Written Evidence from Surrey County Council (EDE 15)

Written evidence from Surrey County Council (EDE 15)

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

1. Surrey County Council (SCC) welcomes the opportunity to submit evidence for this inquiry on the evolution of English devolution. We are encouraged that the Government recognises the importance of devolution for strengthening local economies and facilitating a better quality of life for residents. We see this as an opportunity to inform debate ahead of the Government’s publication of the Devolution and Recovery White Paper. We would also be willing to provide oral evidence to the Committee. Key messages 2. Surrey has a huge amount of potential and can play a leading role in the economic recovery from Covid-19. To do this, English local government needs strengthening with more certainty around the freedoms, flexibilities and funding that can be used to implement the right policies for local circumstances. This would increase the chances of a stronger and sustained economic recovery, safeguarding services for local residents and successfully levelling up the country.

3. Local authorities provide crucial local leadership to address the challenges and opportunities they face, so they can improve the lives of residents and the places they live in. They have the depth of insight into and experience of their places and communities. This is crucial as we continue to respond to the pandemic with our partners, and residents have depended on our services to support them through the Covid-19 crisis.

4. Devolution also has the potential to rejuvenate local democracy in England. Disillusionment with the democratic system is translating into poor turnout at local elections. For example, turnout for the Surrey County Council elections in 2017 was 36%, compared to 68.8% for the General Election that same year. In addition, 41% of Surrey’s residents do not feel they are able to influence local decision making1.

5. Our view is that the forthcoming Devolution and Recovery White Paper should set out a clear framework for devolution, with minimum levels of devolution, so local authorities have a better understanding of the parameters that govern the negotiation of devolution deals. This would then enable the negotiation of the devolution of additional powers and responsibilities relevant to a particular area.

6. Devolution deals would enable areas to empower their growth boards and deliver long-term plans for local growth. They could, for instance, design and implement a local employer-led skills system to increase residents’ readiness for the labour market and help employers fill vacancies. The Growth Board would become the key

1 Surrey Residents Survey, Quarter 2 (July to September) 2020

1 economic development partnership, bringing together local government, health and business partners to oversee and accelerate work to drive improvements to the economy, homes, infrastructure and quality of life.

7. Moving to a simpler local government system would provide a significant boost through streamlining, a joined-up approach, greater accountability, and better and fairer access to services. The current system is not fit for purpose or affordable and is holding back our local areas.

8. The Devolution and Recovery White Paper is an opportunity for the Government to be bold and to bring clarity to what it is willing to devolve. It can support improved and better coordinated health and wellbeing approaches, climate change strategies and newly empowered communities, which all have a role to play in facilitating a strong economy and public services and increased tax revenue.

9. Devolving powers and flexibilities will enable areas to develop their own approaches to local engagement. In Surrey, we are proposing to create 25-30 Local Community Networks (LCNs), based on Surrey’s natural communities and that people will recognise and identify with. These will bring together residents, local government, town and parish councils, other public services and partners to decide priorities, tackle local issues, make decisions and grasp opportunities within communities. Every part of the new council, whether urban or rural, would be in an LCN area. They will strengthen democracy in Surrey by introducing a more local engagement model across the public services system than exists in the current structure. Introduction 10.SCC is responsible for services for over 1.1 million residents including adult social care, children’s services and highways maintenance. Surrey’s economy contributes over £40 billion Gross Value Added (GVA) each year, of which £7.5 billion goes to the Exchequer, has very high business density of 612 businesses per 10,000 population, over half the working age population is educated to degree level or above and has an economic activity rate of over 83%.

11.Given the county’s proximity to London, it is considered peri-urban and has a complex set of characteristics including road, rail and air congestion, land pressure, large volumes of commuting to the capital and a hugely varied environment. These pressures will be exacerbated as the population grows, and the impact of being so close to London is continually felt. The population is also due to grow by 1.4% by 2030, with the older population expected to see the fastest growth rate with the 85+ population growing by nearly 30% and 65-84 population by nearly 19%.

