devolution

Devolution, Inclusive Growth and Local Skills Strategies

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In today’s blog, CURA’s Jonathan Payne argues that the devolution agenda in England has so far been driven by a neo-liberal “growth first” approach that eschews consideration of the challenges presented by inclusive growth. He argues for an inclusive growth approach that is more sensitive to the quality of employment and the lower end of the labour market, and he specifically considers the role that local skills strategies might play in such a policy agenda.

Since 2010, UK governments have promised to empower local communities to drive growth as part of the devolution agenda for England. This has seen the creation of Local Enterprise Partnerships (LEPs), bringing together local authorities and members of the local business community, along with ‘City Deals’, ‘Growth Deals’ and ‘Devolution Deals’, brokered between central and local government. The question is what kind of growth and for whom? The emerging discourse of ‘inclusive growth’ reflects concerns over poverty and inequality, and the general idea that everyone should benefit. The Prime Minister, Theresa May, has spoken of building an economy that ‘works for everyone’ and of spreading the benefits of growth across all parts of the UK. Against the backdrop of weak productivity, ‘industrial strategy’ is being promoted, with the aim of creating good high-value jobs, while the National Living Wage for the over-25s supplements the Government’s welfare-to-work agenda and its commitment to ‘make work pay’.

Inclusive growth is a hot topic, with an All-Party Parliamentary Group looking at the issue, and the RSA’s Inclusive Growth Commission, Manchester University’s Inclusive Growth Analysis Unit, and the Joseph Rowntree Foundation, amongst others, producing reports. The term remains, however, a contested one. A key distinction is between a neo-liberal, growth-first approach which seeks to create more jobs and connect more people, including marginalised groups, to the labour market, and a growth-shaping agenda which goes further by developing more and better jobs. Importantly, the latter puts the spotlight on job quality and includes the lower end of the labour market, an approach favoured by, amongst others, the Joseph Rowntree Foundation.

This is vital because nationally government policy remains firmly wedded to the growth-first approach. Industrial strategies since 2010 have been about sexy, elite sectors and technologies which employ only a tiny fraction of the working population, and have had little to say about the ordinary economy where most people work. Here, one in five UK workers are in low wage jobs and one in eight are ‘working poor’. Many of these jobs are low skill and insecure. While the National Living Wage is welcome, it remains age-restricted and is not a living wage. Progression out of low wage work also remains problematic, with only one in six managing to permanently escape after ten years. Government worships at the shrine of a ‘flexible’ labour market, which gives the green light to employers looking to compete through low wages and poorly designed jobs, ‘zero’ or short-hour contracts and other forms of ‘labour flexibility’, problems which extend far beyond the ‘gig’ economy. With the UK’s low paying sectors a major contributor to our productivity gap with European competitors, there are glaring policy tensions. Austerity also squeezes wages and corrodes investment, while welfare cuts and a punitive regime of conditionality and sanctions applied to those on benefits suck money out of deprived communities and are designed to drive people into any job.

Locally, there are real challenges in fronting up to inclusive growth. Funding for local growth has been cut from £11.2 billion between 2006/6-2009/10 to £6.2 billion between 2010/11 to 2014/15. Local authorities have experienced cuts of 40%. LEPs have limited resources and staffing. Devolution is top-down, limited and uneven, with a crazy paving of devolved powers and responsibilities, which threatens to worsen already stark regional disparities in one of the most centralised countries in the western world. There are concerns that central government is off-loading responsibility for spending cuts, uneven development and deep-rooted structural problems in our economy and labour market. Secret deals, brokered behind closed doors between central and local elites, can mean that questions of ‘what kind of growth and for whom?’ and the lower end of the labour market do not get a look in.

This is not to suggest that local actors have their hands tied when it comes inclusive growth. There are certainly things they can do to directly address low quality employment, whether it be local authorities ‘leading by example’, using public procurement to lever improvements in private-sector contractors, enlisting the support of local ‘anchor institutions’, such as universities and hospitals, or campaigning for employers to sign up to voluntary Living Wage Compacts. Preston’s experiment with Community Wealth Buildingis one approach, and it will be interesting to see how this plays out.

