Written evidence from The County Councils Network (EDE 36)

Public Administration and Constitutional Affairs Committee

The Evolution of Devolution: English Devolution

Executive Summary

• The case for devolution to counties and a more comprehensive approach is compelling. Devolving powers and funding on economic growth and public sector reform would have a major impact on economic growth in county areas and the service outcomes across people-based services.

• CCN has long argued that the Government should set out a clear framework for devolution. The Local Recovery & Devolution White Paper provides an important opportunity to deliver a clear direction of travel to move beyond the narrow focus of devolution to cities to date.

• Devolution should provide parity of power with Mayoral Combined Authorities devolution. This would include devolving powers for a Statutory Spatial Plan; responsibility for the Shared Prosperity Fund; delivery of the Education and Skills Funding Agency; powers over Bus Franchising; and health and social care integration.

• The White Paper should include a minimum default baseline level of devolution, and also the parameters that govern the negotiation of more enhanced devolution deals. To secure more enhanced devolution, we recognise that some degree of asymmetry in devolution will be necessary but this should be based on a broad range of governance models, including both Mayoral Combined Authority models and non-mayoral options, and also the creation of new unitary authorities.

• County councils and unitary authorities should be the default bodies to receive a baseline of powers and take the leading role in negotiations about devolution in collaboration with local partners. This would recognise their unique status as the convener of place across counties, which also form credible geographies for the powers that we envisage being devolved. We also believe that they have the institutional capacity needed to implement a baseline set of powers and negotiate a deal for more enhanced powers.

• It is essential that the Local Recovery & Devolution White Paper provides clear guidance to local areas on acceptable devolution geographies, seeking coterminosity with county boundaries and avoiding inappropriate geographies that could undermine continuing service delivery.

• Devolution may also need to be underpinned by local government reorganisation, where reform is desired to improve efficiency, service delivery and improve growth outcomes or to secure a more enhanced devolution deal. While not all county councils wish to consider structural reform, many county councils are actively considering reform.

• The Local Recovery & Devolution White Paper should set out clear criteria for unitary reform. CCN has produced considerable research which demonstrates the benefits and opportunities presented by local government reorganisation at scale. This research supports CCN’s view that the criteria should include confirmation of a minimum population limit ‘substantially more’ than 300,000 with no upper population limit; ensure proposals offer better public service delivery across the area; and provides the thresholds and tests of local consensus.

Introduction

1.  The County Councils Network (CCN) represents 36 county council and unitary local authorities that serve counties. The essential services our members provide touch on the everyday lives of residents and businesses across 86% of England’s landmass and 47% of its population. The areas represented by our members constitute 38% of local government expenditure; 44% of total public service expenditure (£201bn); and generate just under half of all tax revenues (£255bn). The economies of our areas contribute 39% of Gross Value Added (GVA) and 44% of all employment.

2.  CCN welcome the opportunity to provide evidence to the committee on the evolution of devolution in England. At present only three CCN members have been given the opportunity to benefit from devolution, either on their own, as in Cornwall, or as part of a combined authority, as is the case for Cambridgeshire (Cambridgeshire and Peterborough Combined Authority) and Northumberland (North of Tyne Combined Authority).

3.  Over recent years, CCN has set out a comprehensive evidence base to inform the national debate on devolution in England. Alongside the information in this submission, which draws on this evidence, we urge the committee to consider the findings of the following studies;

• ResPublica – Devo 2.0: The Case for Counties (2017) http://www.countycouncilsnetwork.org.uk/download/1243/
• Grant Thornton (2020) – Place-Based Growth; The Role of Counties in ‘Levelling-Up’ England http://www.countycouncilsnetwork.org.uk/download/2798/
• Grant Thornton (2020) – Place-Based Recovery http://www.countycouncilsnetwork.org.uk/download/3114/
• Henham Strategy (2020) – Making Counties Count http://www.countycouncilsnetwork.org.uk/download/3107/
• PwC (2020) – Evaluating the impact of scale in proposals for local government reorganisation http://www.countycouncilsnetwork.org.uk/download/3148/

4.  Below, we respond to the committee’s terms of reference, grouping our responses. Alongside our written evidence, CCN would welcome the opportunity to provide oral evidence to the committee.