12.While most people who live in Surrey generally have a high quality of life, the county faces many challenges, some of which have been exacerbated by the Covid-19 pandemic. The list below exemplifies some of the county’s most pressing issues:  Surrey’s strong economic performance and relative affluence masks economic inequalities, pockets of deprivation and growing disparity between the east

2 and west of the county. Covid-19 is projected to result in a 14.3% fall in GVA - an estimated reduction of over £6 billion.  Housing is increasingly unaffordable, with Surrey’s median house price at £435,000, significantly more than the South East average of £322,000 and over 13 times the county salary median. This is contributing to skilled workers leaving the county. It is also estimated the county will need at least 67,500 additional homes over the next decade.  Climate change is a major issue, with 46% of the county’s carbon emissions coming from transport, and 6,900 vehicles travelling through the county each day, significantly above regional and national averages.  While our population has average life expectancy over 80, there are stark inequalities across our population in the number of years people can live in good health for. For example, a man living in Godalming Holloway in Waverley borough can expect to live for 18 years longer in good health on average than a man living in Canalside in Woking borough.

13.Surrey is also a county of opportunity with strong assets. The beauty of its countryside and its proximity to London means it is well-placed to support the capital’s revival as a global economic hub. The county can act as a test bed for the green economy, trialling new approaches to sustainable growth that can be rolled out across the country that could also help with the climate emergency.

14.The local health and care system is already benefitting from devolution. The Surrey Heartlands Integrated Care System secured a devolution agreement in 2017, increasing local control over health and care commissioning decisions and aligning NHS and local government responsibilities. The impact of this agreement has enabled the ICS to work across Surrey to drive new collaborations and innovations in services. We aspire to build on this and secure further devolution for health and care to support moving towards our ambitions

15.Local authorities provide crucial local leadership to address these challenges and opportunities so they can improve the lives of residents and the places they live in. They have the depth of insight into and experience of their places and communities. This is crucial as we continue to respond to the pandemic with our partners, and residents have depended on our services to support them through the Covid-19 crisis. For instance, in a recent survey we conducted on residents’ experiences of the crisis, nearly two-thirds (65%) of respondents said they had relied on at least one source of information from Surrey County Council to support themselves. The case for devolution 16.To respond to these challenges and opportunities, and maximise the effectiveness of support to residents, English local government needs strengthening with more freedoms, flexibilities and funding that can be used to tailor policy to local circumstances. Devolution can support policies that adapt to the needs of places such as Surrey where growth is polycentric, so the needs of all residents are met regardless

3 of whether they live on county’s border with London or in a rural village near Hampshire, Sussex or Kent.

17.A clear agenda from Government with well-articulated outcomes and a framework for local authorities to work with would increase the chances of a stronger and sustained economic recovery and successfully levelling up the country. Devolution would give local places the ability to level up within regions as well as across the country so local partners can target resources and interventions to tackle regional economic disparity and provide more opportunities for the people who live in them.

18.Devolution also has the potential to rejuvenate local democracy in England. Disillusionment with the democratic system is translating into poor turnout at local elections. For example, turnout for the Surrey County Council elections in 2017 was 36%, compared to 68.8% for the General Election that same year. In addition, 41% of Surrey’s residents do not feel they are able to influence local decision making2.

19.When we have been more locally responsive and engaged with our communities, this inspires confidence of residents in local institutions, which will help strengthen faith in local democracy. Thanks to the coordinated efforts of ourselves and our partners, and by using the powers and resources Government equipped us with to respond to the pandemic, 85% of residents are either fairly or very confident in the council’s ability to deal with Covid-19 issues3. We have ambitions to harness the strengths of local communities through engaging with them differently and involving them further in decision-making. Giving local authorities greater control over the policies that affect the issues that matter to local people strengthens local political accountability and may help to increase democratic participation.

20.Devolution will not solve all the problems facing Surrey, but it is an important process that would accelerate transformation in local government, create stronger, more trusting partnerships between central and local government and enable the development of innovative policy solutions to support better outcomes for residents, businesses and the wider UK. All councils need a minimum devolution offer

21.We believe reform to English devolution and the local government system is long overdue. Our view is in line with those of local government representative bodies, such as the County Councils Network, in that the forthcoming Devolution and Recovery White Paper should set out a clear framework for devolution, with minimum levels of devolution, so local authorities have a better understanding of the parameters that govern the negotiation of devolution deals. This would then enable the negotiation of the devolution of additional powers and responsibilities relevant to a particular area. This would give govt the capacity to negotiate more deals focused

2 Surrey Residents Survey, Quarter 2 (July to September) 2020 3 Surrey Residents Survey, Quarter 1 (April to June) 2020

4 on the bits that are really relevant to an area rather than negotiations focusing on the basics they’re already willing to devolve

22.The paper should also outline a straightforward offer for places where an elected mayor or combined authority is not the right solution, and where there is no local support for them, but offers parity in terms of powers, freedoms and flexibilities.

