Economic vision: it’s all about devolution

If compelled to choose between electoral advantage and economic vision, smart money would be on the current government choosing the former. Whether it is local government, the criminal justice system, or the NHS, the fabric of what enables the people of British society to live, thrive, and excel is in tatters – and if all you read was the March 2024 Budget, you would not perceive that stress and pain. Even if it were right or proper to look away, the mantra of “high value, high growth” and modest spending pledges ring hollow when, according to the OBR’s latest forecast, total investment will fall every year for the rest of the decade, with little attention given to workforce pressures, trade barriers, and the links between universities, innovation agencies, and the broader economy. 

That media coverage ahead of this week’s budget focused substantially on personal tax cuts and getting ahead of Labour on replacing non-domiciled tax status makes it clear: this is another fiscal event that is being played for electoral advantage, with all its consequences reserved for the next government.

Arguably, one of the most enduring legacies for sustained, inclusive growth that the Conservatives can own is planting the seeds for the reinvigoration of devolution – and it is perhaps a sign of how little this is understood that Michael Gove’s speech at last week’s Convention of the North was not seen in this light. Whilst central government’s vision for what the UK economy should be is, at best, muddled, the sub-regional partnerships covered by Mayoral Combined Authorities (MCAs, soon to be joined by Mayoral Combined County Authorities) have organised to fill that vision vacuum, and have been able to channel their limited resources towards achieving those goals. As Gove said, “the theology is devolution, the reality is improved lives for all”.

The speech contained particularly good news for three of the more longstanding Mayoral Combined Authorities in South Yorkshire, West Yorkshire, and Liverpool, which will follow in the footsteps of Greater Manchester and West Midlands in progressing to ‘trailblazer’ status and single settlement funding. This allows for a step-change in maturation of these collaborative organisations, which will be freed from the restrictions associated with separate funding pots, and empowered to align the resources with the substance of their vision. 

However, MC(C)As are affected by the chaotic short-termism, fragmentation, and underfunding that wider local government is wrestling with – not least as they are partnerships composed substantially of local government. In the words of the Mayor of South Yorkshire, Oliver Coppard, “until and unless local public transport and local government finance is sorted, the work we are doing is never going to be enough”. 

Furthermore, the same missing or imperfect pieces in the national picture will affect both MC(C)As and local authorities as they work to deliver their vision, and the next government will need to address both the vision and the ability to make that vision manifest. For example: 

  • Many governmental arms-length bodies were created in a time before this phase of devolution, and some of the resources that sit within them could be devolved to local authorities or MC(C)As – or at a minimum better aligned with them and their ways of working.
  • Development banking and institutional investment needs to be streamlined and better aligned with delivery on economic vision. Added to this, there may be particular potential in making more sensible regional pooling arrangements for the Local Government Pension Scheme (LGPS) – holding out the possibility of more innovative joint funding mechanisms for large scale, regionally-specific projects.
  • Central government could help better nurture and promote the good practice shown by the Connected Places Catapult in its 3Ci initiative, which shows how a national innovation agency can use its heft and partnerships to assemble a pipeline of investable schemes to achieve net zero and climate resilience, whilst also using that intelligence to shape local and sub-regional skills systems.

If this budget was a serious attempt at building a high value, high growth economy, it would have had devolution, connection, and public institutions written all over it. It would have plans and resources for the places up and down the country where even the basic infrastructure of pavements, sewerage, and hospitals is failing. It does not. The work of turning warm words into lived reality has been delayed for another fiscal event, or another government.