Local Skills Strategies and Inclusive Growth

Another issue worthy of attention is the role of local skills strategies in all of this. At national level, skills have been the policy lever of first and last resort for addressing international competitiveness, productivity and social inclusion over the last 35 years. We know skills have a role to play in productivity and better jobs and in helping people to access work and progress in their lives. But research also tells us that skills have to be used in the workplace if they are to add to productivity. Equipping people with education and training can help some individuals to get better work but it cannot magic away low-skill, low-pay, insecure and dead-end jobs which still have to be done by someone. Neither should we think Robotics and Artificial Intelligence will ride to the rescue or that they will eat all the jobs. The ‘skills problem’ is not just one of too few people with the right skills (weak/misdirected skills supply), it is one of too many jobs which are not effectively using the skills and capabilities of many of those already in them (weak employer demand and poor utilisation).

Skills figure prominently in the devolution agenda, including a number of City Deals and are often an area where devolution deals have requested more influence. We also have the planned devolution of the post-19 adult education budget to Combined Authorities/LEPs by 2018-19, the most visible element of skills devolution to date. However, cuts to adult skills funding leave a massively reduced budget of £1.5 billion across England, much of which is already committed to meeting statutory learning entitlements. Schools and 16-19 funding remain a fiefdom of the Department of Education. Apprenticeships are nationally funded and administered through the Apprenticeship Levy, with government having set a target of 3 million new starts by 2020. Schools and Further Education Colleges both operate in competitive markets for learners, and are subject to centralised accountability mechanisms in the form of ‘high stakes’ national inspections. The ability of local actors to exert influence over the local skills system looks to be pretty limited.

The danger is that local skills strategies focus simply on boosting qualification stocks, addressing skills gaps and shortages, and equipping young people and the unemployed with the ‘right’ skills and attitudes for work, against the backdrop of massively reduced funding. As Ewart Keep has persuasively argued, locally we could see mini-versions of the same skills-supply, target-driven agenda, an approach that nationally has done little to address problems of weak employer demand and poor utilisation over several decades with much bigger volumes of public funding. As the OECD/ILO have also argued, if local skills strategies are to contribute to national productivity and inclusive growth they need to go beyond traditional skills supply measures and address employer demand and utilisation. They call for a major re-think of the ‘skills problem’ which would involve integrating skills into broader initiatives around economic development and business improvement, and working with employers to address issues of product market strategy, work organisation and job design, and the way people are managed. A key challenge is firms bedded down on the ‘low road’, competing on the basis of price, with low wages and low skill job design.

This raises interesting questions for local skills strategies in England at a time when Government is asking Combined Authorities and LEPs to bring forward ‘local industrial strategies’. How far will local growth strategies address low paying sectors? Will we see skills integrated with economic development and business improvement initiatives in ways that do not neglect the lower end of the labour market? Do local actors have the resources, capacity and expertise available to do any of this and can they think differently about the ‘skills problem’? How much progress can be made locally in terms of raising employer demand for, and use of, skills in the context of a weakly regulated labour market and shareholder-driven economy? On this latter point, we will only really know if we try. I have recently been carrying out research, funded by CURA, that has probed these issues in the Midlands, focusing on local actors’ understandings of the ‘skills problem’ and approaches to addressing it. The main finding is that local skills strategies are struggling to move beyond a narrow supply-driven agenda and develop a more integrated approach which fronts up to the challenges presented by low skill, low wage jobs. However, these are still early days. What is clear is that a focus on the ‘whole economy’ and the quality of jobs must be at the heart of inclusive growth agendas.

Jonathan Payne is a core member of CURA and Professor of Work, Employment and Skills at the Department of Politics, People and Place at De Montfort University.

Post-Brexit Devolution: What Should it Look Like?

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brexitIn this post Paul O’Brien argues that after Brexit devolution should  empower local government to deliver a localised industrial strategy.

Councils could be forgiven for wondering if Government remains as committed to devolution and decentralisation of power, post Brexit, as it appeared to be before June’s vote.

What started well and seemed to have support at the highest level of Government, with George Osborne’s zealot like enthusiasm, doesn’t appear to have the same prominence with new cabinet figures, indeed some fear that the agenda could simply fizzle out.