• Should there be comprehensive reform of the English devolution and local government system?
• What aims and principles should underpin devolution in England?
• Is there a public demand for such structures/measures?

5.  The government has made a commitment in its manifesto for devolution for all. This recognises that to date there has been a piecemeal approach to devolution and reform of the local government system, which has prioritised cities and urban areas to benefit from devolved powers and funding.

6.  The case for devolution to counties and a more comprehensive approach is compelling. Devolving powers and funding on economic growth and public sector reform would have a major impact on economic growth in county areas and the service outcomes across people-based services.

7.  Devolution should aim to bring power as close to the people as possible, to achieve better decision-making which delivers greater benefits for communities. It should also aim to transform the relationship between central and local government, so that local government is properly seen as an equal and trusted partner, rather than a delivery arm of Whitehall.

8.  The response to the pandemic has strengthened the rational for devolution. County authorities have been at the forefront of the response to combating the spread of coronavirus, protecting the most vulnerable and supporting local businesses through tailored local solutions, working closely with government departments and local partners right across the public and private sectors.

9.  More broadly, before the pandemic, the new Government rightly identified a need to level-up communities, addressing many of the structural issues with the economy and the inter-regional, and intra-regional, disparities that exist within the UK. The Local Recovery & Devolution White Paper is expected to be the key conduit to drive forward this agenda.

10.  Counties are home to some of our most prosperous and successful areas, but we must not forget that many left behind areas are located within counties; from deprived towns, rural and coastal communities in the north, south and east, to former manufacturing hotbeds in the midlands, to places where young people leave to go to university and never return.

11.  In-depth analysis of county economies by Grant Thornton for CCN has shown the challenges facing county authority areas are often complex and multi-faceted. The report identified particular challenges in productivity, income disparity, skills, housing affordability, infrastructure funding gaps and digital connectivity. For some of these, the challenge focused on the spatial inequality and ‘gap’ in performance between county authority areas and other, often more urban, authority types. For others it was the spatial inequality that existed within the county authority area itself.[1]

12.  The ability for shire counties to access funding and levers currently afforded to urban metro-mayors, will therefore be crucial to the success of the levelling-up agenda and securing better local economic growth. This has been made even more crucial given the economic impact of Covid-19, which recent research for CCN by Grant Thornton demonstrated will have disproportionate impact on county economies.[2]  Many of these challenges have been exacerbated by Covid-19. The immediate economic shock and uncertainty around both the speed and nature of recovery will have exposed and deepened many of these longstanding inequalities.

13.  CCN has long argued that the Government should set out a clear framework for devolution. The Local Recovery & Devolution White Paper provides an important opportunity to deliver a clear direction of travel to move beyond the narrow focus of devolution to cities undertaken to date. This presents an opportunity to not only provide clear guidance to local areas in developing proposals, but to reset the relationship on devolution with county authorities if there is a genuine and tangible offer from Government.

14.  A key focus for members ambitions is the ability shape their local economy, so that they can continue to promote policies designed to level up their areas, both within their own borders, and between counties and other areas of the country. County authorities are uniquely placed, as strategic authorities, to respond to the economic opportunities and challenges presented by devolution post-Covid19. As demonstrated through Grant Thornton’s Place-Based Growth and Place-based Recovery reports published this year, county authorities are the key local agency to influence placed-based growth, delivering billions each year in growth related expenditure and capital investment; and through their influencing and leadership role as convener, facilitator, and vision setter.