23.We suggest the White Paper is an opportunity for the Government to introduce a minimum devolution offer for all strategic authorities, such as county councils, on the same terms as those for Mayoral Combined Authorities. The Government’s approach to devolution over the past five years has been to prioritise major cities across England. Although Surrey does not have a major city, there are significant benefits in recognising the growth potential of the county and therefore offering similar freedoms, flexibilities and funding to those agreed with city regions.

24.This would eliminate competition between metropolitan and non-metropolitan economies and help areas to ‘level up’ and reduce inequality between places. Providing Surrey with the right devolution package will enable us to leverage the County’s relative resilience to help kickstart the rest of the UK economy.

25.There is already something of a ‘benchmark’ in terms of what functions and freedoms Government is prepared to devolve as shown through common features of devolution deals secured by Mayoral Combined Authority (MCA) areas. For example, at least eight areas, such as the West of England and Liverpool City Regions, have devolved powers on adult skills and education budgets, which we know will always be more effectively managed locally. MCAs have also been granted integrated transport budgets and bus franchising powers.

26.Our view is that this should be the starting point for negotiations about what level of devolution is appropriate for those areas that wish to have it. Different areas have different opportunities and challenges, so devolution deals need to reflect those and not be one size fits all. For instance, in Surrey we need further freedoms and flexibilities, so we can unlock barriers and accelerate delivery against Surrey’s projected housing need. Powers that enable us to have a greater role in land use management means we could maximise the use of public land to support housing growth.

27.As the Government has shown willing to devolve powers in these areas, going a step further and offering such powers as part of a standard package of freedoms, flexibilities and funding would:  demonstrate political commitment to devolution and local government as a partner more broadly; and  recognise the urgency for the greater powers local authorities need to mitigate against and recover from the economic damage caused by the Covid-19 pandemic.

5 28.The Covid-19 pandemic has shown the key role local authorities play in supporting national policy, and the Government recognised this by moving quickly to grant new powers and funding to councils for the sake of a common objective. Through the pandemic, Surrey’s local authorities have shown the strong leadership needed to implement national policies and secure good outcomes for residents. For example, we provided direct support to over 32,000 vulnerable and shielded residents, issued £191.7 million in coronavirus grant payments for over 14,500 businesses through district and borough councils4 and are playing a vital part in the local Test and Trace programme. We suggest the same agility, pace and political will is needed and that local places have the enhanced capabilities to respond to the health and economic emergency facing the UK.

29.We believe introducing a MCA for Surrey as a condition of securing further devolved powers would add unnecessary complexity and cost to an already congested local partnership landscape. County councils also have the strategic capacity to deliver these services at scale, while tailoring them to the needs of their local populations. Surrey’s population is a similar size to Birmingham’s, and we already deliver complex, strategic services, such as adult social care and waste disposal, at scale. They are also already politically accountable with elected leaders in a strong position to provide local leadership on a wide range of policy areas, like directly elected mayors5. They have the right governance and mechanisms to deliver devolved powers effectively without the need to introduce a MCA for Surrey.

30.If a baseline package were to be agreed for Surrey, we see this as helping to empower the One Surrey Growth Board in its ambitions to deliver a long-term plan for growth in the county. For example, devolved control over design and implementation of a local employer-led skills system would increase the chances of residents being able to increase their readiness for the labour market and fill the vacancies employers find difficult to recruit to. The Growth Board is led by SCC and is the county’s key economic development partnership. It brings together local government, health and business partners to oversees and accelerate work to drive improvements to Surrey’s economy, homes, infrastructure and quality of life.

31.The Board can draw on evidence and insight from leading individuals, businesses and academic institutions. Through the Surrey Future Economy Commission, chaired by the former Chancellor of the Exchequer, Rt Hon Phillip Hammond, the Growth Board is developing a programme of work underpinned by robust research undertaken by the University of Surrey and Arup. This research focuses on the competitive advantage of the Surrey economy through the opportunities presented by our knowledge economy, international business base and strengths in professional, technical and science-based industry as well as our relationship with London and the wider south east.

