Written evidence from The Northern Powerhouse Partnership (EDE 39)
Public Administration and Constitutional Affairs Committee
The Evolution of Devolution: English Devolution
The Northern Powerhouse Partnership (NPP) was established in 2016 and is a business-led organisation, bringing together Northern leaders to deliver the vision of the Northern Powerhouse, increasing productivity and growth and making a greater contribution to the UK economy. The ambition to deliver the Northern Powerhouse has been taken up by his government, with their agenda to level up the UK and create opportunities throughout the country.
This submission, put together by NPP with our business members (comprising the senior leaders from Addleshaw Goddard, Arcadis, Arup, Associated British Ports, Atkins, Barclays, Bruntwood, The Cooperative Group, Virgin Money, Drax, HSBC, Mace, Manchester Airports Group, Sellafield, Siemens, TalkTalk and with sponsorship from EY, as well as our wider Board members including our Chair George Osborne, Vice-Chair Lord Jim O’Neill, Cllr Sir Richard Leese, Cllr Julie Dore, John Cridland CBE, Metro Mayor Ben Houchen, Professor Dame Nancy Rothwell and Professor Juergen Maier), sets out our blueprint for how levelling up can be achieved, and the long-term, systemic changes that are required to truly rebalance the UK economy and create a North of England as prosperous as the South.
Alongside Transport and Education & Skills, Devolution is one of the three central thems which NPP focus. Our Chair George Osborne, as Chancellor, signed off deals for Greater Manchester, Liverpool City Region, Tees Valley and the Sheffield City Region, but progress stalled on devolution under the subsequent administration. We have been heartened to see the Sheffield City Region deal finally be implemented in full, as well as Metro Mayor elected in North of Tyne and a forthcoming election for a West Yorkshire Metro Mayor in 2021. We share this government’s publicly-stated objective for 100% devolution across the Northern Powerhouse, and are committed to work with ministers and officials to explore appropriate economic geographies in the North that have ambitions for more local control. Simply floating the idea of moving departments out of London cannot be a replacement for the rebalancing of political power which comes from resources transferring from those departments to strong and effective Metro Mayors.
Yet it is also our firm view that existing mayoral authorities do not have adequate powers to truly make a difference in their places and play a significant role in the levelling up agenda. There are important and glaring omissions from existing deals; skills policy devolution has been slower than first commited to with delays from the department and key levers to raise productivity, such as an integrated public transport network like in London, are still yet to be completed. The mayoral deals that have been struck have allowed accountable leaders to take long-term decisions in the interests of their places, including to double down on the challenge of low productivity. Their work will be critical to the economic challenges we face going forward with their local knowledge of place, so more effective in investing resources to generate impacts that will have a measurable and decisive impact.
Existing deals that have been agreed in the North provide a promising step in creating more city region and wider economic areas control based on an understanding of local geographies. It is not our view that the blueprint for these deals should be ripped up, and a new approach be taken. Rather, we would want to see devolution go further, be more meaningful, and allow those elected leaders to have a more decisive say in the economic futures of their city regions, notably in the recovery from Covid. This would be a major change in how decisions are made and money is spent that will allow Whitehall to focus on those issues best dealt with by the centre, reduce waste and drive up productivity faster. It would allow spending decisions to be made at the lowest appropriate level, cutting unnecessary bureaucracy in the process.
There is a strong case for the powers currently available in Wales and Scotland, which have for instance allowed significant industrial policy decisions which have benefited the strategic development of sectors in the case of the AMRC in North Wales for example, to be on the table. The purpose is not to devolve powers for powers sake, but to assemble the right tools to drive up productivity, such as revenue raisng tools and spending powers over strategic and local transport.
There should not be a ‘one size fits all’ approach to devolution. Examples of existing deals in the North have demonstrated how individual areas need to be treated differently depending of local geography, demographics, industrial strengths and the make up of local and regional councils. For example, the priorities of the Tees Valley deal vary considerably with core city based combined authorities – eg Greater Manchester – and both are vastly different to the political and geographical picture in the North of Tyne, the first urban devolution deal with a substantial rural hinterland (including the Borderlands within Northumberland as well as more industrial south east of the county).
