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Home , Combined authority, Localism Act 2011

Written evidence from Dr Luke Cooper1 (EDE 37)

Public Administration and Constitutional Affairs Committee The Evolution of Devolution: English Devolution

Putting English devolution in context: what is it for?

1. This evidence statement draws on work undertaken at the School of Economics as part of the LSE Local project2 and on-going follow-on research into the impact of UK regional inequalities on the British political landscape.3 Our evidence largely focuses on enquiry questions 1, 2, 4 and 8. Our assessment of the existing structure may also assist the Committee in developing answers to question 5.

The Brexit referendum and UK regional inequalities 2. Both the 2016 Brexit vote and the 2019 General Election have brought considerable attention to the geographical diversity of the contemporary . Both the Brexit and Remain votes were wide, diverse coalitions, and the debate on their nature has been subject to tremendous political, as well as scholarly, contestation. But within this context, there is broadly agreement that regional inequalities in were an important factor in the Remain/Leave divide. The Brexit vote has been described as a ‘revenge of the places that don’t matter’ due to how economically struggling towns and small cities, which have struggled to find a place for themselves in the post-industrial economy,4 rallied to the anti-EU cause.5 While Remain-voting inner city areas often have higher levels of deprivation,6 territorial - as opposed to interpersonal - inequality was an important predictor of the Brexit vote. Importantly, regardless of the Remain/Leave divide, there is now a political consensus on the need to ‘level up’. Moreover, amongst both the victors in the 2019 General Election (Conservative, SNP) and the losers (Labour) there is broad agreement on the tremendous political salience and importance of issues concerning economic inequality, identity, self-government and constitutionality, even if there are substantial differences on how exactly they should be addressed.

1 Produced by Dr. Luke Cooper (LSE Ideas) with input from Dr. Jose Javier Olivas (UNED, LSE IDEAs) and Ms. Christabel Cooper (data analyst and councillor). 2 Details of the LSE Local Brexit project can be found here https://www.lse.ac.uk/international- development/conflict-and-civil-society/current-projects/debating-brexit-at-a-local-level. The project also utilised data put together by the LSE Centre for Economic Performance. 3 Luke Cooper and Christabel Cooper, ‘“Get Brexit Done”: The New Political Divides of England and at the 2019 Election’, The Political Quarterly, no. iFirst (2020), https://onlinelibrary.wiley.com/doi/abs/10.1111/1467- 923X.12918. 4 Italo Colantone and Piero Stanig, ‘Global Competition and Brexit’, American Political Science Review 112, no. 2 (May 2018): 201–18. 5 Andrés Rodríguez-Pose, ‘The Revenge of the Places That Don’t Matter (and What to Do about It)’, Journal of Regions, Economy and Society 11, no. 1 (10 March 2018): 189–209. 6 Cooper and Cooper, ‘“Get Brexit Done”’.

1 3. Our qualitative research in Mansfield, Pendle, Ceredigion, and Barnet, each in different ways ‘proto-typical’ Leave/Remain areas, revealed both the political/geographical diversity of England and Wales and the importance of local identities to how citizens feel and engage with national political issues.7 The idea of living in a ‘left behind area’ or town is often internalised by local citizens. Our interviews in Mansfield and Pendle also contained a number of references to the North/South divide. We found that there is a certain sense of pessimism, insecurity and disconnect with political elites which were considered ‘out of touch’. In our discussion panels it was clearly expressed that while cities are doing well, ‘towns are left behind’, and that it was probably necessary to achieve a higher degree of political decentralisation so that policy- making would take into consideration local realities. Given the political significance of the fallout from Brexit it seems impossible to separate these issues from the question of English devolution. They pose important questions on how to make democracy at the local level more accountable to the demands of individual citizens. One way of thinking about this is the distinction between formal democracy, substantive democracy and the role of identity as the basis for a political unit (e.g. the existence of a London identity and is an important justification for the GLA/Mayor).8

Devolution and ‘levelling up’: three key issues of relevance to the enquiry 4. The foregoing raise three broad themes for English devolution we will attempt to address: a. How is/should English devolution address/ing the regional inequality issue? b. Is English devolution changing the visibility of ? Can it be expected to? c. What can English devolution reasonably be expected to achieve regarding regional inequality and what issues will it confront in doing so?

