Where next for England’s city regions? How will the new government and Brexit impact devolution and combined authorities?

Dr. Max Lemprière & Professor Vivien Lowndes 

If you’re a local authority leader today you will doubtless be considering opportunities to gain devolved powers and funding from central government as part of a Combined Authority (CA) deal. Or perhaps you are already part of the joint leadership of a new Combined Authority (CA)? Since the emergence of the Greater Manchester Combined Authority in 2011, a further nine have been formed, with eight in total holding elections for directly elected mayors. New deals are in the pipeline, and those who have yet to strike one fear being left behind.

We’ve spent the last few years following these developments, asking what their emergence tells us about the nature of devolution and central-local relations. We’ve highlighted the role of well-defined leadership, existing institutional structures that favour joint working, and a range of locally specific factors, like shared identities and partnership culture.

But what is also clear is that English devolution policy is constantly evolving, responding to (and seeking to capitalise upon) broader political and economic trends. It is that which we want to discuss here.

CAs are voluntary collaborations between elected local authorities in England that have received devolved powers and funding from central government to support infrastructure and economic development, on the basis of negotiated settlements. Since 2010, central government has championed CAs as a vehicle for stimulating regional economic growth and rebalancing the economy away from London and the South East. They vary in terms of their powers, funding, priorities and governance. New CAs have been formed at different points since 2010, and are working to different deadlines for performance reporting to central government and negotiating follow-on packages of additional funding and devolved powers

We have argued elsewhere that the devolution policy underpinning CAs represents a noticeable shift in central-local relations. Rather than imposing a ‘one-size-fits-all’ model of devolution, the policy has been based upon bespoke negotiated agreements between groups of local authorities and Whitehall. The policy is also morphing in response to developments in Westminster and beyond.

The most significant developments are the arrival of Boris Johnson as prime minister, in the context of the 2019 Conservative landslide, and the ongoing Brexit agenda.

What these highlight is that the political saliency of the CA agenda varies depending on the will of political leadership at the national level and their existing policy priorities. What’s more, they show that, as CAs become more empowered and begin to bed-in and develop trajectories and momentum of their own, a tussle emerges between the CA and national level, particularly in the on-going battle for a further devolution of powers and funding.  For example, the Greater Manchester CA has made vocal appeals for repatriated powers and funding over transport and skills training to land at the regional rather than national level.

Boris Johnson is a former directly elected mayor of London. In the 2019 general election, he based his claims to be able to ‘get things done’ as PM on his record at London mayor. Johnson’s power and influence in that role, and personal visibility, owed everything to New Labour’s devolution policy, which had created the mayorality and Greater London Assembly in 2000. He has now promised to ‘do devolution properly’, signalling an opportunity for existing CAs to expand their capacity and influence, especially in the North of England. Many CAs represent areas in the former ‘Red Wall’, where support for Labour crumbled and voters ‘lent’ their support to Johnson’s Conservatives. Now, many see an opportunity to call in the favour and make demands for further devolution.

Overshadowing all of this is Brexit. Voters in these regions shifted their allegiance towards the Conservative Party in order to ‘get Brexit done’, but Brexit itself presents opportunities and potential pitfalls for existing and proposed CAs. Many see an opportunity emerging for CAs (rather than Whitehall) to claim some of the powers being repatriated to Britain. Could Brexit lead to regions ‘taking back control’ as well as the national government? Johnson’s premiership represents a critical juncture for the devolution policy, which had stalled between 2016-19 in the face of struggles over Brexit, and an ideal opportunity for regional leaders to strengthen their calls for further powers

Johnson is on record as supporting the CA agenda. New CAs are currently being negotiated with the Treasury (for example in Yorkshire and Lancashire), and Johnson has advocated for further devolution of funding and powers to existing CAs, particularly over transport and infrastructure, in line with his government’s broader domestic agenda. The commitment to a Northern Powerhouse Rail programme suggests the agenda may be gaining traction. Regional leaders are hoping that Johnson has learnt about the benefits of locally controlled infrastructure from his experience at the helm of the most well developed regional transport body, Transport for London.

This new breath of life for the devolution policy follows a period of uncertainty following the departure of Chancellor George Osborne in 2016. Under David Cameron’s government, Osborne had been the architect of the CA agenda, personally pushing the agenda and getting the deals signed off the deals. Following the Brexit referendum, Theresa May’s government let the devolution policy flounder, preoccupied with the fall-out from the ‘leave’ vote.