15.  As strategic authorities with responsibility for social care and children services, we also believe devolution offers the opportunity to enhance the powers and resources of upper-tier councils in wider public service reform and integration of services across different agencies. Previous analysis by Oxford Economics for CCN estimated that full devolution to counties could save up to £36bn over five years, as well as bringing decisions closer to local people.[3] A devolution settlement for all should present opportunities for reform to existing partnership arrangements to promote whole-place public service reform.

16.  Devolution should therefore provide as much parity of power with Mayoral Combined Authorities. This would include devolving powers for a Statutory Spatial Planning; responsibility for the Shared Prosperity Fund; delivery of the Education and Skills Funding Agency; powers over Bus Franchising; and health and social care integration.

17.  Our research has demonstrated public support for devolving more powers to county areas. A YouGov poll conducted by Henham Strategy on behalf of CCN found that just one in ten (9%) of people believe metro mayors should have more powers than county leaders.[4] They also found that 50% of people – rising to 55% in county areas – say that county authorities should have equal or greater powers than the ones currently given to England’s nine metro mayors.

• How should decisions on English devolution be agreed?
• What is the purpose of current the “devolution” deals and mechanisms? Are these purposes being achieved?
• To what extent should there be consistency in devolved and local governance within England, and to what extent is asymmetry necessary?

18.  Over the past ten years ten devolution deals have been agreed covering a quarter of England’s population. The process for delivering these arrangements has remained tightly controlled by government. Local areas that pursue devolution deals are required to go through a considerable amount of negotiation with Whitehall, but this has resulted in a series of deals that look remarkably similar. This has resulted in an increasingly complex local government system, with only three CCN member councils part of devolution arrangements.

19.  CCN contends that a laborious and complex deal making process which results in ostensibly the same deals is not a good use of time or resources for either Whitehall or local government.

20.  We would therefore recommend that the government needs to be clearer and more consistent in its approach and use the forthcoming Local Recovery & Devolution White Paper to set out a permissive national framework for devolution.

21.  The similar nature of the devolution deals that the government has concluded means that where asymmetry occurs, it is not between different devolution deals, but rather between areas that have been granted devolution deals, and those that have not yet been able to benefit from devolution.

22.  The White Paper should include a minimum default baseline level of devolution for all areas of the country. It should also set out the parameters that govern the negotiation of more enhanced devolution deals. To secure a more enhanced form of devolution, we recognise that some degree of asymmetry in devolution will be necessary but should still be based on a broad range of governance models, including mayoral combined authority models and non-mayoral options, and also the creation of new unitary authorities. We expand on governance arrangements for these below.

23.  County councils and unitary authorities should be the default bodies to receive a baseline of powers and take the leading role in negotiations about devolution in collaboration with local partners. This would recognise their unique status as the convener of place across counties, which also form credible geographies for the powers that we envisage being devolved. We also believe that they have the institutional capacity needed to implement a baseline set of powers and negotiate a deal for more enhanced powers.

• How should the interests of different parts or regions of England be better represented to central government and in intergovernmental arrangements as well as in Parliament?

24.  CCN welcomes the impact that devolution has had on amplifying the local government voice within Whitehall. However, devolution has only been delivered in a quarter of England, with the majority of the country without a mayor or devolution deal lacking the same level of access or influence, impacting their communities.

25.  Whilst it may not be appropriate for local government representatives to be added to intergovernmental structures that already exist, we would welcome debate about whether formal structures are needed to ensure that local government voices are more firmly embedded in central government decision making.

• On what basis should the form, geography and extent of devolved regions or areas be determined, and what should be the role of culture and identity?

The geography for devolution

26.  Harnessing the geographies and strategic role of county authorities, whether through existing structures, new regional mayoral combined authorities, directly elected leaders of unitary authorities or alternative governance structures, must be at the heart of a comprehensive approach to devolution.