Devolution and the danger of ‘levelling down’: fiscal devolution and local government cuts 5. The UK state is often recognised as highly centralised in relation to how it raises and distributes fiscal resources compared to other OECD countries. Due, however, to Scottish and Welsh devolution, the UK state is peculiarly now a UK-English state - a quality that

7 Jose. Olivas Osuna J., Max Kiefel, and Kira Gartzou-Katsouyanni, ‘Place Matters: Analyzing the Roots of Political Distrust and Brexit Narratives at a Local Level’, Governance, Forthcoming. 8 A simple way of thinking about democracy is the distinction between formal representation and substantive empowerment (formal and substantive democracy). Formal democracy refers to the institutions that provide citizens with political representation. Substantive democracy refers to a broader range of issues that concern the extent citizens are able to have ‘control’ over the forces that affect their life chances and wellbeing. Cutting across these two distinctions is the issue of belonging, identity, inclusion and symbolism. Alexis de Tocqueville called this the ‘habits of the heart’. In the nineteenth century American context, he saw this as defined by participation in local politics, religious conviction and family life. But regardless of what we think the ‘habits of the heart’ should be, we can, in all likelihood, agree, that they will have an effect on how citizens think about government and the quality of their political representation. On this see: Mary Kaldor, ‘The Habits of the Heart Substantive Democracy Afterthe European Elections’, Online resource, OpenDemocracy, (27 May 2014), https://www.opendemocracy.net/.

2 has been particularly clear during the 2020 Coronavirus pandemic with the UK government determining the rules for England-only. There are two key fiscal effects of this for how local government is funded. On the one hand, the funding formula is broadly redistributive and therefore mitigates against the effects of regional inequalities. On the other hand, local governments in deprived areas that benefit from redistributive funding are vulnerable to cuts and austerity. As a result, the cuts of over 50 per cent to the Department for Local Government and Communities budget between 2010 and 2016 was not evenly shared across local government. It hit those more dependent on the central government grant, which led to wide geographical differences in the scale of impact.9

6. There are two major dangers this poses to the levelling up agenda.

a. Treating unequal regions ‘equally’. Since 2013 the UK government has allowed local councils to keep up to 50 per cent of business rates. In the context of the government’s delayed ‘Fair Funding Review’ some have pushed for councils to have 100 per cent control of their business rates. There is a very high danger that these reforms simply concentrate taxation revenue in already affluent parts of the country.10 They could also lead to a ‘race to the bottom’ in business rates, which rather than leading to a net increase in UK economic growth, creates ‘zero sum’- like conditions as areas effectively ‘snatch’ revenue from elsewhere. Rather than levelling up economic growth, this would create more geographical unevenness.

b. Shift from discretionary to mandatory spending. With many local councils facing such high cuts they have unsurprisingly shifted away from discretionary to mandatory (the 1100 local statutory duties) areas of spending. This means the burden of cuts has fallen disproportionately on areas of local government activity which supports the social and physical infrastructure, e.g. private sector business growth and economic development, planning and developmental services, transport and highways.11 Problematically, these are precisely areas of local governments expenditure that can boost local economic opportunities and output, and are vital to the construction of ‘place centred’ plans for development (below).

England and the ‘devolution deals’: the bias towards big cities

9 Mia Gray and Anna Barford, ‘The Depths of the Cuts: The Uneven Geography of Local Government Austerity’, Cambridge Journal of Regions, Economy and Society 11, no. 3 (29 October 2018): 541–63, doi:10.1093/cjres/rsy019. 10 Daniel Bailey, ‘Economic Renewal through Devolution? Tax Reform and the Uneven Geographies of the Economic Dividend’, Competition & Change 21, no. 1 (1 February 2017): 10–26, doi:10.1177/1024529416678069. 11 Mia Gray and Anna Barford, ‘The Depths of the Cuts: The Uneven Geography of Local Government Austerity’, Cambridge Journal of Regions, Economy and Society 11, no. 3 (29 October 2018): 541–63, doi:10.1093/cjres/rsy019.

3 7. The Combined Authorities which have been established reflect powers set out in three pieces of legislation, The Local Democracy, Economic Development and Construction Act 2009, The and the Cities and Local Government Devolution Act 2016.12 The 2016 Act allowed for the creation of directly elected mayors for Combined Authorities, but ‘Devolution Deals’ had already been established previously, and formed part of the ‘’ agenda.13 Central and local governments negotiate the powers and governance structures that should be dissolved. These arrangements are distinct for those that exist in the London mayoralty and assembly which was created under The Authority Act 1999. To further complicate matters, local authorities were given the freedom to create directly elected mayors under The Local Government Act 2000 but very few have pursued this system.14 Taken together this all gives a very ‘messy’ character to the current state of the English devolution agenda.