It would be a major policy U-turn to cancel next year’s mayoral elections for the big three combined authority areas of Greater Manchester, Liverpool City Region and the West Midlands, however it doesn’t appear that many other deals are close to completion with almost daily stories of negotiations collapsing.

Whilst some find the idea of having an elected mayor forced upon them objectionable, others have concerns over whether you are really going to get what you signed up for in terms of funding for projects or powers, given the economic uncertainty that exists post Brexit.

Given the financial crisis local services face, decentralisation is exactly what is needed. It’s clear the public feel that they are not getting their fair share of resources. APSE’s recent opinion poll, with Survation, found 77% of the public want more of their taxes spent locally, rather than elsewhere.

There now appears to be a consensus amongst Government that the UK needs a new industrial strategy with national infrastructure projects at the heart of it. However, what is really needed is for local government to be recognised as the key to driving a localised industrial strategy, and given the powers and funding to deliver it. One that can draw in investment and stimulate local growth, which will have an immediate impact now, rather than in fifteen years time.

Devolution to date has been about individual authorities combining and going to Government asking for funding to undertake initiatives that are ‘unique’ to their area but in reality when you examine many of the Combined Authority Orders there are common themes running throughout. So is it really necessary to painstakingly go through the process of putting these together and then spend months negotiating back and forth with civil servants on the detail? Is it not time for the sector to get together, as a whole, and ask Government for a devolution package around local industrial strategies, including borrowing powers for housing, transport and roads infrastructure, employability and skills development?

In the current climate of uncertainty we may just find a Government that is willing to listen to creative solutions to problems, which they are struggling to find answers for.

Paul O’Brien is Chief Executive of APSE (the Association for Public Service Excellence) and a member of the Centre for Urban Research on Austerity

Devolution after Brexit: 3 things that need to change

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In this post, originally published on the New Economics Foundation’s blog, Adrian Bua argues that devolution should deliver a genuinely more equal, decentralised and balanced political economy in the UK following the Brexit vote.

Brexit has cast doubt over much of UK economic policy – including the Treasury’s pledged support for a ‘devolution revolution’.

Many areas that voted in favour of Brexit were those left behind by a decline in British industry since the late 1970s and those suffering the most from government spending cuts.

They’re the areas that need effective devolution the most, but they’re also the areas standing to lose the most from a Brexit.

Uncertainty has already hit the manufacturing sector with Siemensdeciding to halt investment in Hull, and it won’t be the last case of its kind. Decisions like this will affect poorer regions disproportionately as their industry is generally more dependent on EU demand.

Moreover, these regions have also benefitted the most from EU regional development funding – and therefore stand to lose the most as these funds are discontinued, especially if the British state decides not to compensate the losses.

All this means that poorer regions will suffer from short term disruption and uncertainty, but it does not mean that such regions won’t benefit from Brexit in the long term. For example, supporters of Brexit such as James Wharton, the Minister for local growth and the Northern Powerhouse, say northern businesses now have a huge opportunity to “go global”.

We are concerned however, that rather than leading to a more balanced economy, Brexit risks turning Britain into a full-on ‘hedge-fund economy’ that works for already global finance firms and the City of London.

It’s therefore even more important that the government changes its currently-flawed approach to devolution in the following ways:

1. An industrial strategy for the whole of the UK

The Brexit vote was a loud complaint by those left behind by what Colin Hay has called the ‘Anglo-Liberal’ growth model based on London’s financial services, spending fuelled by private credit and housing price bubbles. This also brought with it the decimation of our public and social services.

We need a new industrial strategy and a plan for regeneration that will boost the incomes and opportunities of these alienated communities that have been left behind.

2. More power to the people

The above, which would include some redistribution of wealth, needs to be accompanied by the redistribution of power.

As Tony Hockley argues, more money and investment can’t reverse the cultural elements of inequality, highlighted brilliantly by Lisa McKenzie’s work on the stigmatisation of working class neighbourhoods in Nottingham, for example.

