Is it a deal?

Last month’s Budget saw the announcement of two new devolution deals with Greater Manchester and West Midlands. These were landmarks in the recent history of English devolution, hailed as the most significant since the 2014 Greater Manchester deal which gave GM responsibility for co-leadership of health services across the city region, and the wave of devolutionist energy unleashed by George Osbourne’s Northern Powerhouse concept. England now has deals covering a decent chunk of its population, with large swathes of the north and midlands as well as London with novel forms of governance and some degree of devolved funding and powers. Deals are part of the cadence of English policymaking and the cycle of elections and fiscal events. Mayors are a fixture of the governing landscape, making the case every day for an extension of their powers and greater autonomy for the places they represent as well as the idea that sub-national government is a force to meet the challenges on 21st century. This incremental process is a step forward for those who believe that greater devolution is a good thing, and it has driven an emerging consensus across both main political parties for greater local control. Those negotiating them, both within central government and in the cities and regions who have driven them, have much to be proud of.

However, the way of thinking that gives rise to this process is problematic. Devolution in England is not seen as a right, a natural corollary of identity, with communities entitled to self-government within a wider nation, but something which must be instrumental in meeting other economic and social objectives. Whitehall and Westminster have an unarguable primacy in the governance of England, and places therefore need to earn the right to govern themselves beyond a limited range of essential services which, whilst important, are not seen as vital to national or economic strategy. Cities must demonstrate the capacity and capability to deliver, the shorthand for which is ‘earned autonomy’. This functionalist/instrumentalist approach to devolution needs meaningful and sustained critique and we need new narratives and arguments that make a strong case for self-government as a right of citizenship based on identity and existing political communities.

But we are where we are, and this shift will take time. This is time we lack before the next wave of devolution is kicked off by a pending general election and a flurry of policy activity before and after it. If giving directions to a stranger, we might say “well…I wouldn’t start from here” but nonetheless we have to. So, what is wrong with how we do it now and how might we do it differently?

What is wrong with deals?

A deal sounds prudent, grown up and business like but they are an odd way to frame governing in partnership

• Devo deals are slow, with a few dozen deals negotiated over more than 10 years, large swathes of the UK’s territory not covered, and many inconsistencies and hanging threads meaning successful areas are essentially locked into future rounds of deal-making
• Deals are temporary, with funding and powers timebound and the structures set up to deliver them always at risk of having the rug pulled from underneath them
• It takes a lot of capacity, with several government departments involved and lots of effort from DLUHC to coordinate and balance a range of different interests
• Deals are technocratic and opaque, distancing the process from citizens (a key problem with the instrumental frame) who are understandably cautious about a way of working from which they are largely excluded because of its elite and closed nature
• It reinforces the diversity of English local government, always at risk of seeming incomprehensible to the outsider, without any serious attempt to make a virtue of this (for instance, the capacity for policy experimentation)
• It doesn’t force a necessary strategic discussion about the respective roles of central and local government and so you can’t make the big leaps you need

The last point is the one I want to concentrate on because I think it is the most important. Deals are essentially a negotiation between several government departments, each with their own mandates and bureaucratic interests, and a group of local authorities in a region. These departments are encouraged to give up some powers and money to a particular place for a limited period of time. But the essential role of the department of state does not change, and incentives and accountabilities are largely unaltered. The principle of accountability to Parliament for expenditure and the role of the Whitehall Accounting Officer, for instance, don’t seem to change much if at all.

Naturally departments focus on the ability of these places to deliver with a strong focus on their capacity, capability, and accountability upwards so the line of sight between the department and Parliament is strong. The process doesn’t ask them the more difficult and existential questions about their purpose and role within the wider governing system.