27.  Reports for CCN by both Grant Thornton and Henham Strategy this summer, analysed the place-based leadership role that county authorities working across their strategic geographies have played and are playing to navigate and direct their places back to a growth trajectory.[5]

28.  These reports provided extensive analysis and recommendations on how county authorities working across their geographies at pace and scale, have already been taking the lead in developing and implementing economic recovery plans, which, while not a traditional vision for a place, do provide the necessary focus and direction to the activities they need to support recovery.

29.  In order to maintain coherency, several leading reports by Respublica, IPPR and most recently Henham Strategy, have argued that, outside of combined authorities, county authority geographies are the essential building blocks for enhanced devolution to local government.

30.  The county acts as a practical and effective layer of government, being strategic, yet inherently recognised and celebrated by residents. County boundaries are an asset, not a brick wall; with the ability to reach into district and parish economies, but also work constructively across borders at a strategic scale with sub-national and national bodies. As Nick King, former Chief of Staff to Sajid Javid MP, wrote in his recent report for Henham Strategy:

“The public understands what a county is and can easily identify with it. Counties have existed for centuries and played a key role in shaping our sense of place, our common history, our culture and our geographic understanding of ourselves. They provide reference points, they give their names to clubs and societies, sporting teams, regiments, dialects, culinary fayre, local traditions and much more. Counties provide such obvious local government units because they are more than just local government units. In essence counties are places in the minds of the English people – places where people live and come from, where they ‘belong’. Our counties already provide a natural and fundamental part of local government across large parts of England.”

31.  In considering devolution geographies, it is important to also recognise that previous devolution proposals have failed due to contested geographies, rather than a coherent approach building on county geographies. This has been the case in places such as Derbyshire, Nottinghamshire and Yorkshire, where City Regions in neighbouring areas secured mayoral combined authority devolution deals that included district councils within the county area. CCN has consistently raised concerns over the impact such deals would have on the continuity of service delivery in key areas, such as highways and transport, if these deals had gone ahead.

32.  It is therefore essential that looking ahead to the Local Recovery & Devolution White Paper that it provides clear guidance to local areas on acceptable devolution geographies, seeking coterminosity with county boundaries and avoiding inappropriate geographies that could undermine continuing service delivery.

The form of devolution and governance

33.  The form of governance that devolution takes should be determined locally, as there will be some areas which would prefer to progress down the mayoral combined authority or unitary route, whilst some areas will prefer to continue with accountability and responsibility residing within existing council structures.

34.  The White Paper should outline the powers the government is willing to devolve by default to all local authorities, and the structures that it is willing to consider in order to facilitate a more enhanced form of devolution through negotiation.

35.  To achieve a baseline set of powers, CCN has long argued alongside other leading think-tanks, that there should be an opportunity for the strategic authority within the area to take on accountable body status, supported through the formation of a joint or special committees.

36.  CCN has worked with stakeholders to develop this idea, including the Institute for Public Policy Research, which recommended that county authorities should be the ‘default’ strategic bodies for the devolution of powers outside of major cities. This recognises the additional complexity in county councils’ areas due to existing two-tier governance, the challenges this presented on ‘horizontal v vertical integration’ and contested devolution geographies.[6] These ideas have been further debated in publications by Localis[7] and Respublica[8].

37.  In these reports the think-tanks introduced the concepts of the ‘strategic authority’[9] and Respublica’s ‘Governing authorities’. These build on the principle of using county authorities, and their geographies, as the building blocks for devolution outside of major cities.

38.  More recently, CCN set out that a baseline devolution settlement to county authorities could be supported by reforms to establish Growth Boards in each county area, as recommended by Grant Thornton in their Place-Based Recovery report for CCN.[10] These boards should be politically-led with a statutory duty placed on county authorities to convene and coordinate key public and private stakeholders.

39.  To secure more enhanced forms of devolution, we recognise that some degree of asymmetry in devolution will be necessary, but this should still be based on a broad range of governance models, including mayoral combined authority models and non-mayoral options. Any mayoral combined authority should be tailored to recognise the additional complexity of two-tier areas, including voting rights between partners, and rural areas with polycentric geographies. Cornwall, as the first non-metropolitan area with a devolution deal, has demonstrated that strong unitary authorities covering a functional economic geography can deliver real benefits for residents.

