governance and accountability: the impact of elected mayors and whether they are necessary to make devolution a success. Public engagement with the devolution process and how scrutiny is working in practice. 

7.1  Devolution for Greater Manchester has enabled rationalisation and integration of governance arrangements, with the public sector, private and community, voluntary and social enterprise sectors all working to a single plan – the Greater Manchester Strategy – and doing so in an integrated way. The public profile of the Mayor and the convening power that accompanies the role has also enabled progress in areas where a number of sectors and groups can be brought together behind a common goal. 
 

7.2  A combination of ‘hard’ and ‘soft’ Mayoral powers has enabled wider institutional ‘buy-in’ to Greater Manchester strategies and more integrated and efficient decision-making. In Greater Manchester’s case, the next phase of development of the Combined Authority which has occurred as part of the agreement to move to the GM Mayoral model has also produced a variety of reforms that have made GMCA decision-making more visible, public and transparent and developed new channels of communication with a broad range of groups within Greater Manchester’s social, residential, geographical, professional and business communities. 

8. How access to new sources of income – for example business rate growth – have impacted local areas and how broader devolution of financial powers will affect the success of the policy. 

8.1  Devolution has also been a vehicle to deliver on the ambitions of the Greater Manchester Strategy. Increased ability to align local services has enabled the development of integrated models focussed on the issues that matter to individual residents and communities. There are many examples of the successes from this devolved approach:

• The Earn Back Deal, Local Growth Deal, and Transforming Cities Fund have provided flexibility to make strategic decisions on priority transport projects resulting in the extension of Metrolink to Trafford Park, linking more communities across Greater Manchester to a key employment hub, and additional Metrolink capacity, including 27 additional trams.
• The devolution of funding for employment programmes, and co-commissioning with Government has increased their effectiveness. Since 2014 Working Well programmes have achieved employment outcomes for over 4,000 Greater Manchester residents (November 2018).
• The 100% Business Rate retention has allowed investment to support future growth. This includes individual infrastructure and regeneration projects, and services such as the Business Growth Hub which supports businesses at all stages of their growth journey through a broad range of services, including expert one-to-one and peer-to-peer business support, events, specialist programmes, and funding. Business rates retention has also supported districts in retaining their capacity to support service reform and economic growth. A range of other local programmes are addressing skills and employment, supporting business start-up, scale-up and internationalisation, and business investment also contribute to addressing imbalances in regional and sub-regional economic performance.[1]

9. 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. 

9.1  The UK is one of the most fiscally centralised countries in the world, with a very small proportion of local spending coming from funding sources that are designed and administered locally. Greater Manchester’s approach over the last decade has been to demonstrate that higher levels of local autonomy, organised at a scale that makes economic and organisational sense, can produce better outcomes per unit of public resource. The long-term logic of the approach is that those areas that are capable of making a bigger contribution to national prosperity should move, over time, towards a single, place-based settlement for public service delivery and investment. The devolution settlement enjoyed by Scotland, with more predictable levels of revenue income and investment support, greater influence over policy development and more fiscal freedom, is therefore a more appropriate aspiration for sub-national areas in England than one confined only to bespoke, time-limited deals.

9.2  As a first step, an agreement to continue the 100 per cent retention of Business Rates in the city region would help to put investment in productivity growth on a sustainable basis. The full implementation of the Unified Public Services for the People of Greater Manchester also requires a scaled up Reform Investment Fund in Greater Manchester – which can operate in an integrated way with NHS transformation funding at a local level. There are severe funding pressures on local authority core services and the police and fire services following significant funding reductions following the financial crisis. Putting these services back on a sustainable basis should be addressed as a matter of urgency.

9.3  There remain significant disparities across the city-region and Greater Manchester urgently needs the right powers and resources to deliver its future vision. The implementation of the recommendation of the National Infrastructure Commission for devolved, stable, significant long-term infrastructure funding to city regions would be a significant step and we await Government’s response to their Assessment. The development of a devolved Shared Prosperity Fund to replace EU Structural Funds (and their matched funding) and other growth funding is another priority. There are also opportunities for the devolved Adult Education Budget to be extended to meet the skills needs of businesses in the city region.

10. The potential scope of a devolution framework. Whether the current practice of bespoke deals for local areas is working or should some powers be made available to any local authority that chooses to adopt them. 

10.1          Greater Manchester’s experience shows that consensual, evidence-based policy, for a genuine natural economic area, delivered through effective governance arrangements, produces better outcomes per unit of public spending and investment. The forms of devolution introduced through ‘deals processes’ have helpfully supplemented the tools Greater Manchester has available but they have not, in and of themselves, been the drivers of change. They should not be expected to be in areas where the other pre-conditions present in Greater Manchester do not exist.

10.2          In the next phase of devolution, reflection on where good progress has been made should form the development of future devolution. The development of the Local Industrial Strategy provides an example of how this approach to policy development and devolution can be taken forward; through a longer-term discussion with Government rather than a single deal agreed at a single point in time.

September 2019