Alex Nice: Sealing deals with Middle England

Boris Johnson's devolution-driven levelling up offer to counties is still a work in progress, but Treasury support will be vital
Michael Gove sets out his approach to levelling up before members of parliament's, Housing, Communities and Local Government Select Committee on 8 November 2021. Screengrab: Parliament TV

By Alex Nice

21 Dec 2021


In his levelling up speech in July, prime minister Boris Johnson announced plans for a new wave of devolution deals for county areas in England. This is designed to end England’s devolution imbalance, which to date has largely benefited city regions. Nine of the 10 English regions to receive greater powers since 2014 have been mayoral combined authorities focused on metropolitan areas such as Greater Manchester and the West Midlands.  

Little detail on county deals has emerged so far, but the government’s long-awaited levelling up white paper is set to announce plans to give leaders in county areas greater powers over transport, planning, investment and adult skills.  

Ministers have already set out some high-level principles for this process. After Johnson’s speech, then communities secretary Robert Jenrick said devolution proposals should deliver stronger local leadership, improved efficiency and join up services. Deals must also operate “across a sensible economic geography of a suitable scale and one based on local identity”.  

The core principles are helpful, but if the government wants to make a success of county deals, and achieve its manifesto pledge of “full devolution in England”, the white paper needs to go much further.

While county leaders are broadly supportive of the new devolution agenda, many have bad memories of the last time the government invited them to submit devolution proposals. In 2014-16, when most of the metro mayor deals were concluded, a further 28 devolution proposals were put forward, many focused on county areas. Only one – from Cornwall – was successful, and that deal was far less substantive than those signed with the mayoral combined authorities.

Many counties are understandably wary about expending time and resources on negotiations that could again lead nowhere. Our recent Institute for Government report, produced in partnership with the County Councils Network and Grant Thornoton, recommends that the levelling up white paper should include a framework for English devolution, setting out the parameters within which future county devolution deals will be agreed. In particular, the government needs to make clear its expectations regarding the geography for deals, acceptable governance arrangements, and available funding.  

As a first step, the framework should clarify at what scale devolution deals will be concluded. The last round of devolution deals were primarily focused on raising growth and productivity. They created combined authorities on the basis of “functional economic areas” – in effect, major cities and their commuter belts – even when the region did not have a clear shared identity.  

The government now appears to be giving more attention to local identity and working with existing administrative boundaries. This shift should work in counties’ favour. But the government still sees devolution as a means to achieve other aims, in particular levelling up, rather than as an end in itself. It should clarify what it means by a “sensible economic area” and set out how considerations of appropriate economic scale and local identity can be balanced.  

The framework should also explain what governance reforms will be required for powers and functions to be devolved. Michael Gove, the new communities secretary, has expressed a preference for a directly elected leader to provide “strong local leadership”. But he has also acknowledged this may not be appropriate in all areas. This flexibility has been welcomed by counties, but the reality is that local authorities that opt not to establish a directly elected leader may be offered a smaller menu of additional powers. 

Finally, the white paper also needs to make clear what additional funding will be available to county areas under future devolution deals. All the metropolitan devolution deals to date have included investment grants, providing a source of long-term, flexible funding to support economic growth. For many authorities, this incentive was critical to persuade them to agree to form a mayoral combined authority.  

This underlines how important the Treasury is to making county devolution deals work. One of the reasons for the rapid progress on devolution to city regions in 2014-16, in contrast to the failed attempt to establish regional assemblies in 2003-4, was that the former process was driven by the Treasury. Its engagement meant devolution deals came with additional funding and enough momentum to overcome other Whitehall departments’ instinctive reluctance to give up powers and budgets.  

Gove’s recent move to head the new Department for Levelling Up, Housing and Communities has undoubtedly given greater ministerial heft to the English devolution agenda. Last month he told county leaders the case for further devolution “has been powerfully made”. The task ahead for the communities secretary is to make that case powerfully to the rest of Whitehall, and in particular to the chancellor.  

Alex Nice is a researcher at the Institute for Government 

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