Places that haven’t secured a devolution deal may have to wait until 2020

Who's that guy on the right? Bit familiar. Nope, can't place him. Image: Getty.

In the last few years of George Osborne’s time in government, it was a fairly safe bet that any major speech by the chancellor would bring significant announcements on the devolution agenda. His last budget in March, for example, included new devolution deals for the West of England and Solent city regions; and the key moment of his final speech to Conservative Party Conference as chancellor brought the landmark announcement on the devolution of business rates.

However, predictions for the first Autumn Statement under Theresa May’s still relatively new administration were harder to make. While the new chancellor Philip Hammond had made it clear that Britain has “passed a tipping point in devolution”, it remained to be seen whether his enthusiasm for the devolution agenda would match that of his predecessor.

What did seem certain, however, was that this Autumn Statement was likely to mark the cut-off point for any places hoping to secure and implement devolution deals in the foreseeable future. Here are four reasons why:

1. Time constraints

Electoral Commission guidance on the metro mayor elections stipulates that legislation for new devolution deals which include a mayor should be introduced in Parliament at least six months before elections take place. But with the first metro mayor elections scheduled for May 2017, places currently without a deal are running out of time to secure one in time to meet the Commission’s deadline.

And with the second mayoral elections due to take place in 2020 (to bring them in line with London’s mayoral elections), it’s unlikely that the government would countenance the idea of holding separate mayoral elections before that point (in 2018, for example) for places which fail to agree a deal for next year. A two year term would not give new mayors nearly enough time to build their institutions, raise their profile, and demonstrate results to voters before second elections in 2020. Indeed, this will be a difficult enough job for the 2017 cohort of mayors in the three years they have in office.

2. The government’s commitment to devolution beyond current deals is unclear

While the government has emphasised its commitment to the existing devolution deals for major city-regions, it has shown little indication that it will pursue more deals for other places, or that it is open to renegotiating the terms of current deals.

When local leaders in the North East failed to reach agreement on how to progress with their deal in September, the government did not step in to salvage the agreement – instead telling local leaders that the £900m deal they turned down in September was now “off the table”. While that deal may be resurrected on a smaller geographical basis and for a smaller financial settlement, it won’t be as a result of active government intervention.

Beyond 2017 the government’s devolution priorities, if they have any, are as likely to be about doubling down on places with established deals such as Greater Manchester and the West Midlands, as they will about extending devolution deals to a whole raft of new places. Andrew Percy, the Northern Powerhouse Minister, has already said that a greater share of Local Growth Funding will be allocated to those places with a mayor than those without.

This doubling down approach is even more likely if the Conservatives win a couple of the mayoral contests, such as the West Midlands and West of England.


3. Other issues will consume the government’s attention

With Brexit negotiations likely to drag on for the next two years at least, and the current business secretary Greg Clark (who has been pivotal in driving the devolution agenda) now focused on delivering the government’s new industrial strategy, the reality is that devolution will come some way down the government’s priorities list in comparison. Places which hope to open negotiations on a new or revised deal are therefore likely to be disappointed.

4. Leaders in many places don’t want a devolution deal on the government’s terms

Communities secretary Sajid Javid has been clear that in order for places to gain a devolution deal, they will need to introduce a metro mayor. This proved the sticking point for local leaders in the North East, and in recent weeks has also led to the collapse of tentative agreements for places such as Greater Lincoln and Norfolk and Suffolk. It is also likely to deter leaders in other parts of the country from putting forward proposals for a deal in their area.

So while cities with nothing confirmed should continue to try to work with government to get deals in place, it is unlikely they will be able to secure anything that matches those deals already agreed before 2020.

Simon Jeffrey is a researcher and external affairs officer at the Centre for Cities, on whose blog this article first appeared.

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What do new business rates pilots tell us about government’s appetite for devolution?

Sheffield Town Hall, 1897. Image: Hulton Archive/Getty.

There have been big question marks about any future devolution of business rates ever since the last general election stopped the legislation in its tracks.

Not only did it not make its way to the statute book before the pre-election cut off, it was nowhere to be seen in the Queen’s Speech, suggesting the Government had gone cold on the idea. (This scenario was complicated further recently by the introduction of a private members’ bill on business rates by Conservative MP Peter Bone, details of which remain scarce.)

However, regardless of the situation with legislation, the government’s announcement in recent days of a pilot phase of reforms suggests that business rates devolution will go ahead after all. DCLG has invited local authorities to take part in a pilot scheme which will allow volunteer authorities to retain 100 per cent of the business rates growth they generate locally. (It also notes that a further three pilots are currently in operation as they were set up under the last government.)

There are two interesting things in this announcement that give some insight on how the government would like to push the reform forward.

The first is that only authorities that come forward with their neighbours with a proposal to pool all business rates raised into one pot across a wider geography will be considered. This suggests that pooling is likely to be strongly encouraged under the new system, even more considering that the initial position was to give power to the Secretary of State to form pools unilaterally.

The second is that pooled authorities are given free rein to propose their own local arrangements. This includes determining, where applicable, a tier split (i.e. rates distribution between districts and counties), a plan for distributing additional growth across the pool, and how this will be managed between authorities.

It’s the second which is most interesting. Although current pools already have the ability to decide for some of their arrangements, it’s fair to say that the Theresa May-led government has been much less bullish on devolution than George Osborne in particular was, with policies having a much greater ‘top down’ feel to them (for example, the Industrial Strategy) rather than a move towards giving places the tools they need to support economic growth in their areas. So the decision to allow local authorities to come up with proposed arrangements feels like a change in approach from the centre.


Of course, the point of a pilot is to test different arrangements, and the outcomes of this experiment will be used to shape any future reform of the business rates system. Given the complexity of the system and the multitude of options for reform, this seems like a sensible approach to take. But it remains to be seen whether the complex reform of a national system can be led from the bottom up. In effect, making sure this local governance is driven by common growth objectives, rather than individual authorities’ interests, will be essential.

Nonetheless, the government’s reaffirmation of its commitment to business rates to devolution and its willingness to test new approaches is welcome. Given that the UK is one of the most centralised countries in the western world, moves to allow local authorities to keep at least some of the tax revenue that is generated in their area is a step forward in giving places more autonomy over how they spend their money. That interest in changing this appears to have been whetted once more is encouraging.

There are, however, a number of other issues with the current business rates system which need to be ironed out. Centre for Cities is currently working on a briefing of the business rates system, building on our previous work in this area, and we’ll be making suggestions as to how the system can be improved.

Hugo Bessis is a researcher for the Centre for Cities, on whose blog this article originally appeared.

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