The CA agenda may well be gaining new traction, as a result of both bottom-up and top-down demands. Recent years have seen many success stories, from the Greater Manchester poster-child, to ongoing negotiations with Lancashire, to further rounds of devolution for some of the UKs biggest cities. As time goes on, CAs are likely to gain the confidence they need to challenge central government in the on-going tit-for-tat that has characterises UK central-local relations. This isn’t to say that there haven’t been failures; our own research for example has shown how the North East Combined Authority failed to negotiate a meaningful devolution package with central government due to poorly constructed economic and political geographies and a lack of congruence or leadership. Having said that, a new North of Tyne Combined Authority has arisen from its ashes and negotiated a successful deal with central government.

But this also points to the way that CAs will continue to evolve in the future. Brexit was, to some extent, a product of social division, and a distrust amongst those at the local level about politics and priorities driven by Westminster and Whitehall. Beyond London and the South East there was a particularly powerful distrust of elites and a feeling among many that they had been ‘left behind’ by the dominant economic model. Indeed, the CA agenda itself was an attempt to alleviate growing regional discontent in England in the aftermath of New Labour’s devolution to the Scottish government and Welsh. Renewing the CA policy provides an opportunity to decentralize responses to the demand to ‘take back control’. English devolution has the potential to rebalance the economy whilst also reducing social division and mistrust in Westminster politics.

It remains to be seen whether combined authorities are able to capitalise on these opportunities, and indeed whether Westminster is serious about pursuing them. What we also need to watch out for is whether it is only those existing CAs, which have already proved themselves to be adept at bidding for power and funding (Greater Manchester and the West Midlands come to mind), that will be able to win the tussle for extra post-Brexit powers, or whether the bounty will be shared more evenly. The danger is, of course, that what is already seen by some as an uneven distribution of powers and funding away from Westminster will be aggravated further.

lempriere

Max Lempriere is an Associate at INLOGOV. His research interests lie in local governance, institutions, sustainable development and urban planning. He completed a PhD in the politics of sustainable urban development.

 

 

Vivien Lowndes photo

Vivien Lowndes is Professor of Public Policy at INLOGOV.  She undertakes research, teaching and knowledge transfer on local governance, political institutions, citizen participation, gender and migration.  Professor Lowndes is Chair of the Politics and International Studies Sub-Panel for REF 2021, the UK’s periodic assessment of research quality. 

 

The tax so popular it has its own song

Chris Game

A good crossword anagram should have real meaning, ideally laced with a bit of humour. Like my personal long-time favourite, “I’m Tory Plan B”, which many Labour supporters still reckon fairly describes their three-time election winner, Tony Blair MP or PM.

As Labour leader, his latest successor looks like being ‘Mr Streaker’, aka Keir Starmer, with eliminated Emily Thornberry left ruing “my horrible entry”.

Switching to ministers, this week’s headlines are all about Home Secretary, Priti Patel – a clearly sensitive soul, and I entirely understand her feeling that “Rip it, petal”, was inappropriate advice from a senior male civil servant.

Next week, though, is still scheduled as Budget Week, when the headliner will be the new Chancellor, Rishi Sunak. Potentially another anagrammatical pain, with only ten letters to juggle, but saved by the extreme haste of his appointment and some flashy punctuation: “Ask? I rush in!”

By long established Budget custom, the Chancellor reveals little of any planned tax proposals in advance. It gained attention, therefore, when Sunak deliberately pre-announced his intended “fundamental” review of business rates, and their replacement with a Land Value Tax.

“A riski hunch” perhaps, and yes, I know it’s not a perfect anagram, and yes, I promise it’s my last effort.

The political rationale was clear enough. Scrap an unpopular tax, paid not by landowners, but on rental values by small businesses and potentially Conservative-voting tenant retailers, and earn credit for enabling your Leader to claim he is saving struggling high streets.

But here’s the thing. Sunak chose not just to use the provocative T-word, but actually to call it a Land Value Tax (LVT – which a certain person I know thinks stands for Luxury Vinyl Tiling).

The idea – the tax, not the tiling – has been around for literally ages, advocated by, among many others, the 4th Century BCE Confucian philosopher Mencius, 18th Century classical economists, Adam Smith and David Ricardo, the then Liberal MP, Winston Churchill, and the very up-to-the-minute Institute for Fiscal Studies.

