Saturday, 19 December 2015

THE DEVOLUTION DEAL

   
In this article I look at the proposed 'Devolution Agreement' for the North-East, and highlight some of its pros and cons.

   
With an income 77% of the European Union average, Durham’s economy is the third poorest region in the UK.  A report by Lord Adonis in April 2013 identified three key problems:
  1. a weak private sector, lacking investment
  2. a skills shortage
  3. poor connectivity, not just of transport, but of planning and policies.
Adonis recommended that the seven local councils should cooperate to coordinate their growth, skills and transport policies, and the ‘North-East Combined Authority’ (NECA) was duly set up in April 2014 to do so.

   
TOWARDS DEVOLUTION
At this point, NECA got bound up with the government’s policy of ‘devolution’.  In November 2014, council leaders in the Manchester area signed a devolution deal with the government.  Other negotiations followed – there are currently 38 in the pipeline – and NECA came under great pressure to agree a similar deal.
The Devolution Deal will not be like the one proposed in 2004, with an expensive Assembly of elected representatives.  Instead, under the Devolution Deal now proposed, an elected Mayor – with a Cabinet of the seven NECA Council Leaders – will be given some of the powers, functions and funding hitherto administered by government civil servants in London.  Meanwhile, Durham County Council (DCC) will still deliver the day-to-day services it currently provides. 
On 23 October, DCC agreed to take this Devolution Proposal forward, but insisted on a preamble which made it clear that final agreement was conditional upon “further public consultation”.  Soon after, the Council announced that – in County Durham – this would involve a poll of all electors early in the New Year.  Although legally this poll cannot be advertised as ‘binding’, devolution is a major change to local government and we won’t sign up until you’ve had your say; no other Authority has given residents such a say.

A TERRIFYING DECISION
It is vital now that people learn about the Devolution Proposal, so that they know what they are voting about, because a wrong decision may ruin us
I acknowledge the fears of some that signing up could turn us into an ignored hinterland of Tyneside, getting nothing but the blame for inadequately-funded devolved services.
Equally, however, people need to realise that there is no going back.  If we do not join the Devolved Authority with the other six councils, we will spend the forseeable future administratively and economically isolated, and actually in competition against them. 
Either we go in and battle our corner against interests sometimes contrary to ours, or we stay out and watch the North-East move forward without us.

*   *   *

So what is this ‘Devolution Agreement’ that we are expected to understand and vote upon? 
  
  
(1) BUSINESS
‘Devolution’ is not about new powers and funding, but about transferring existing functions from the government to the region.  What you think about devolution, therefore, will depend on whether or not you think that regional officers can do a better job for us than Whitehall civil servants. 

SOME POSITIVES
Durham County Council Regeneration officers, for example, desperately want to control the EU funding process, and also UKTI (the department which oversees exports and inward investment) – both of which are poorly managed by the government.
There will be a £30 million a year grant.  It is true that this sum is less for the whole region than the government is cutting from DCC’s budget next year alone.  And yes, it might allow us to borrow an investment fund of £1.5 billion, but at the end of the term we will have to pay it back plus interest.  However, the opportunity here is that assured funding would allow regional officers to develop a long-term economic plan, rather than the year-by-year budgets they have at the moment.
In addition, the Devolution Proposal offers a single allocation of the Local Growth Fund to support a programme of investment – though the amount is undefined.  Again, despite disappointments over the sums, the key opportunity here is for the region – not the government – to control regional investment.  Here, therefore, is a chance for a partnership with business which will see growth policies explicitly designed to help the North-East economy.
There are some attractive further offers on the table – the area “will receive” extra Enterprise Zones to attract business.  There will be an emphasis on rural growth.  There will be a science and innovation programme with local universities to create more ‘catapult’ (innovation and development) centres in the region.  We are also promised the roll-out of 4G broadband.
Other offers are more vague.  We are assured that the North-East will not be “disadvantaged in relation to the tax freedoms granted to the Scottish government” (our greatest fear being over Airport Passenger Duty).  There is also a promise of “fair and equitable” funding to local councils in the future – whatever that might mean.

A CONCERN
The biggest worry is the government’s scheme for Business Rate retention; because the North-East economy is so weak, this will actually mean a reduction of income to local councils.  The Devolution Proposal allows the Mayor to increase Business Rates to fund investment … but, since wealthier areas may reduce their Business Rates to attract firms, this is not a feasible policy.  Having said this, retention of Business Rates is happening anyway, whether or not we join the Devolved Authority.

MY VERDICT
Some risks, and inadequate funding ... arguably outweighed by the opportunity of greater control over our own destiny economically.
 