4 Department for Business, Energy and Industrial Strategy (2020), Local authority grant payments (Small Business Grants Fund and Retail, Hospitality and Leisure Business Grants Fund) as of 30 August 2020 5 Respublica (2017), Devo 2.0: The Case for Counties

6 32.With the county council acting as the lead and accountable body for these devolved powers, it would be positioned to work with and empower the Growth Board to accelerate the recovery and levelling up of Surrey’s economy and the wider UK. It could fast-track our plans for addressing the growth of our opportunity sectors, the skills need of our residents and businesses, the implementation of sustainable long- term transport solutions and ultimately speed up delivery of the housing the county needs.

33.Channelling devolved powers and freedoms through the county council will also support Surrey to secure better outcomes from access to local growth funding, which is not well served by fragmented current Local Enterprise Partnership (LEP) arrangements. Surrey is served by two LEPs:  Enterprise M3 – covers west Surrey and most of Hampshire, serving a population of 1.52 million people and 89,700 businesses. The west of Surrey accounts for 52% of the population covered by of Enterprise M3.  Coast to Capital – covering Greater Brighton, east Surrey and west Sussex, serving a population of over 2 million people. East Surrey residents make up 20% of the population covered by C2C LEP

34.This split has created unequal access to funding. East Surrey, covered by the Coast to Capital LEP, has been awarded on average £14.83 per capita from growth deals, while west Surrey, covered by Enterprise M3, has been awarded £128.53 per capita.

35.LEPs have also not made the impact on the social inclusion agenda, despite this being part of their remit. As the pandemic progresses, increasing numbers of local people are likely to need support to break down the barriers that prevent them from taking part in economic life. The more diverse membership of Growth Boards compared to LEPs, including colleagues from health services, means there will be a greater focus on these issues as part of building momentum towards recovering the country’s economy. More can be achieved by changing local structures for growth, to empower partnerships with the range of resources, investment and accountability to work on this broader agenda. A baseline devolution package would form part of this. Growth Boards, led by county councils but with clear partnership lead arrangements are the only mechanism that will bring strategic planning, transport and infrastructure together with health and wellbeing, inclusion and skills development to enable a more comprehensive approach to growth and development.

36.Growth Boards also enable stronger collaboration with neighbouring counties. SCC is exploring where there might be opportunities to work together with partners in Kent, Hertfordshire and Essex, as counties that surround the London urban region, through our Growth Boards to grow our economies and create the potential for joint ventures in the coming years. Devolving powers to county-based geographies would enable greater scope for innovative working and accelerate interventions to support economic recovery and prosperity.

7 Building on the minimum offer

37.Longer term, for places that want more freedoms and flexibilities beyond the baseline offer, Government and local places would need to open negotiations to agree enhancements to the existing package. Some degree of asymmetry in devolution will be necessary as different counties have different mixes of rural and urban places, with implications for growth, connectivity and sense of place. Surrey’s peri-urban context and complex economic geography means the county needs freedoms and flexibilities to complement them.

38.Moving to a simpler local government system would provide a significant boost. Surrey has one county council and 11 district and borough councils. The current system is not fit for purpose or affordable and is holding Surrey back.

39.60% of Surrey’s residents support moving to a single tier local governance model. They support the benefits of a streamlined system, a joined-up approach, greater accountability, better and fairer access to services as well as a less confusing and frustrating system.

40.We are also reaching the limits of the efficiencies that could be achieved in the two- tier system. Even before Covid-19, the 12 Surrey councils needed to find £134 million of efficiencies over the next three years. The financial effects of the pandemic will only exacerbate these issues.

41.The fragmented landscape also leads to piecemeal approaches to factors affecting health and wellbeing and economic prosperity. Addressing cross-cutting issues such as building affordable homes for the workforce, aligned to sustainable transport options and jobs growth is hard to achieve.

42.Devolution would be much simpler to achieve within a single tier system. A report by Henham Strategy for the County Councils Network argues for a system of local government “which is simplified, provides better services, delivers with greater efficacy and efficiency and which is more readily understood by local people”6.

43.This would make it much simpler for Government to engage a local area over complex negotiations to secure devolution agreements, as well as greater certainty on who their local negotiating partners were. A unitary authority would then be able to act as the single unified voice for a place, ensuring greater consistency of position and clarity on local priorities.