To tackle this appropriately, as well as offering opportunities for excluded communities to benefit from growth, we need to enable such communities to take an active role in our society and economy. Approaches to ‘Community Economic Development’ such as that being carried out in Preston in their experiment with co-operative industry, have much potential in this respect.

By combining economic development, with the empowerment of citizens, communities can become ‘development makers’, rather than ‘development takers’.

Devolved areas should also engage citizens in forms of participatory public administration, by implementing meaningful and genuine forms co-production in public services, and developing more ambitious approaches to participatory budgeting to give genuine control to people over public investment in their areas.

3. More democratic politics

Our politics also needs to be more responsive to people and the decentralisation of political power needs to occur in political parties and through the electoral system.

Decay in these key democratic institutions is part of what Colin Crouch terms ‘post-democracy’, a condition which I argue elsewhere underpinned many of the pathologies surrounding the EU referendum.

All political parties need a bottom up reinvention based on greater democracy.

How do we do this?

Current attempts by the Labour party to rediscover its roots in social movements are welcome, as are remarks by incoming Prime Minister and Conservative leader Theresa May about a country that works for everyone.

A more proportional electoral system that allowed for a greater plurality of political parties, that could experiment with different organisational models and offer a greater variety of policy platforms without engaging in distracting internal struggles would also be welcome.

Adrian Bua is researcher at the New Economics Foundation and at the Centre for Urban Research on Austerity

Workshop: Local Economic Development and Skills Under Austerity

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In this post, Jonathan Payne reports back on a two day workshop on local economic development (LED) and skills policy under austerity held by the Centre for Urban Research on Austerity (CURA) in May.

The workshop brought together leading UK academics in the areas of LED, governance and skills to debate the changing institutional landscape around LED in England and the opportunities and constraints afforded by policy commitments to ‘localism’. This afforded a rare opportunity for academics interested in economic geography, local governance and skills to come together and discuss how the ‘localisation’ agenda is playing out in practice.

As Ewart Keep argued, for the last thirty years skills policy in England has tended to be a national project, focused on generalised workforce upskilling in pursuit of government targets. With government now promising to devolve more of the adult skills budget to local areas, there are questions around how much autonomy local areas will have and what level of resource they might draw on. Furthermore, past experience would suggest that a narrow focus upon education and training, or boosting the supply of skills, runs up against problems of weak employer demand for skill, linked to the way many firms in the UK compete, design jobs and manage staff. This is reflected in a high proportion of low skill, low wage jobs compared with many other advanced European countries, relatively low productivity, and problems of ‘over-qualification’ and ‘under-utilisation of skills’ within the workplace. As the UK Commission for Employment and Skills has argued, there are limits to what boosting skills supply can achieve on its own without wider measures to influence the ‘demand side’. The latter requires effective measures such as industrial policy, economic development and business improvement to grow the proportion of high skill jobs and upgrade the skill content of work more generally. Skills policy might work better if integrated and joined up with such activity.

The role of local enterprise partnerships, city-deals and combined authorities is clearly of relevance here for a number of reasons. First, government is promising to ‘empower’ local communities through these mechanisms to drive LED. Second, skills policy is being localised and skills often figure prominently within this agenda. These claims are controversial, particularly in terms of how ‘real’ localism is at time of funding cuts. However, localism is also a moving picture, and if skills and economic development are to be integrated as part of a more holistic approach, then this is one of the few areas where we might look for examples of progress (or not).

Many issues came to the fore during these discussions: the tendency for LED governance to bounce back and forth between different scales and for policy to ‘keep failing forwards’; the uneven capacity of LEPs; the role of power in devolving ‘risk’; the need to understand how local actors comprehend their situation and what motivates their engagement; the tendency for policy to eschew interventions inside the ‘black box’ of the firm; and the question of what ‘localism’ can tell us about the ‘neo-liberal state’ in a period of crisis management and the narratives it constructs. What is clear, however, is that research will be better placed to address such issues where academics work across disciplinary boundaries. LED, governance and skills are an example of one such interface where collaboration is likely to prove particularly fruitful.

