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Summary

There is a strong case for devolution to counties both in terms of their significant role in relation to economic growth and public service reform, and in terms of the patchwork approach to democratic reform that is taking place across the UK. It is clear that there is a real opportunity for non-metropolitan areas to bid for increased powers to boost their economies and better serve their populations.

The government is right to insist that there is no one-size-fits-all approach to devolution dealmaking. The complex governance of counties makes this all the more relevant, but in the absence of any published guidance or due process, counties too often perceive they are faced with a set of unwritten rules.

To this end, IPPR recommends:

  • greater clarification of the purpose, process and timescale for devolution dealmaking with greater coherence and collaboration between central government departments
  • establishing a principle of coterminosity with local enterprise partnerships (LEPs) for economic development deals, including cases where combined authorities work together within a LEP footprint
  • an explicit acceptance that other models of accountability – beyond directly elected mayors – might be more appropriate for county areas, including the idea of an elected county mayor
  • greater emphasis on sharing good practice between areas working on devolution deals and building local capacity to agree and implement local arrangements.

The case for counties

Following the general election in May 2015, the government has pushed forward an unprecedented wave of devolution in England. With the open-ended Cities and Local Government Devolution Bill at the centre of its new approach, the government has consciously avoided detailing any form of guidance as to how devolution will proceed – its argument is that local areas need to work together to bring forward their own proposals for devolution and then to negotiate a ‘deal’ with central government. In principle, there is much to be said for this approach. In practice, progress has been far from straightforward, not least for England’s counties.

There is a strong case to be made for devolving to England’s county areas. Counties cover 86 per cent of the landmass of England and represent half of the country’s population, and collectively they represent a sizeable proportion of the national economy.1 However, county economies face significant challenges: not least low productivity, relatively low wages, high levels of benefit claimants on ESA among those on out of work benefits and large levels of skills mismatches. Devolving significant new powers for economic development should help counties to address these issues and boost the national economy.

Beyond their economic potential, counties also have huge opportunities for public service reform, delivering more efficient services and better value for money. With significantly higher proportions of older people than is the case in cities, counties are facing bigger health and social care challenges than other parts of the country and costs of service delivery that are much greater in more isolated and rural parts.

For both of these reasons, counties need devolution deals just as much as cities. But their situations tend to be more complex. For a start, counties are more geographically diverse, often incorporating urban, rural and coastal areas and sometimes covering quite distinctive local identities too. Counties very often involve two-tier governance with county councils and district councils responsible for different functions, as well as single-tier unitary authorities. Unlike city-regions, counties require both horizontal and vertical joint-working and integration.

The difficulties of devolution dealmaking to date

In this report we highlight five different case study county devolution proposals, each of which demonstrates the importance of adopting a locally specific range of powers that local authorities would like to see devolved, alongside the changes to local governance that the county is prepared to adopt in order to draw down the new powers on offer.

The negotiation process for many counties has highlighted significant areas that could be improved. First, despite the rhetoric around locally tailored deals, it has become increasingly clear that the government does have some unwritten rules, particularly around scale and governance. County proposals that have been considered too small have been challenged, while, more significantly, in almost all cases where there is anything other than modest ambition, the government would appear to be insisting on the introduction of a directly elected mayor. Although there is a clear commitment to developing more effective and streamlined local decision-making, the conditions under which directly elected mayors might work well do not always exist at county level.

Second, there is significant variation in the approach taken by different government departments towards proposals put forward by county areas. Although county stakeholders have been very positive about the Cities and Local Growth Unit and its role in facilitating devolution negotiations, a number of government departments seem to require intensive bilateral negotiations and – at the end of the day – the Treasury would appear to hold the whip hand. None of this is made any easier by the fact that the government itself was unprepared for the sheer number of devolution proposals and the capacity issues this would throw up.

Finally, the lack of any guidance at all has brought to the surface a number of more fundamental tensions about the real purpose of the government’s strategy. The original orientation of the approach was towards economic development and yet the permissive nature of the bill, together with the devolution of health and social care to Greater Manchester, has opened up a significant new front in relation to public service reform which is of particular interest to counties. In many respects economic development and public service reform are two sides of the same coin, but outside of cities they can have quite different implications for the scale and nature of proposed governance arrangements.

There are further tensions between scale and local identity. The government’s enthusiasm for bigger geographies – and those coterminous with local enterprise partnerships – may be logical in terms of strategic planning, but in some situations it makes little sense when considering the adoption of a directly elected mayor or a single combined authority. And in all of these deliberations, the democratic dimensions of devolution seem to be secondary to the expediency of getting a quick deal done. In truth, there is a significant risk that unless there is greater public deliberation, more business involvement, and greater clarity of process, many people will treat English devolution as a cynical transfer of powers between national and local political elites.

