In mid-March, two new devolution deals, labelled Trailblazer Deeper Devolution Deals, were agreed between the Government and two of the first mayoral combined authorities, Greater Manchester (GMCA) and the West Midlands (WMCA). Announced as a core component of the Chancellor’s Spring Budget, these deals are the culmination of over a year of development and negotiations with Government across a range of policy areas including fiscal devolution and financial sustainability, to housing, transport and skills, business productivity, trade and innovation to name but a few.
As a company that found its beginnings in the first devolution deals in England, we are proud and privileged to have been asked by both GMCA and WMCA to support this next chapter in the English devolution story. In this blog, we share three reflections on what has been agreed, the implications of this for the future of devolution.
1. These deals mark a qualitative shift in English devolution
In the Government’s own words, these trailblazer devolution deals ‘lay the blueprint for the future of English devolution’, with the biggest gamechangers being a department-style single settlement and a significant step towards fiscal devolution with 100% business rates retention, both from the next spending review period. Both measures aim to provide the combined authorities with the flexibility and independence to deliver what is needed locally and over a longer term, making a decisive move away from the competitive funding approach that has dominated the local government funding landscape in the last decade. Although these changes are subject to decisions at the next spending review and should be seen in the context of a potential change in administration in the medium term, expectations of areas seeking or having already agreed a devolution deal have now been raised.
Outside of these two major changes, the deals went relatively far in agreeing new powers, funding, partnerships and approaches across a range of other economics levers. Housing, transport and skills were always at the core of the trailblazer offer and have delivered reasonably positive steps forward. In other areas, such as business productivity, innovation, trade and investment, culture and tourism and digital, the deals have established closer partnership working and new approaches with Government and its agencies to drive local, inclusive growth. As with the financial agreements, further devolved powers are earmarked following the next spending review, and these changes will serve to stretch the art of the possible for the future devolution agenda.
2. There will be implications for spending and structures
The provision to both GMCA and WMCA of a single settlement, business rates growth retention for 10 years, growth zones in which this retention is for 25 years and an investment zone (allocated separately, not as part of the devolution deals) will require a fundamentally different approach to business planning and financial management.
The deals describe these new single settlements as being closer to how government departments work with thematic functions and budgets being set at spending reviews. As above, this marks a qualitative change in how combined authorities will need to work.
Moving from a programme-based approach to a more strategic view of their financial affairs, they will be less focused on bidding for discrete funding pots (outside spending reviews) and more concerned with thinking about how to focus resources on their priorities and managing any fluctuations in income or costs. Preparations for spending review processes will now also take on a much larger status. Together, these changes may require internal changes to roles and structures, further crystallising and embedding the policies that combined authorities are responsible for and the levers they have at their disposal.
3. Local relationships will become even more important
The process for developing the trailblazer devolution deals was impressive in the levels of collaborative displayed between each combined authority and its constituent local authorities, as well as the wider stakeholder landscape of businesses, universities, non-constituent local authorities, public sector partners, and LEPs. This track record of working in partnership and by consensus must now continue and strengthen to make the best impact with the increased financial flexibility, powers and funding these deals will bring. With so many new mechanisms, funding pots, powers and partnerships to deploy across each footprint, making collective decisions as to how to do this in an equitable and impactful way will test the strength of relationships in each region, and will require the original shared purpose and principles for devolution to be brought to the fore.
In terms of next steps, the deal text outlines how both GMCA and WMCA are looking to agree the terms of the single settlement in an MOU by January 2024, ahead of an expected spending review by the end of the same year. As the next wave of the mainstream devolution agenda continues to progress throughout 2023, it does so in the knowledge of a greater prize on offer in the future.