Jonathan Payne is Reader in Employment Studies at De Montfort University and a member of CURA (Centre for Urban Research on Austerity) as well as CROWE (Contemporary Research on Organisations, Work and Employment

Taking Power Back: Response by Simon Parker

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This post is the latest in the series debating Simon Parker’s recent book ‘Taking Power Back‘. The debate began with an outline by Simon of the main argument of his book, followed by a response by Jonathan Davies and Adrian Bua from CURA. In this post Simon highlights areas where our thoughts overlap and diverge. If you are interested in contributing to the debate further please email adrian.bua@dmu.ac.uk.

The striking thing about Jonathan and Adrian’s article is how much we agree on the fundamentals. We are clear that Britain’s mix of the big central state and free market economics has not delivered on its promises. And I think we broadly agree that a politics of commonism – the creation of a vastly expanded realm of self-help, mutual aid and social enterprise – represents a credible and desirable way to secure social progress in new times.

The challenge I have been posed is less about the ‘what’ and more about the ‘how’. Jonathan and Adrian are right to ask how we get from a world where power and assets are overwhelmingly enclosed by the state and market, to one in which commoning becomes, well, commonplace. They argue that far from encouraging mutual aid, the British state is more often engaged in expanding the reach of profitable activity while simultaneously choking off the social sector through austerity. Is my vision of the creative commons not pure idealism without some sort of struggle against the power of capital?

One of the challenges I face in answering this is that I am deeply suspicious of top down, structural change. I do not have some kind of Marxian revolution in my back pocket. They tend to end badly. Instead, I think commonism will emerge from decentralised trial and error in the real world. But I accept the charge that my bottom-up approach runs slap bang into some very big and ugly vested interests in both the state and the business world. The commons is not the strongest force in society, but where I differ from Jonathan and Adrian is that I think this might already be starting to change.

My first reason for hope is that commoning is already starting to grow in the midst of the very neoliberalism Jonathan and Adrian decry. Take, for instance, the 25% boom in the number of co-ops over the three years from 2010, or the 10% growth in community businesses over 2015. These organisations are generally not old-school charities funded by grants, but organisations which use their community roots and freedom from shareholder demands to develop innovative business models in response to local needs and demands.

My second reason for optimism is the fact that the economy is starting to change in ways which might favour commoning. I am hardly the first person to point to the rise of automation, which has the potential to destroy a vast number of jobs without replacing all of them. This reduction in paid labour is a horror for the old Labour movement, but when you think about it a world with fewer of what David Graeber calls ‘bullshit jobs’ is hardly a bad thing.  Imagine more people, with more free time and vastly cheaper goods and services, searching for more meaning in their lives.

My third reason for hope is that I can already see some of the institutional changes that might help to unlock a world of commonism. The first plank in my agenda is a universal basic income, both to manage the economic consequences of automation and to liberate people to pursue more meaning free from the demands of paid labour. This is the key policy change which would turn a dystopian world of mass unemployment into a world where work became more like play (and the commons is the perfect space to play in).

I think we need a new public service architecture which actively encourages commoning. This means city-level social investment funds which can support the early stages of commons-based organisations, governed by the public, private and commons sectors to ensure that the money flows towards their shared priorities. Local authorities and others need to direct their commissioning to spotting and scaling up the parts of the commons that work best.

My response to the question of how we grow the strength of the commons is to transform the role of government into growing and protecting the realm of mutual aid. This will help to grow a strong and independent domain of community ownership. My answer to austerity is that a smaller state might be a good thing as long as we also have a smaller private sector and much more social activity in-between them. Commonism is not a utopian project, but a practical route through which ordinary people can adapt their lives to a changing economic context.

Simon Parker is director of the New Local Government Network and a leading expert in public policy, public services and government.

Taking Power Back: Review by CURA

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Professor Jonathan Davies and Dr Adrian Bua from CURA respond to Simon Parker’s  previous  blog where he explained the argument of his recent book ‘Taking Power Back‘. This blog will be followed over the next few weeks with a reply by Simon.

Taking Power Back is written as a provocation – a manifesto for change – at a moment when the ruthlessly centralising tradition of British politics is under greater critical scrutiny than ever before. As Simon Parker explains in his blog post, current levels of centralisation in British politics are unsustainable and the call for radical decentralisation, driven by the social action of place-based individuals and communities is timely.  Moreover, Simon argues that with the end of austerity nowhere in sight, the halcyon days of the welfare state are in any case well and truly over. Something has to be done.

