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.

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 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. 

 

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 4^th Century BCE Confucian philosopher Mencius, 18^th 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, 19^th 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.