Where communality should be sought, however, is in the commitment to more powers in specific policy areas to be given to Metro <ayoral authorities when areas have the need for them and are able to take them on, as a right rather than as something to be offered discretionally by Whitehall officialls. The following summary sets out priority areas for Northern devolution deals, both existing and those to come:
As proposed by the National Infrastructure Commission, there should be a long-term devolved city infrastructure budgets to deliver integrated plans for housing, employment and transport. The Transforming Cities and Flexible Brownfield Land Funds are the basis on which to build with a legislative basis, with a need as well for more mechanisms for raising local funding. As the Williams Review is implemented, the specification of commuter and wider local services should be devolved alongside current subsidies (enabling rail to be fully integrated in local ticketing) alongside deployment of the existing bus franchising system (with certainty of funding to invest to underpin growing patronage in the recovery from COVID19).
These are about creating greater local flexibilities within existing funding streams, or fast-tracking future promised investment (such as that through previously agreed earnback mechanism). These flexibilities relate to existing funding vehicles and would enhance local investment capacity by anything up to £5bn across the Northern Powerhouse, maximising capacity of existing Housing investment Funds as in GM at £300m as originally intended and create further ones; renewing the Earnback scheme and City Deal receipts; minor adjustments to reset arrangements to the local Growth business rates deal; extending business rates growth in Enterprise Zones from 25 to 40 years and other minor adjustments and extending the zones to capture planned investment in the future. The Treasury will need to drive this process as these are not neat categories of funding for local authorities to bid for, but will require the same creativity within Whitehall which was seen when the first Mayoral devolution deals were done under clear HM Treasury leadership.
Driven by a major package for capital investment in FE colleagues, for areas with the Adult Education Budget the next step is to take responsibility for all the skills funding streams (including 16-19 technical budgets and traineeships). Building on the success of devolved AEB and enabling more integrated, and place based employment and skills systems. This isn’t about government spending more in the North than would otherwise be spent, but spending the money already allocated more effectively, specifically aligning the skills system to place-led economic strategies (ensuring that there are the people to fill the jobs we create in our key capabilities – across the Northern Powerhouse specifically including advanced manufacturing, health innovation, energy and digital).
Ensuring that the full fund is devolved with no national top slice, and that areas do not see reductions in funding compared to before Brexit, which will benefit those parts of the country that have the largest number of left behind places.
There is a major role for mayoral combined authorities supporting government to achieve the proposed increase in the proportion of GDP spend on R&D, without needing to take away funding from the Golden Triangle to do so. As spending is increased, it provides an opportunity to dedicate significant resource to using Mayoral Combined Authorities with the capability to invest in the innovation opportunities which will impact their own industrial assets and those across the wider Northern Powerhouse.
The purpose of those deals has been covered earlier in this submission. In terms of their effectiveness, our assertion is that without increasing powers and policy areas that devolved regions, the full benefits and impact of devolution cannot be achieved. It is our view that levelling-up can only happen if the significant number of policy areas referenced in the previous answer are taken from Whitehall, and placed in the hands of directly-elected Mayors. Nowhere is this more critical than in the recovery from the pandemic. Allowing Metro Mayors to have control over their local recovery plans, delivering the Prime Ministers promised Northrn Recovery Plan on the ground, would be a significant first step in recognising the ability of locally-elected leaders to manage their own economic recoveries from Covid, working alongside national government at every step, agreeing shared outcomes.
Collaboratively, with indications from the Secretary of State that he is open to submissions from distinct economic geographies (not always city regions, as the cases made by regions including Cheshire and Warrington and North Yorkshire demonstrate) and strong, unified, economically-viable plans being put together in those area by civic leader supported by major businesses and community groups. A clear understanding of the economic potential of a region is critical, and a recognition of the strengths of that area that funding, powers and a joined-up approach could enhance.
There is a clear public demand for levelling-up – for the principle of creating a balanced economy and a country that works for everyone. Devolution can be a central tenet of that. The Covid crisis has seen the prominence of mayors rise, yet many in the North still see significant inequalities in their everyday lives; in health, in education, in transport. Based on the democratic madate of Mayors, the legitimacy of pan Northern institutions like Transport for the North is increased, and all future plans for a growth body to take on powers such as on energy policy, digital or trade and investment must be accountable to combined authorities.