The way forward

So how do we move forward with a process of devolution that can resolve some of these problems? It is vitally important that the bottom-up approach to devolution is not lost, nor that the importance of locally specific devolution deals is undermined – but diversity of outcome should not be confused with a disregard for due process. Many counties now feel that they face a set of unwritten rules in developing their proposals. To this extent there needs to be greater clarity.

To this end, we return to our principles of decentralisation set out in a previous report2 and propose some more detailed suggestions pertaining to the immediate context and to county devolution in particular.

A broad and clear purpose

First, counties seeking devolution deals must clarify their primary narrative to gain traction with the government. Whether in terms of geographical scale, governance arrangements or indeed fiscal matters, devolution deals with a strong economic growth narrative have progressed quickly with the Treasury. However, there is a strong steer from our research that whole-place public sector reform, through devolution, is a key consideration and ambition. This may be delivered according to a different scale or geography and over a longer-term period, but it is of equal importance to counties seeking a new devolution settlement, with substantial potential benefits for Whitehall. Based on the experiences of those ‘forerunners’ in the devolution process, we would recommend that:

Recommendation 1: The primary narrative of county devolution deals should be to drive economic development, and in the short-term deliver the government’s agenda associated with local growth. Public sector reform, particularly health and social care integration, should remain a central pillar of county devolution deals. However, it should be acknowledged that in most cases this will be dealt with over a longer time period once initial arrangements start to bed in and governance capacities grow.

Geographical scale and coterminosity

Following on from recommendation 1, the government must be more explicit about the geographical scale around which it would prefer to see county proposals and their relationship with LEP geographies. To this end we propose that:

Recommendation 2: Where county devolution deals are economic in nature, they should be coterminous with LEP boundaries – but the government should make it possible to allow for the rationalisation of LEP boundaries where there is local demand to do so.

Recommendation 3: The role and remit of local enterprise partnerships should be reviewed and clarified by the government within three months of the Cities and Local Government Devolution Bill becoming law.

Asymmetry and governance

It is increasingly clear that the government is closely wedded to the idea of directly elected mayors for anything other than very modest devolutionary proposals.3 It also seems to prefer large-scale combined authorities, coterminous with LEP areas. There is a clear contradiction in this position, especially given the demonstrable complexity associated with county devolution arrangements and the creativity with which local partners have approached new governance solutions. However, while counties are working with partners to develop robust governance models, they may need to recognise that significantly increasing local powers are necessarily conditional upon higher levels of visibility and accountability of decision-makers – maintaining the status quo is not an option.

To this end, we propose that:

Recommendation 4: The government must demonstrate by its practice that it is genuinely committed to a range of different models of governance and that it is genuinely responsive to the creative solutions being developed in counties. There should be a presumption that ‘form follows function’.

Recommendation 5: The government should allow for more than one combined authority to work together to strike a devolution deal where the local circumstances make it advantageous to do so and where satisfactory arrangements are in place for joint-working and decision-making.

Recommendation 6: The government must clarify the powers and functions that it is prepared to devolve to all local areas as part of the spending review and reforms to business rates retention. The development of more bespoke and ambitious deals should continue alongside a core settlement.

Recommendation 7: The government must accept (or deny) that the directly elected mayor model of governance, which may be highly relevant in more monocentric city-regions, might not be the best model of governance for counties and therefore demonstrate genuine openness to alternative models.

Table S1

Conditions under which directly elected mayors are more and less effective

Directly elected mayors are most effective when...

Directly elected mayors are less effective when...

• there is a strong focus on a single urban centre

• there is a clear sense of cultural or political identity bounded in a particular geography

• there is no duplication of existing democratic arrangements

• there is a significant transfer of fiscal powers

• there is a clear public demand for greater visible leadership.

• there is a small number of different centres of economic activity

• there is little sense of collective cultural or political identity or that there are multiple identities within a single geography

• there are existing democratic arrangements that are fit for purpose

• the transfer of powers are largely administrative or modest in nature

• there is little public appetite for change

• where a directly elected mayor will add further complexity in an already complicated system of governance.

 

Recommendation 8: Equally, counties must accept that with additional powers over significant functions and funds, new governance arrangements must allow not only for more sophisticated decision-making processes but ALSO for higher levels of public visibility and accountability and provide arrangements for doing so.

Enhancing coherence and coordination

We have shown that central government is facing a difficult task in the way that it responds to the number and sophistication of the devolution proposals that have already been made and the prospect of further proposals to come. For this reason we propose that:

Recommendation 9: The government needs to streamline its capacity to negotiate devolution deals, deploying cross-departmental teams dedicated to specific deals with the authority to coordinate government decision-making and reduce the amount of bilateral negotiation between proposers and individual government departments.