Simon’s alternative is encapsulated in the idea of ‘commonism’, a new kind of society based on self-help and mutual aid enabled by a more local, relational and supportive state, rather than the over-bearing centralised behemoth developed since the post war era. Simon thinks that we are moving into a conjuncture more favourable to commonism, as experiments proliferate and the state slowly and reluctantly begins to show awareness of its limitations. In his analysis, the push for devolution and localism is more than a mere straw in the wind.   The wave of city deals, with the Greater Manchester Combined Authority at the forefront (which Simon discusses at length) signals an opportunity to develop the ‘commonist’ agenda and forge a path to a more decentralised and democratic polity.  Taking Power Back is at once resolutely pragmatic and visionary.  Commonism is not communism, a system that envisions the entire system of production, distribution and exchange socialised and democratised.  Rather, the practices of commoning sit in a nebulous and uneasy relationship with state and market.  It rests tacitly on re-working the classic state-market-civil society triad.

However, preoccupation with the critique of statism means the triad is never adequately discussed.  For example, Simon is very reticent about markets, corporations and economic crises. Contemporary political economy tells us that states and markets are deeply inter-dependent. Much of what states do in the 21st century is about extending the reach of the profit economy.  Take austerity, a policy regime Simon tends to take for granted: it undermines the resources of localism in ways that seem destined to shrivel the commons.  First, we know that cuts in state funding drive local community organisations to the wall.  Second, government contracts are deeply biased towards corporate contractors and large extra-local civil society organisations (the so-called “primes”), and against local organisations.  Third, austerity welfare and its extraordinarily punitive sanctioning regime so envelops and bureaucratises the lives of millions of unemployed and working poor citizens, that it is hard to envisage them finding the time or cognitive space to do any volunteering or commoning.

These deeply reactionary trends arguably diminish the space for commoning, but perhaps more importantly they point to a huge oversight in Simon’s analysis.  Taking Power Back will not be accomplished by going with the flow, it can only be a deeply conflictual process oriented to reversing malign trends in our society – the expansion of markets and corporations, the boa-constrictor of state regulation and the predatory character of civil society “primes”, all of which conspire to corrode the local and the democratic. Simon’s call for a universal wage (or basic income) to unlock commoning capacity is an acceptance that sharpening inequalities need to be addressed.  Yet, it is hard to see how this can be accomplished without, at the very least, reversing austerity and in the process taking on recalcitrant interests throughout the state, market and corporatised civil society sectors.

Viewed through this lens, the current devolution and localism agendas are deeply problematic, accentuating anti-democratic developments antithetical to ‘commonism’.

Simon acknowledges the anti-democratic manner in which “Devo Manc” was accomplished – a deal struck between local and central state elites. Moreover, greater local responsibility for allocating a shrinking budget presided over by boosterist metro-mayors is no basis for a flourishing municipal commons, particularly under a grossly punitive benefits regime over which the centre exercises an iron grip. This is compounded by declining standards in what researchers at ‘Manchester Capitalism’ have called the ‘foundational economy’. This consists precisely of those businesses and services to meet the basic needs that are the bread and butter of ‘commonism’, yet, the foundational is increasingly beset by casualised work, and operates as a cash cow for big business.

As Simon recognises, under capitalism, technological innovation and productivity do not usher in a world of leisure. They rather concentrate power in the hands of techno-elites and shrink the labour market.  Nowhere is the dystopian character of the digital age clearer than in San Francisco, where the predatory elites of Silicon Valley make the city unliveable for working class people and complain at having to look at the human refuse left in their wake.

We live in a world of confected scarcity (austerity) and ever-rising inequality in a highly precarious global economic conjuncture. Simon is right that a flourishing commons depends on greater equality, in a world of plenty.  But there is a vast gap between our world and the world of the Morrisonian commons.  Taking Power Back offers a welcome stimulus to those thinking about how a better world might come into being. Simon’s wager is that examples of commoning in action can be pedagogic in the sense of showcasing the virtues of “commonism” to all, at a time when elites seem a little more aware of their limitations.  Our concern is that these are not the most powerful trends in our society. It is hard to see the pursuit of social justice as anything other than an elemental struggle in the 21st century, without which new political economies of solidarity will remain confined to the margins.