   
(2) SKILLS AND EDUCATION
The Devolution Agreement proposes to set up an ‘Employment and Skills Board’ to review post-16 support for harder-to-help claimants, and to develop new strategies for post-16 education, deepening links with business and encouraging “vocational training, experience of work and enterprise learning”.
However, there is no funding identified, except the post-19 adult skills budget and the new Apprenticeship Levy.  The Board will be dominated by senior Whitehall civil servants, chaired by the Commercial Secretary to the Treasury, and responsible to the government – so it is hard to see much ‘devolution’ going on here.

MY VERDICT: One has to wonder whether the powers and funding on offer will achieve the ambitious aims, and it is very depressing to see a final proposal for a ‘Service Transformation Fund’ intended “to reduce high dependency on public services” – has the Skills part of the proposal been hijacked by the government’s Welfare agenda?
  
   
(3) TRANSPORT
The Devolution Agreement hopes “to create the UK’s first fully integrated transport system … to bring together responsibilities for rail, local highways, metro, buses and ferries, for urban, suburban and rural communities”.  To this end, moreover, the Agreement promises the Mayor legal powers, and a multi-year transport settlement. 
The Mayor will introduce a regional ‘smart ticketing’ system (e.g. like the London Oystercard).  He will “oversee” the work of a government organisation called ‘Rail North’, which will have responsibility for rail services, rolling stock and connections in the north east.  He will control franchising of bus services, and he will have a voice in inter-regional transport issues and investment, including Highways. 
The Devolution Proposal also promises to “consider” funding a multi-year investment programme in the Tyne and Wear Metro.  This is of particular significance to County Durham residents because funding the Metro – from which we currently gain nothing – was such a worry that we secured a specific exemption in the NECA agreement, and there is no such exclusion (yet) in the Devolution Agreement.

MY VERDICT: Very ambitious, but to be welcomed if it comes off.  Doing the job properly, however, will require £-billions, and sceptics will note the absence of any specific numbers amongst the promises.  Bus-franchising powers are included in the Buses Bill going through Parliament, but this may be compromised by the recent legal defeat of Tyne and Wear’s attempted re-regulation.
   
   
(4) GOVERNANCE
The devolution agreement will not replace our existing Town and County Councils.  Neither will it set up a huge new layer of government.  What will happen is that – if the Deal is agreed – a Mayor-and-Cabinet will administer powers devolved to them from the civil service in London.
The idea of a Mayor alarms many people.  It is something that Durham County Council has resisted throughout, but on which the government is adamant – if we are to have devolution, we will have to accept a separately-elected Mayor.
However, the Mayor envisaged in the Devolution Proposal will be a ‘weak’ Mayor, who:
- will not appoint his own Cabinet, which will be comprised of the Leaders of the participating councils.
- will not have a power of veto and, if two-thirds of the participating councils disagree with a Mayoral policy, then they will be able to veto even the Mayor’s budget.
- will not have the power to raise a precept (so all the costs will have to be met from the £30 million annual grant).  The Devolved Authority will not cost you a penny.

MY VERDICT: It is arguable that – given that the Devolved Authority will be a cooperation of rival councils with very different needs – it may be better to have an independent Mayor, as long as they are little more than a chairman/coordinator/peacekeeper.
  
   
(5) OTHER ISSUES
There are some other issues in the Devolution Agreement.  The Authority will have oversight of housing and climate change.  There is also the suggestion that, in the future, it might take responsibility for Health & Care, and the Police & Fire authorities – both, in my opinion, suggestions which we need firmly to refuse.  Health & Care is a financial crisis about to happen, and taking control of the Police would involve the reconstitution of the Durham Police force.
  
  
YOUR VOTE
In the New Year, therefore, you will vote to decide the region’s future.
The vote cannot be a Yes-No referendum (which, legally, can only be held by the government). Thus DCC is holding a ‘poll’ asking four multiple-choice questions – on: the idea of devolution; a Mayor; the desirability of additional powers; the expected benefits. 
By law, a poll cannot be binding, but the University of Durham will take people’s answers and analyse them, and DCC will proceed accordingly.
 
MY VERDICTThe existing structures are not solving the region’s problems.  And whilst I am aware of the risks, ‘going back’ is not an option. 
The decision is not: ‘Is this a good or a bad deal’.  The decision is whether we go into the future as part of a regional Devolved Authority, or whether we go into the future alone and in competition with it.
   
John D Clare


(This is my interpretation only, and not official DCC policy.  You can read the full Devolution Proposal here: bit.ly/NECADeal and see the (independently designed) poll questions here: bit.ly/DCDevoPoll)

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