Recommendation 10: The government needs to clarify its process for deal negotiation and sign-off.

Concerning timescale

While the government’s approach has provided an important device to generate momentum and drive, it has not taken sufficient account of the importance of three core aspects: building trust between individuals and institutions; negotiating important details of future arrangements; and ensuring public buy-in. For this reason we suggest the following proposals:

Recommendation 11: The government should provide a clear and unambiguous statement that bespoke devolution deals will be negotiated with all those county areas who seek them over the duration of this parliament.

Recommendation 12: The government should clarify a series of milestones for the future negotiation of deals according to the ‘type’ of deal being discussed, with some form of timetable for each of the 38 areas already under negotiation as well as opportunities for new proposal to be brought forward.

Recommendation 13: The government should do more to negotiate neighbouring deals rather than prioritise city devolution deals over county negotiations.

Recommendation 14: The government should work with other national bodies to do more to encourage collaboration between neighbouring areas in order to enhance deals and drive up good practice.

Good practice in county devolution

Finally, in view of improving good practice in developing better devolution deals we think there is considerable merit in mutual learning and collaboration between counties. To this extent we set out a number of general ‘models’ by which counties could consider the different types of governance that might support their differing geographies and their diverse devolutionary demands. These include:

  • the standard ‘combined authority’ model – with or without a directly elected mayor
  • county mayor and cabinet executive model – for areas with a single unitary authority or single two-tier county but no combined authority
  • a public service board model – with an emphasis on bringing together the range of local authority and other public authority stakeholders to galvanise public service reform
  • a federated model of county governance where a number of smaller combined authorities work together within a bigger functional economic geography with a single devolution deal
  • a unitary model – as in the case of Cornwall – where district and county tiers are combined.

One of the most tried and tested ways of sharing good practice and supporting learning between local and combined authorities is through the work of their national representative bodies, such as the County Councils Network. This could be further enhanced in the following ways:

Recommendation 15: The broad headlines – if not the precise details – of devolution proposals could be shared more widely, even if not with the public, in order to allow for local authorities to link up with areas where there might be some learning and synergy though joint-working.

Recommendation 16: Building on existing good practice, there should be more opportunities for local authorities with similar proposals to meet and network together under the auspices of bodies like the County Councils Network and other local government umbrella bodies through secondment opportunities and more specific support programmes, for example.

One of the particular lessons learned through this research is that local councillors – who often play a central role in unlocking the local aspects of devolution proposals – feel blindsided and unsupported through processes of local discussion and deliberation. To this extent we propose:

Recommendation 17: More training and support should be offered to local councillors who often feel marginalised by current processes. This needs to be developed locally but could be supported again by umbrella bodies for local government.

Recommendation 18: There should be greater engagement between local authorities and their local members of parliament in understanding and supporting local proposals in county areas.

Conclusion

In the past few months, the devolution genie has well and truly escaped the lamp. This presents a huge opportunity for cities and counties alike, but unless the government moves quickly to recognise the importance of county devolution – and the added complexities that this brings – and unless it demonstrates a greater willingness to adhere to its principle of negotiating locally specific deals, then it risks causing little more than irritation and dissent. With some simple steps to clarify its purpose and principles and to spell out a more coherent process for negotiation, the government could quite easily set the process back on track. If it does not address these issues, its well-intentioned plans could be undermined by frustration and lack of trust.


1 Counties represent two-fifths of the national economy; they have more active businesses than any other part of England; business start-up rates in counties are second only to rates in London; and counties such as Surrey, Oxfordshire, and Cheshire and Warrington have growth rates that surpass any of the Core Cities (CCN 2015b).

2 In Decentralisation decade (Cox et al 2014) we identified five principles which we argued should underpin any programme of decentralisation in England: (1) Decentralisation must be for a broad and clear purpose – with some clear, long-term goals and outcomes; (2) Decentralisation must be joined up requiring a coherent and coordinated approach across government; (3) Decentralisation will necessarily be asymmetrical as the appetite and capacity for devolution will vary from place to place and the arrangements themselves will vary according to local context; (4) Decentralisation will take time, not least for the necessary adaptations to take place – both centrally and locally – and for new capacities and skills to develop; (5) Decentralisation requires cross-party support.

3 That Cornwall managed to sign a significant deal is partly testament to their foresight and preparedness, but other areas that lack the simplicity of a unitary structure and a relatively straightforward local geography are highly unlikely to achieve something similar – as many stakeholders have stressed to us, Cornwall was a unique case for devolution.