Wary councils look for Treasury buy-in for PM’s levelling-up devo deals

As DLUHC delays publication of white paper, local leaders want commitment from Sunak, Institute for Government says
The Mander Centre in Wolverhampton, where DLUHC has opened its “second headquarters”. The department said the move demonstrated a commitment to levelling up. Photo: Nic Gould/Flickr/CC BY 2.0

By Jim Dunton

09 Dec 2021

Five months after prime minister Boris Johnson set out a devolution-led vison for the government’s levelling up agenda, local authorities are still looking for evidence of Treasury buy-in for the plans, according to a new report.

The Institute for Government said Johnson’s proposals for county-level devolution deals targeting swathes of England not currently covered by the metropolitan-area focused agreements had been greeted with caution by some local leaders because of a lack of detail.

Some of that detail – and proposals for a wave of pilots – had been expected in a white paper on levelling up this year. As recently as last month, levelling-up secretary Michael Gove told MPs he hoped the white paper would be published before Christmas.

But it emerged this week that the white paper would not now see the light of day before 2022, raising more questions about how well worked-up the government’s plans for the agenda actually are.

The IfG’s just-published How To Make a Success of County Deals report says government will need to adopt a cross-departmental approach to supporting local areas to deliver levelling-up plans. It says that in addition to leadership from the Department for Levelling Up, Housing and Communities, input is likely to be needed from the Department for Transport, the Department for Education, the Department for Business, Energy and Industrial Strategy, the Department for Health and Social Care and HM Treasury.

Report authors Akash Paun of the IfG, Michael Hill of the County Councils Network, and Grant Thornton partner Phil Woolley, said county deals should provide greater budgetary flexibility for local government, and as a result Treasury buy-in was seen as particularly important.

They said the point had been underscored at a round-table event – with local government leaders, civil servants, business leaders and other stakeholders – that informed the report.

“The success of this agenda will depend on whether those leading the process have the political and administrative clout to drive action across Whitehall, which many in local government perceive to be instinctively sceptical about devolution,” the report said.

“The commitment of the Treasury to the county devolution process was seen as crucial, since county areas will be seeking additional fiscal flexibilities and resources.

“During the 2014-16 period, the rapid progress on devolution to city regions was driven by the Treasury under George Osborne. One participant worried about the ‘silence on devolution issues’ from the current Treasury under Rishi Sunak.”

The report authors said that individual had cautioned that unless the Treasury was behind the county deals drive “not much will happen in the near term”. They added that others in local government had been wary of committing resources to working up county deals until the government’s vision was clearer.

The report’s principal recommendation for ensuring the success of county deals is for the government to create a “devolution framework” to spell out how the devolution process will be taken forward.

“This should build on the principles set out last July that put county and unitary authorities in the driving seat for negotiating deals based on existing county geographies,” the report authors said.

They added that government would also need to provide strong cross-departmental leadership, with chancellor Rishi Sunak demonstrating the Treasury’s commitment to devolution.

Report co-author Paun, who is a senor fellow at the IfG, said that both ministers and councils had ground to give to make a success of county deals.

“The government needs to provide a clearer sense of direction, while leaving enough flexibility for devolution deals that reflect varying local circumstances in different parts of England,” he said.

“For their part, local leaders may need to compromise on governance reform if they want to unlock significant devolution, including by opening the door to direct election of county leaders.”

The report cautioned that ministerial enthusiasm for directly-elected mayors meant that county areas unwilling to adopt such a model may find that they were offered fewer powers and flexibilities.

Last month, Gove told MPs on the Housing, Communities and Local Government Select Committee he was keen to set up cabinet-level committees for the levelling-up agenda that would be modelled on ones created to manage the UK’s departure from the European Union and preparing for net zero.

“My view is that the logic here is to have the prime minister chairing a strategy committee looking at levelling up strategy and then the operational outworkings of that being done in a committee that would be chaired by whoever had the job that I currently have,” he said.

Gove said he anticipated that the white paper would set out measures that could be used to judge the government’s success in delivering on its levelling-up pledges.

In September, the IfG said the government would need to use its levelling-up white paper to clarify “contradictory rhetoric” from ministers concerning the aims and ambitions of the agenda.

At last month’s select committee session, Gove was asked to explain what “levelling up” meant.

"In a sentence, it's making opportunity more equal across the country,” he said.

He went on to say that four critical elements for the agenda were: helping to strengthen and improve local leadership; improving living standards; improving the quality of public services; and helping to restore and enhance pride in place.

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