It’s also possibly the only tax with its own song – or, more precisely, 19th century hymn. Entitled ‘God made the Land for the People’ and too long to quote extensively here, it is available on Wiki and includes:

“Why should we beg work and let the Landlords take the best? Make them pay their taxes on the land, just like the rest; The Land was meant for the People!”

Now try it to the tune of ‘Marching Through Georgia’, it really is a bit better.

So there’s no shortage of pedigree, or of possible alternative labels that might make it sound a bit less communistic to some of Sunak’s own party supporters. ‘Levy’ and ‘site-value’ both sound a bit vaguer, so why not try ‘site-value rating’ or – possibly my own choice – Location Value Rating?

Yet Sunak chose the very term that his actual political enemies – Labour, Lib Dems and Greens – had all used in their 2017 manifestos and that the Greens especially outlined in some detail in 2019:

“Our Green plan to transform land and property taxes will abolish Council Tax and Business Rates, replacing them with an LVT. The LVT will also absorb National Non-domestic Rates, Stamp Duty and Inheritance Tax on land, Capital Gains Tax on land sales, and Income Tax on land for owner-occupiers. The new LVT will charge the landowner a proportion of the capital value of the land each year (estimated to be around 1.4% of current values.)”

 I doubt Sunak is thinking on this scale, but the key point still holds. Long-term simplification and rationalisation take time – which most councils’ finances don’t currently have.

Anyway, on this topic at least, Labour’s 2019 manifesto was even more cautious than 2017’s. That manifesto pledged to “initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term” (my emphases).

It may sound an open-minded, evidence-driven approach to policy development, but to the Tory ‘Red Top’ media it was raw meat, and they eviscerated it.

Re-badging it a ‘Garden Tax’ – misleadingly, with garden values already included in council tax – they reckoned it would cost the average home (in South-East England, that is) an extra £4,000-plus, treating the unlaunched review as if it were Commons-ready legislation. I expect Sunak’s proposal will receive similar treatment – no, just kidding!

Labour’s 2019 manifesto was more tentative still, restricting any review to business rates and emphasising that any LVT would apply to commercial landlords. Politically understandable, but it undermines much of its full potential, as outlined by the Greens.

So why do I prefer Location Value Rating? Because I feel it’s easier to understand. Land’s true ‘location’ value derives considerably less from the actions of individual property owners than from the wider, longer-term efforts of the community in creating transport links, schools, hospitals and other infrastructure.

It is therefore the community that should benefit from this ‘value added’ or ‘unearned betterment’, not frequently absentee landowners who currently have no incentive even to put their properties on the market.

Next Wednesday, though, those actually in local government, rather than bossing it, want to hear about the immediate, not medium-term, future. Above all, what is the Government’s policy on further, and ultimately full, business rates retention, that it’s been piloting for nearly three years now? And is this LVT talk just a distraction?

 

Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan.  He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.

First, do no harm – An assessment of the Housing and Planning White Paper

Anthony Mason gives an initial assessment of the white paper on housing and planning in England

First impressions are not always very reliable.  When Sajid Javid replaced Greg Clark as Secretary of State for Communities and Local Government following the post-vote governmental putsch last year (sorry, change of Prime Minister following the referendum), local government figures were very wary.  Clark had, and still has, a reputation for understanding local government and can connect the local to the national in discussions around the cabinet table in a way that few of his colleagues are able to. Javid, however, was an unknown quantity – said to feel that the DCLG role was a demotion and giving every indication that he was unexcited by the move.

Yet, for those of us specifically interested in housing policy, Clark – alongside his spiky and confrontational housing minister, Brandon Lewis, presided over some rotten housing policies, as I suggested in this place last year.  Indeed, the Housing and Planning Act 2016 will, I suspect, go down in legislative history as the Dangerous Dogs Act of housing policy in England.  Gratifyingly, a number of the craziest measures enabled by that Act have proved so difficult to implement that the “new” government has simply shunted them into a siding and (we hope) left them there to rot.

And now comes the first comprehensive white paper on housing policy in England for almost a generation. Bearing the less than poetic title-as-ambition of Fixing our broken housing market.  Javid and his refreshingly rounded housing minister Gavin Barwell, set out in 104 pages and many supporting papers their ambitions to do just that.  To their great credit, Javid and Barwell have spent many weeks on careful consultation with local government, sector interests, and Number 10 before getting this far; delaying the publication of the white paper somewhat while doing so.  They have even persuaded the PM to pen a lengthy introduction to the paper – presumably in the hope of corralling rural Conservative NIMBYs into line.