44.We would welcome greater transparency from the Government on where they are willing to devolve powers, where they are not and the reasons why. The Devolution and Recovery White Paper presents an opportunity for this clarity. However, we believe Government departments should be bold in the possibilities for devolution to support improved and better coordinated health and wellbeing approaches, climate

6 Henham Strategy (2020), Making Counties Count: Weaving a New Tapestry for Local Government

8 change strategies and newly empowered communities, which all have a role to play in facilitating a strong economy and public services and increased tax revenue.

45.We suggest the Government considers the potential of fiscal freedoms and devolution, already practiced in other parts of Western Europe, in enabling further economic growth and revenue creation for the Exchequer. States such as the Netherlands already have greater freedoms and flexibilities to decide how to and what to tax in the best interests of their locality, such as a parking levy to manage congestion. In Germany, municipalities have the ability to set their own multiplier rate for their own local business tax that could raise money for vital infrastructure to support growth, such as high-speed broadband. There is no evidence of a race to the bottom, nor is there a postcode lottery7 and introducing similar powers for UK local authorities could unlock the potential of local economies.

46.Freedoms and flexibilities could enable us to move to a new economic model based on ways of living, working and travelling that are more localised, sustainable and inclusive. For example, greater flexibilities and streamlining in planning policy could help us build on the work already being done through the One Public Estate programme to repurpose vacant offices, retail space and surplus health facilities for alternative uses, such as for education or housing. We can also speed up housing delivery and our plans for developing future-proofed high streets and town centres with powers to consolidate and streamline decision making on planning and infrastructure.

47.The right devolved powers and funding can also help us develop an employer-led local skills system to prepare our residents and businesses for a post Covid-19 economy. Commissioning powers for transport connectivity and digital would help us roll-out smart infrastructure across Surrey, supported by 5G technology.

48.We also advocate for the benefits of devolution for health and care. Surrey already has experience of this through the agreement secured by the Surrey Heartlands Integrated Care System in 2017 increasing local control of health and care commissioning decisions and aligning NHS and local government responsibilities. The Surrey Heartlands ICS is demonstrating the impact gained by working across Surrey, driving new collaborations and enabling innovation in services.

49.Further devolution of health and care responsibilities has a lot of potential for us to work with local NHS partners to re-design services for better health and wellbeing outcomes. We note, for instance, some of the success Greater Manchester has had in using devolved powers to bring their entire hospital network into a single hospital service for the area8.

7 Local Government Association (2020), Fiscal devolution: adopting an international approach 8 Oral evidence given by Sir Richard Leese, Leader of Manchester City Council, to the Housing, Communities and Local Government Committee, 7 September 2020

9 50.There is a lot of potential for devolved powers to improve health and care outcomes, to increase the financial sustainability of the NHS and local government in Surrey by enabling us pioneer new health and care models. We could, for instance, amend financial frameworks with perverse incentives, such as payment-by-results, to support the NHS to achieve financial balance. We could also create a shared single budget for hospital discharges to improve the discharge flow from hospital to social care. Devolved powers will benefit the NHS as well as local government.

51.Securing additional devolved freedoms, flexibilities and funding would also strengthen our proposed new approach to empowering residents, including young people. We will seek to create 25-30 Local Community Networks (LCNs), based on Surrey’s natural communities and that people will recognise and identify with. These will bring all residents together with local government, town and parish councils (where they exist), other public services and partners to decide priorities, tackle local issues, make decisions and grasp opportunities within communities. Every part of the new council, whether urban or rural, would be in an LCN area. They will strengthen democracy in Surrey by introducing a more local engagement model across the public services system than exists in the current structure.

52.These LCNs would provide residents and communities with better opportunities to influence priority setting in their local places, ensure effective and joined-up approaches to addressing local issues and service provision and potentially have devolved local assets and services.

53.We suggest there could be scope for some powers devolved from central government to the county council to be further devolved to LCNs under the right circumstances. While the county would need to retain oversight and management of functions that can only be delivered effectively at that level, such as strategic spatial planning, there may be opportunities in areas such as skills, where funding could be devolved to develop interventions in more deprived places with a low skills base.

54.In our view, the Government has a significant opportunity to empower and engage local communities. In doing so, we are likely to see a much stronger economic recovery from the effects of the pandemic, as well as better outcomes in health, education and skills, social care, and all the other services councils provide. Surrey County Council will continue to pressure Government, while at the same time develop new ways of engaging with its residents and providing them with the local government they deserve.

November 2020