8. A strong ‘city bias’ to the Combined Authorities approach can be observed to date. In 2011 government discussion around the Localism Act envisaged ‘executive mayors’ in the ‘twelve largest English cities’. In one scoping doc they wrote: ‘Many major cities in the world outside of the UK have a strong and powerful executive mayor. The Government believes that having a powerful and directly accountable mayor could lead to significant benefits for local communities, including enhancing the local economy and bringing greater prosperity to the city’.15 Economic thinking more broadly has also been dominated by the idea that cities have an absolute primacy in delivering national prosperity.16 The levelling up agenda and the new focus on small town England challenges this widely held traditional viewpoint. It raises questions regarding what distinctive role towns, large towns and small cities can play in a modern economy.

9. Of the 12 largest English cities most are now attached to a Combined Authority: (West ), Bradford (West ), (West England), (), (), (), (), (North of Tyne),

12 For a detailed piece of research on combined authorities and metro mayors, see John Fenwick and Lorraine Johnston, ‘Leading the Combined Authorities in England: A New Future for Elected Mayors?’, Public Money & Management 40, no. 1 (2 January 2020): 14–20, doi:10.1080/09540962.2019.1622344. 13 See Institute for Government, Making Devolution Deals Work (2016). https://www.instituteforgovernment.org.uk/sites/default/files/publications/4681%20IFG%20- %20Making%20a%20Devolution%20final.pdf 14 It seems on prima facie grounds reasonable to imagine that the residents of Liverpool must find it confusing that they have a City Mayor (currently, Joe Anderson) and a City Region / ‘Metro Mayor’ (currently, Steve Rotheram). This will be less of a problem in a situation where they do not share a name: e.g. Mayor (currently, Tim Bowles) and the Bristol mayor (currently, Marvin Rees). 15 UK Government. ‘Localism Bill: creating executive mayors in the 12 largest English cities Impact assessment’ (2011) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/6040/1829754.pdf 16 Andrés Rodríguez-Pose, ‘The Revenge of the Places That Don’t Matter (and What to Do about It)’, Cambridge Journal of Regions, Economy and Society 11, no. 1 (10 March 2018): 189–209.

4 (Sheffield City Region) and Wakefield (West Yorkshire). The exceptions, Leicester and Nottingham, are currently in talks to create an Combined Authority.

10. However, encouragingly, smaller cities and towns are breaking into the devolution agenda. is the first rural region in the UK to be offered a devolution deal. The North East and Tee Valley combined authorities bring together small cities and large towns, and there is also the and Combined Authority. In the ‘left behind’ towns we have researched at the LSE, Pendle in would be included in the talks underway to create a Lancashire Combined Authority, and Mansfield would be part of the proposed East Midlands Combined Authority.

The new Combined Authorities and ‘levelling up’

11. What went wrong in the past? Attempts at ‘levelling up’ have failed in the past because they have been insufficiently responsive to local conditions. Strategies have tended to take two forms. The first is ‘top down’ big projects, which do not reflect the need and capacities of the local area, and leave behind ‘white elephants’ or ‘cathedrals in the desert’ that do not produce sustainable growth. Sometimes these have placed the interests of particular economic stakeholders above those of the local community. The second is focusing only on redistribution through the welfare system, which, while necessary to provide a safety net, does not provide long-term ‘levelling up’ economic opportunities.17 Investment and welfare are both necessary conditions for leveling up. But unless it is undertaken in the right way it can lead to wasted resources and missed opportunities.

12. Place-centred economic development as a levelling up strategy. While especially in the Coronavirus context significant additional investment will be needed to level up, there is a danger that this may be wasted if it goes into activity that proves unproductive. The alternative approach is place-centred. It requires developing local plans that scope the untapped potentials of each area and seeks to fine-tune policies according to these conditions. This creates a particular role for local government because it provides the structures of accountability and institutions that are better able to map the particular needs and capacities of the community, vis-à-vis the central government. Local stakeholders - from civil society, to business and educational institutions - often have a strong understanding of the untapped potentials of an area and need to be drawn into the policy-making process. They will be vital to delivering the ‘levelling up’ commitment.

17 Lewis Dijkstra, Hugo Poelman, and Andrés Rodríguez-Pose, ‘The Geography of EU Discontent’, Regional Studies 0, no. 0 (24 September 2019): 1–17; Rodríguez-Pose, ‘The Revenge of the Places That Don’t Matter (and What to Do about It)’.