40.  CCN has also advocated the option for a county council or new unitary authorities to strengthen direct accountability to unlock further devolved powers through the constitutional adoption of the directly elected mayor/leader and cabinet model, permissible under current legislation.

41.  While many of our members still believe that the mayoral model is not suitable to large rural areas, when coupled with local government reorganisation, many of our councils have outlined that they would be more open to creating and/or joining regional combined authorities due to the reduction in local complexity. As stated by the CCN Chairman in an article for The Times, the opportunities presented by creating more unitary counties and streamlining local governance could increase the likelihood that county areas are willing to embrace the government’s preferred devolution model of combined authorities and directly elected mayors.[11]

Local Government Reorganisation

42.  Devolution may also need to be underpinned by local government reorganisation, where reform is desired to improve efficiency, service delivery and growth outcomes or to secure a more enhanced devolution deal.

43.  Polling shows that there is a case for reforming local government to help deliver devolution and a more consistent approach to service delivery. YouGov polling for CCN found that less than one in five (18%) of people find it easy to understand what services their local councils provide, with over two-thirds unsure of how local government is structured.[12]

44.  Over recent months, before and after the first wave of the Covid-19 pandemic, councils in various two-tier county areas have put forward proposals for local government reform. This was in direct response to the Government stating that they wished to see more mayors and more unitary authorities in county areas ahead of the forthcoming Local Recovery & Devolution White Paper, and strong encouragement for many areas to bring forward unitary proposals.

45.  While not all county councils wish to consider structural reform, many county councils are actively exploring the opportunities presented by local government reorganisation, both as part of a devolution deal but also post-Covid recovery plans.

46.  CCN welcome the recent invitations for Cumbria, North Yorkshire and Somerset to submit a business case for the creation of unitary authorities. The decision to progress proposals for unitary councils in these areas is an important first step towards greater devolution in shire counties. A number of CCN members still wish to explore unitary governance, alongside alternative reforms referenced by the Secretary of State.[13]

47.  To enable those areas who wish to explore reform to continue to do so, the Local Recovery & Devolution White Paper should set out clear criteria and timetable for unitary reform.

48.  CCN has produced considerable research which demonstrates the benefits and opportunities presented by local government reorganisation at scale. This research supports CCN’s view that the criteria should include confirmation of a minimum population limit ‘substantially more’ than 300,000 with no upper population limit; ensure proposals offer better public service delivery across the area; and provides the thresholds and tests of local consensus.

49.  In their recent report Evaluating the importance of scale in proposals for local government, PwC explored in detailed the financial and non-financial benefits of unitary reform. Financially, this showed that abolishing all district councils and county councils within the 25 two-tier county areas and replacing them with a single county unitary could generate savings of £2.94bn over five years compared to £1bn over five years for two unitary authorities in each area.

50.  The report found that disaggregating (splitting care services between multiple unitary authorities) could result in different councils competing over scarce care providers, potentially destabilising local adult social care markets already under additional strain due to Covid-19. It would also make children’s social services costlier and undermine efforts to attract and retain high calibre directors with sufficient experience.

51.  PwC also analysed the impact of different reorganisation formations across housing, planning, economic growth and devolution.[14] Comparing the establishment of a single unitary authority in each county area to multiple unitary authorities, it analysed the strategic benefits of maximising scale and the risks and challenges associated with disaggregation and the establishment of small unitary authorities.

52.  PwC argued that creating multiple new authorities in a county could ‘create and concentrate’ economic disparities, with one part of the county a high-growth, high tax base area, and the other side a low-growth, low-tax base area without the economies of scale to address these issues. This could impact on the government’s levelling-up ambitions, while conversely, a single unitary provides a single point of contact for residents, businesses, and the government, and a platform to maximise housing and economic growth.