A fictional negotiation about devolution (let’s use the example of employment support) would start by an existing or putative combined mayoral team pitching for somewhere on a range of powers across a spectrum. Local authorities do this stuff already, we have a track record, and we can join up a fragmented system in a way that you can’t they’d say. The pitch might be:

• co-leadership of the JCP network with joint governance and co-location at one end, to regional and local government responsibility for design and delivery of the network at the other (devo max)
• permanent delivery responsibility for ‘complex’ cohorts and far greater freedom to design programmes and interventions with a system that is co-commissioned with DWP at one end, and devolved budgets, autonomy over design, and a clear agreement about sharing the fiscal uplift from getting people into work at the other

A DWP response would likely be as follows:

• JCP delivers for cyclical short-term unemployment and does so at relatively little cost so, if it’s not broken, why would you want to fix it? Even a relatively small move towards devo max through co-location and shared governance creates noise in the system which feels like a distraction unless we’re clear this is the direction and we’ve got a plan to get there backed by strong political will
• DWP manages the Annual Managed Expenditure (AME) risk of welfare spending, so devolving its budget and core functions creates a fundamental challenge of accountability for expenditure. Would local government be prepared to take on the AME risk, impacting its annual finance settlement, and how would these risks be shared across the sector?
• Sure, local authorities deliver employment support, but this is largely outside of the grittier parts of the system, namely where participation is not voluntary and comes with conditionality and the threat of sanctions. Would local authorities be able to overcome this squeamishness, would we discard ‘hard’ conditionality entirely, or would we disaggregate employment support from benefit administration?
• If we devolve bits of the system to London and Greater Manchester, we risk creating an incoherent patchwork and whilst places with scale and ambition might be able to do this well, responsibility for managing the whole system would become complex and more costly
• The role of the department and its mandate is clear, but devolution muddies this. If ministers and the permanent secretary are accountable for strategic outcomes but their grip on the levers of delivery are loosened, how do we ensure the will of the government of the day is being carried out? Do we contract with places around outcomes set by the centre and if so what outcomes and through what mechanisms?

It’s hard to deal with any of these issues without dealing with all of these issues…and a time-limited deal covering the population of a city region is no place to do that. These are questions about a national system, and they need to be answered with good evidence and within a clear framework.

How might we do things differently?

Full disclosure, I think there are maximalist answers to all these questions or at least starting hypotheses. What we lack is a plan to test them. I think that plan could have the following features (sticking to employment but with a few of the essential features of a wider devolution settlement thrown in)

• A big, transformative system goal which aligns all the relevant parts of government. This would commit to the full devolution of employment support by 2030 and sit alongside a similar NorthStar for English devolution (more below)
• A white paper right at the beginning of the next Parliament setting out a broad-brush plan for how we get from here to there
• An agreement across the whole sector to a set of strategic outcomes to increase labour market participation, with governance of these at a regional level, regular publication of data, and local economic plans which show how places will brigade local efforts to move people into work and grow economies
• A series of initiatives to experiment and learn, creating evidence to test the hypotheses set out in White Paper. Whilst you might give all areas co-location and joint stewardship of the JCP network, a city-region (acting as a vanguard) could pilot full running of the network and consciously wrestle with the system questions that this presents. Another would test gain share arrangements for getting those furthered from the labour market into work.
• Some of the major policy choices which feel like the grit of a maximalist approach could be reviewed in depth — say a root and branch review of conditionality and the role of sanctions, chaired jointly by a senior local authority figure and an ex-HMT minister or civil servant.

This conscious experimentation would need a clear and committed audience scrutinising and deciding on the basis of good evidence and a shared framework goal. A wider 2030 goal for ‘full’ devolution in England would galvanise both the civil service and the whole of local government (not just the most interested and well positioned). A Secretary of State for England and an English Devolution Council (as suggested by the Bennett Institute) would keep up the pressure in government, and a legislative commitment to ‘devolve or explain’ would provide public transparency and reinforce a governing strategy which is about devolution by default.

I think something like this approach might begin to move us beyond deal-making. It provides an overall coherence, accounting for difference but encouraging convergence over time. It is prudent and evidence-based without tempering its overall ambition and it supports localism but as part of much needed national strategy. The alternative is achingly slow.