5 13. Does size matter? There is no automatic ‘devolution dividend’ for economic growth.18 It depends on the policy-mix that is adopted at the local and national level. Both these elements have to work together to deliver a policy agenda that is based on, and responsive to, the needs of the local community. It is also too early to assess whether the combined authorities will have a positive impact or if the current government are delivering on ‘levelling up’. But if you accept the place-centred approach it poses two considerations for English devolution. First, the combined authorities emphasis on local council cooperation is positive. Because the development needs of different towns within a combined authority will be diverse, the governance structure has to take account of this variation and plan accordingly. The flexibility of this system looks helpful in this regard. Second, it may be instructive that some combined authorities have already ‘broken up’: e.g. the North of Tyne Combined Authority split away from the North East Combined Authority; the devolution process also resulted in the smaller Cambridge and Peterborough Combined Authority. This might suggest a concern that local needs may be overlooked in larger political units. Similarly, there is clearly a danger that small ‘left behind’ towns may be marginalised in very large combined authorities. Examples here may be Mansfield in the proposed East Midlands CA or Leigh in Greater Manchester. 19

The Combined Authorities and the role of symbolic or soft power

14. No doubt the Committee will have noticed that the media visibility of the elected mayors of some of the combined authorities have been significant during the Coronavirus crisis. The two prominent examples of this would be Andy Burnham in Greater Manchester and Andy Street in the West Midlands. While this reflects, in part, the importance of local institutions in the fight against the pandemic, leaders of local councils that are also on the front line have not enjoyed the same profile. The ‘case studies’ of Burnham and Street do appear to provide strong support for the original goal of the 2011 Localism Act to create a ‘strong and powerful executive mayor’. But the nature of this power remains institutionally limited compared to devolution in other countries. Interestingly, it relies heavily on ‘soft’ or ‘symbolic power’. They influence the national policy picture by leveraging the cultural power of their position. The social media meme of Andy Burnham as ‘king of the north’ circulating during his confrontation with the UK government over economic support for lockdown illustrates how local government can capture ‘the habits of the heart’ and the importance of identity. Many citizens also engage with politics primarily through the national media. So, when their elected local representatives enjoy prominence in it this is likely to mitigate against the sense that they are ‘looked over’.

18 Andy Pike et al., ‘In Search of the “Economic Dividend” of Devolution: Spatial Disparities, Spatial Economic Policy, and Decentralisation in the UK’, Environment and Planning C: Government and Policy, 30, no. 1 (2012): 10–28. 19 Gray and Barford, ‘The Depths of the Cuts’.

6 15. This raises some critical considerations for the ‘devolution deals’ agenda more broadly. The specificity that the ‘deal’ takes in each area appears helpful to developing a place- centred perspective. However, it inevitably raises an issue as to why Greater has this elected ‘champion’ in the national political scene but other areas, which have not struck a ‘devolution deal’, do not. In the long-run, it does not seem sustainable to have very varied levels of devolution in different areas of England. This risk of creating ‘devolution deserts’ alongside ‘devolution oases’ seems very high.

Recommendations 16. In light of the above, we would make the following recommendations:

a. Link English devolution to the levelling up agenda. The high political salience of the call to ‘level up’ and the consensus on the need for this in UK politics provides scope for the development of a bipartisan position. English devolution has not always captured the public’s imagination. But given the popular support for ‘levelling up’, coupled with the symbolic power displayed by the mayors of combined authorities during the 2020 crisis, this may now be changing.

b. Recognise and avoid the ‘levelling down trap’ in fiscal devolution. Once English devolution is linked to ‘levelling up’ it can avoid a situation in which fiscal devolution merely deepens territorial inequalities between regions (the ‘levelling down’ trap). The funding formula should remain redistributive and local government should be provided with greater resources for physical and social infrastructure as part of a ‘devolution plus levelling up’ approach.

c. Back place-centred development strategies. Devolution is a necessary but not sufficient condition to deliver the levelling up agenda. It can provide crucial inputs from local communities to develop plans that are responsive to the needs, demands and opportunities of particular local geographies. But it can only succeed with the right policy-mix at the national level, especially given the overall very centralised nature of UK governance in England. In this context, the devolution of further powers needs to be assessed in relation to the impact they would have on deprivation, interpersonal and territorial inequalities.

d. Establish a ‘pathway’ for areas without devolved powers. Review stalled or dropped devolution deals and assess what went wrong. Establish a pathway that will address over the longer-term the problem of ‘devolution oases’ sitting alongside ‘devolution deserts’. Find a flexible but universal English approach.

7 November 2020

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