Professor Jonathan Davies is director and Dr Adrian Bua a core member of the Centre for Urban Research on Austerity

Making the most of the devolution revolution

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In his budget statement last week, the Chancellor spoke again of a ‘devolution revolution’. Other areas beyond Greater Manchester will receive new powers and responsibilities previously held in Whitehall. Agreements with Sheffield, Cornwall and Yorkshire are underway, with more to follow. It can be hard to keep abreast of these developments, as each agreement contains a unique pattern of policies to be devolved, resulting in varying degrees of local control. We are supposed to see the agreements as great successes, but with little sense of what it all amounts to.

What is devolution for? New Economics Foundation (NEF) has been working with the Crick Centre at the University of Sheffield to map the arguments made for devolution, in order to address this crucial question.

We recently released the findings of this research which can be found here. A summary is shown in Figure 1 (click on the image to enlarge)

FIG1

Advocates of devolution point to economic growth as the main motivation, above all other concerns. On average, just under half of all arguments for devolution refer to its role in creating economic growth. Improving the effectiveness of public services came second with 23.7% of arguments, and strengthening democracy third at 12.9%.

From the perspective of central government departments, local governments and think-tanks alike the focus is economic growth. Creating growth in parts of the country which have struggled economically is a laudable ambition, and one that merits discussion, but it also matters how growth is discussed and what it is taken to mean.

We found that economic growth arguments are weak on explaining how growth would be achieved and focus primarily on benefits to the national purse. How income-to-cost-of-living ratios, which affect everyone’s day to day economic reality, would be affected by devolution is seldom mentioned. Reducing poverty through economic growth is mentioned only four times in a total of 1,129 arguments. Numbers of jobs created are discussed far more than the quality of jobs.

Devolving economic powers over skills, housing, business rates and enterprise could in theory improve how the local economy works for its residents and local stakeholders. Yet the current focus pays little attention to how devolution would improve the lives of local people.

A s Figure 2 shows (click on the image to enlarge) Creating a more democratic country seems an obvious aim for devolution but in fact is neglected by advocates of devolution, particularly advocates in local government.

Figure-2_devo

On average local governments refer to strengthening democracy in only 9% of the arguments they make for devolving power. They neglect the expanded role citizens could play in decision-making if decisions are made closer to home and rarely discuss the ways in which devolution could increase the accountability of elected leaders to the public. Simply creating elected mayors is not enough to revive an ailing democracy. This is why local governments should also be considering the mechanisms for citizen participation which could make devolution worthwhile.

One change could make all the difference as the devolution revolution progresses. This is to bring the debate into the open for public discussion, locally and nationally, so that everyday economic concerns feature strongly in discussion of economic growth and establish a model for more accountable, deliberative democracy. The debate has so far been conducted in the backrooms of Westminster rather than in public forums.

Several parties in government have proposed a Constitutional Convention, but are yet to act on the proposal. The convention model is a citizen forum bringing together a representative sample of people to discuss changes underway in the governance of the country. In the meantime, a group of academics and civil society groups have piloted this model in Sheffield and Southampton, showing how it would work. Drawing on examples from countries including Iceland, Canada, the Netherlands and Scotland, they show that the direct participation of local people in decision-making improves not only the democratic quality of decisions, but their effectiveness. It’s a match made in heaven for the devolution revolution.

‘The briefing Democracy: the missing link in the devolution debate’ is available for download from New Economics Foundation website here.

This post was originally published on the University of Sheffield’s Crick Centre Webpage

Sarah Lyall is a researcher and policy analyst at the New Economics Foundation. She tweets @sarahglyall and @nefSocialPolicy.