The white paper sets out many proposals and poses 38 carefully framed policy questions for response (by 2nd May 2017, if you’d like to contribute).  But in quick summary, it:

  • Acknowledges that England needs around 250,000 new homes each year going forward. This was expressed as “between 225,000 and 275,000 homes” – and is up from the oft-quoted 200,000 previously accepted (but never consistently realised)
  • Proposes that each local authority will have to draw up and regularly review an “honest assessment” of local housing need – methodology to follow.
  • Says that developers could be forced to build within two years of planning consent, or see that consent lapse. At the moment, permission usually lapses after three years.  The paper also proposes new compulsory purchase powers for councils where sites lie undeveloped – details to follow.
  • Suggests an expanded and more flexible affordable homes programme, for housing associations and local authorities, with £7.1bn of (already announced) funding. It drops the “old” government’s fixation with starter homes in favour of a more balanced approach.
  • Encourages building rates at higher density – including of higher buildings – to make best use of land (and to avoid having to give a view on releasing green belt).
  • Dodges the question of future housing association and council rent levels after George Osborne’s compulsory rent reductions “We will provide clarity over future rent levels. In return, we expect them to build significantly more affordable homes over the current parliament.” Is what ministers promise.
  • Says that smaller building firms will be given assistance to expand, including support for off-site construction (where components are fabricated off-site and factory-assembled). It also encourages “build to let” where private companies build large-volume rental flats for tenants.
  • Continues a focus on leaseholds, proposing what it calls “an end to leasehold abuse” where home buyers are locked into leases with spiralling ground rents.

Most of us acknowledge the general need for new homes while protesting loudly if those homes are to be built near to us – and for years, housing policy in England has tried not to upset voters and yet deliver new homes.  And the white paper has had to throw titbits in all directions to keep sector interests at bay.  Local authorities are both excoriated for planning failures and mildly encouraged to build new homes.  Those who worship at the altar of home ownership will be pleased that there is a threat to close a loophole that has allowed councils building homes through wholly-owned companies to avoid the right to buy.  Those who see renting as the most realistic way forward will be pleased that much of the white paper acknowledges this reality and makes gentle proposals for longer tenancies.  Big developers are both criticised for not building out sites as well as encouraged by some anti-planner language.

But ministers have failed to resolve some longstanding conundrums – and a couple of new ones – in their paper:

  • Successive governments have tried to combine bottom-up and top-down policies on housing which appear to conflict in their efforts to encourage and coerce. For example, communities and parishes have been given more control over developments and yet principal councils are still required to provide new homes.  Housing associations should develop more and yet have no control over the rents they can charge for these new homes.
  • Government has long had an intellectual tendency to support developers over planners – even though planning consents have been running ahead of homes built for some time. This white paper at last begins to recognise that not all is well, with our developers while avoiding the obvious response: councils’ potential contribution to building at scale.
  • There is a cherished belief that brownfield sites can provide the majority of our new homes, but these sites no longer match need. Not surprisingly, they are disproportionately in cities, but not all housing need is city-based.  The white paper avoids the question of building on the green belt, even though, in our own city, we’ve faced a highly charged debate about this topic.
  • A further concern is around labour and skills. We’ve long worried that not enough UK youngsters express any desire to work in the building industry.  This is now compounded by fears of the actual or apparent impact of Brexit on the non-UK workforce.

The fundamental question that the paper avoids is whether any combination of our present arrangements for building can ever deliver the amount of housing we need; as the answer to that question may be too hot to handle.  It’s old evidence now, but the Calcutt review of the housebuilding industry commissioned a decade ago set out a straightforward graphic showing who has built what in the UK in the years since the Second World War (see figure one on page 10).

untitledThis evidence was summarised in a beautifully simple graphic (above) by the University of Sheffield School of Architecture.  It evidences that the three decade long gap in our housing provision is simply because we’ve stopped building council houses.  The answer to the fundamental question would seem to be to let councils (and housing associations) build again at some scale in order to supplement the relatively fixed-but-declining contribution of private developers.

The title to this post is a common misquotation of the Hippocratic Oath.  It suggests that a first duty for medics is not to do harm “Primum non nocere” – and the new white paper seems to pass that test, at least.  If a second duty is “then to do good” – then I’m not yet convinced that the paper will achieve that in any significant way.

Anthony Mason

 

 

Anthony Mason is an Associate at INLOGOV and works mostly on local government systems and organisation and on improving public sector partnerships.  His early career was in local government followed by more than 20 years in PwC’s public sector consultancy team.