53.  A recent report by Henham Strategy for CCN also set out the economic and social benefits that can be achieved reforming local government.[15] Not only can XXXnitarization deliver efficiency savings, but a more streamlined and effective local government structure to drive forward the recovery and long-term prosperity of UK plc, while also supporting the levelling up agenda. They concluded:

“We are clear in our view that smaller unitaries will most likely lead to poorer economic performance and disaggregation will lead to duplication and inefficiency. Larger unitaries, on the other hand, have the potential to deliver economic projects of greater ambition and can provide a more compelling single vision for growth. Our analysis has led us to conclude that larger unitaries will lead to better outcomes, not least in terms of helping level up local areas. But the principal reason we think that county unitaries should be pursued even when on a large scale is because this allows counties to retain their sense of place.”

54.  As an alternative to the establishment of county and/or large unitary authorities, it has been proposed in some areas that reform seeks to establish combined authorities to replace county councils, with smaller ‘delivery units’ formed of merged combinations of district councils. Existing county council services, such as transport, would be transferred to the combined authority, with the suggestion that services such as adult and children’s social care also be operated by combined authorities or trust models.

55.  In 2016, EY published a report analysing the implications of such a reform model, outlining the additional costs and complexity that would be inherent in essentially re-creating a new two-tier model.[16] More recently, PwC argued that the creation of a combined authority alongside multiple unitaries to oversee growth and transport functions would be unprecedented and has no guarantee they will perform better in this new arrangement, nor that economic growth for the county is maximised.

56.  In addition, PwC concluded the following in relation the establishment of a children’s trust model as part of reorganisation proposals:

While the ambition and design principles of an alternative delivery model would be to deliver better outcomes, the creation of such a vehicle would – amongst other aspects – require additional leadership posts and governance arrangements. This would lead to additional costs and further complexity to an already crowded system, creating further points of interaction and potential points of failure. It also has an impact on how commissioning and the care sector or market is managed and whether stability of provision can be maintained. In addition, there is limited evidence that the implementation of these types of models can lead to an immediate improvement in service outcomes.[17]

57.  Some parts of the local government sector have also sought to suggest that when considering local government reorganisation, the geography and population size of new governance arrangements should be in line with other European nations. However, we believe it is not appropriate to make a direct comparison on local government structures due to population size as their responsibilities and funding differentiate hugely with those in England.[18]

58.  Across Europe there are various types of local government structures. These structures range in their roles, responsibilities and tax raising powers for the residents they serve. Although there is an argument around the appropriate size of local government it is very hard to make a direct comparison between the different structures purely based on population size, especially when these calculations exclude the important and genuinely local role of town and parish councils.

Double Devolution

59.  A further way the government can ensure the role of culture and identity is strengthened in a place is through double devolution. There are around 9,000 town and parish councils in England who work at a grass root level in the local government structure. At the same time as enhancing the powers of principle upper tier councils, power can be passed to the historical representative bodies for rural places – parish and town councils.

60.  Originating in the manorial system of the feudal age, parish and town councils both represent real communities and are a flexible form of local government that can take on more or less powers as circumstances dictate. Unitary and county councils across the country have been offering parish councils new powers, new assets and new responsibilities, where they have the capacity to receive them.

61.  The local councils bring many benefits to an area, particularly in relation to their ability to represent the community at grass roots level. This is because they’re composed of representatives elected by the people of the parish to make decisions and speak on their behalf.

62.  Local councils also have a higher level of responsiveness to community needs and interests. They can represent local interests to external bodies and have a responsibility for a single area or neighbourhood. Many councils work to enhance or improve local services, often in partnership with the county council and other partners. Both county and unitary authorities can have strong strategic governance and service delivery for an area and have the connection to the communities they serve through the on the ground services they provide and their relationships with Town & Parish councils.

November 2020

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