Devolution deals: three risks

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Devolution to city regions is a central pillar of the conservative government’s industrial strategy. The ‘Northern Powerhouse’ model developed in the Greater Manchester Combined Authority (GMCA) is being rolled out through ‘Devolution Deals’ and the Cities and Local Government Devolution Bill. Advocates of devolution argue that it can close regional disparities in economic output by boosting growth in city regions. It is also argued that closer proximity of devolved administrations allows policy to be tailored to local needs; that devolution contributes to increased dynamism by creating opportunities for local innovation and increases local participation and accountability. As recently summarised by the Local Government Association these are points of consensus in British policy circles.

However, the evidence of devolution as a driver of economic growth, convergence in social and regional inequalities and is pretty thin.  For example, one analysis of devolution concluded that the evidence in favour of such links is very weak and another found a moderately negative relationship. It seems that this evidence is overlooked by the general consensus in favour of devolution amongst policy makers.  In this blog, I will set out three key ‘risks’ that explain failure to deliver on the ‘economic dividend’ argued for by so many proponents of devolution.

The balance between the transfer of resource and responsibility

It is often argued that the ‘litmus test’ of devolution is the balance between the transfer of policy responsibility and resource capacity. On this test, it can be said devolution in the UK has been non-existent in recent history – the purse strings have remained under tight Whitehall control. Research on the coalition government’s devolution reforms found that the scale of devolved functions heavily outweigh the devolution of resources to carry these out effectively. In order for local units to exercise devolved responsibilities effectively, resources and resource raising powers need to be commensurate with responsibilities. The Conservative government’s devolution deals are being pursued in a context of even harsher projected public spending cuts. It is therefore difficult to avoid the cynical conclusion that devolution forms part of a broader agenda to transfer the responsibilities of managing cuts to lower government tiers, rather than a genuine attempt to construct a more decentralised political economy.

Exacerbating inequality

‘Devolution deals’ seem to involve a more fundamental shift of power away from central government than previous attempts at devolution. However, these deals are struck on a case by case basis. Some resource raising powers are on the table, but some regions receive more powers that others – leading to an asymmetric distribution of powers that could exacerbate existing inequalities. Even if these were uniformly devolved, the ability to capitalise upon these is likely to differ across city-regions.  It is also noteworthy that many of the policies that previously distributed the proceeds of the UK’s London and finance-centric economic model are being discontinued by the austerity agenda. Recent research by the Institute for Fiscal Studies makes it clear that measures such as the ‘Living Wage’, which is presented as mitigating these impacts, will do little to compensate for those at the cutting edge of these reforms. Compounded by the imbalance between the devolution of functions and resources noted above, heed should be taken of the possibility devolution to city regions serves as a model for the shrinking the welfare state.

Collaboration and co-ordination between regions and governance tiers

Devolution deals are concerned with arrangements for individual cities and city-regions. Beyond the aspiration for a larger collective contribution to national economic output, there is little focus on the relationships between regions and the impact on devolution deals upon the overall functioning of the economy. Because of this, analysts of devolution have raised the possibility that rather than leading to an “effective and coherent yet more locally autonomous system of government”, devolution policy in the UK might deliver “a disconnected set of governance fiefdoms pursuing more or less strategic ends with varying degrees of competence”.  A related likelihood is the devolution deal model will encourage competition over collaboration between city-regions. As economist James Meadway argues “by granting large cities more powers on the allocation of spending, but leaving the level of taxation, spending and borrowing under tight Treasury control, regions will be forced into competitions with each other to attract business expenditure and therefore extra tax revenues”. This could lead to a regulatory ‘race to the bottom’ that would substantially undermine the collective potential of city-regions to deliver improved economic and social outcomes.

In conclusion, a viable model for a more decentralised political economy should:

  • transfer ‘effective’ policy autonomy by providing adequate resourcing opportunities for devolved units;
  • reduce inequality within and between regions and social groups;
  • provide effective co-ordination between regions and governance tiers.

Although devolution deals are an emergent approach whose outcomes are not yet evident, the ad-hoc and case by case nature of the devolution deals, and the context of harsh public spending cuts within which they are taking place, are likely to lead to negative outcomes regarding the three areas above. It is therefore quite doubtful that devolution deals can constitute a viably generalisable model to deliver a more decentralised and effective political economy.

Adrian Bua is Research Assistant at the Centre for Urban Research on Austerity, as well as at the New Economics Foundation