A Devolution Deal

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A devolution deal is an agreement between the government and a group of local councils.
As a result of the deal, the councils form a combined authority and gain new powers, as well as extra funding.
This authority has an elected mayor who forms a cabinet.
On the surface, these deals are like the City Deals that started in 2011. But they transfer more powers to the combined authorities and create new structures.
A devolution deal for the Sheffield City Region was announced on 2 October. A proposal for a deal covering Hampshire and the Isle of Wight has been submitted to the government.

What’s the basic idea?

‘Devolution deals’ form a cornerstone of the government’s current policies for breathing new life into the English regions. A devolution deal is an agreement between the government and a group of local councils and other bodies. Certain powers are passed from central government to this local grouping (called a ‘combined authority’).

There is wide agreement that the economic and cultural activity in England is too focused on London and the South East. Many people want to see efforts to rebalance things to provide a more even spread of activity. But there is concern that other cities and areas outside London cannot rival the capital because they are too fragmented: they have many small local authorities that are not large enough to plan strategically.

The devolution deals are designed to overcome that by creating ‘combined authorities’ that join together the local councils and other bodies in an area. The idea is that these combined authorities will help local councils to work together. There will be a directly elected mayor for the whole area, who will appoint a ‘cabinet’ made up of the leaders of the local councils. The joint authority will take on powers from central government in London. Local councils will continue to exist and will have roughly the same responsibilities as now.

How is it happening?

The process of negotiating and agreeing devolution deals has already begun. Deals were announced for Manchester in November 2014 and for Cornwall in July 2015. The government set 4 September 2015 as the deadline for groups of local authorities to submit their proposals, and, by that time, 38 proposals had been lodged.

The government is now negotiating with the areas that made these proposals. The first new deal was announced on 2 October, with the Sheffield City Region.

Aspects of these deals can’t come into effect until a new law is passed by Parliament. This law – the Cities and Local Government Devolution Bill – is currently being debated. It is likely to pass into law by Christmas.

The deals are made between government and the councils. Local people have very little role in the process. For example there is no local referendum to ensure public support. It is expected, however, that a consultation on the proposals for the Sheffield City Region will shortly be announced. The discussions in Assembly North will feed directly into that. Assembly South will feed into any similar consultation that takes place in Hampshire and the Isle of Wight.

How would it work?

A new combined authority would be formed with members from all the local councils that sign up to the deal. There are differing ideas on what areas should be covered:

The Sheffield City Region. Source: South Yorkshire Local Transport Plan.

For Assembly North, the deal that was announced on 2 October includes the whole of the Sheffield City Region. Within that are the four local authorities of South Yorkshire (Barnsley, Doncaster, Rotherham, and Sheffield), four local authorities covering central Derbyshire (Bolsover, Chesterfield, Derbyshire Dales, and North East Derbyshire), and one local authority from Nottinghamshire (Bassetlaw). Others have argued that it would be better to focus only on the local authorities in South Yorkshire.

For Assembly South, a proposal has been submitted to government by the local authorities covering the whole of Hampshire and the Isle of Wight. Another idea is for an authority covering only the urban area of South Hampshire: Southampton, Eastleigh, Fareham, Gosport, Portsmouth, and Havant. A third idea also includes other areas in the Solent region – the Isle of Wight, southern parts of the Test Valley, Winchester, and East Hampshire council areas, and the east of New Forest – but excludes north Hampshire.

Hampshire and the Isle of Wight. Source: www.snipview.com.

Under the government’s proposals, each combined authority will have a directly elected mayor (elected by local citizens). The government has indicated that it will not devolve the full range of powers available unless a mayor is put in place. It has been agreed that there will be a mayor for the Sheffield City Region, to be elected in 2017. If the proposal for an authority covering Hampshire and the Isle of Wight is accepted, this area will have a mayor too. The mayor will appoint a ‘cabinet’ made up of all the local authority leaders in the area. They will be scrutinised by a group of councillors drawn from councils in the area. Staff and programmes will transfer from existing bodies, so there will be little new bureaucracy.

What powers would transfer from existing bodies?

The government’s approach is that devolution deals in different parts of the country can involve the transfer of different powers. So the powers that will be transferred to Manchester are different from those to be transferred to the Sheffield City Region.

In Manchester, the following powers are to be transferred:

employment support and the Work Programme
further education and skills
police and fire services
public transport, including buses and ‘smart ticketing’
housing funding
integrated health and social care
decisions on how to use EU structural funds
economic development and business support
sale of land that is currently owned by public sector bodies

The powers that have been agreed for the Sheffield City Region are slightly more limited, and focus mainly on transport, skills, and economic development. The main area that is missing from the Sheffield deal when compared with the Manchester deal is that there is nothing on health and social care in Sheffield. In addition, there will continue to be a separate Police and Crime Commissioner for South Yorkshire, as at present.

Other policy areas that could also be transferred in this model include education funding; skills funding; trunk roads; arts, sport and heritage; and environmental protection.

The prospectus for a Hampshire and Isle of Wight devolution deal asks for, amongst other things, the devolution of the following powers to the HIOW region as a whole:

business support funding and advice, which are currently provided both locally and by the government
control over the distribution of European Union structural funds
funding for adult skills provision, currently managed by the Skills Funding Agency
distribution of the Apprenticeship Grant for Employers and careers service funding
exploration of joint commissioning or devolution of the Work Programme, providing welfare-to-work schemes, from 2017
establishment of a Housing Delivery Fund to purchase and prepare land for new homes.

Funding sources

Funding under these devolution deals would consist of grants from government linked to the powers devolved. The mayor would have the power to add a small amount to council tax bills. Under an announcement made by George Osborne (the Chancellor of the Exchequer) in early October, the mayor would also be able to raise business rates by 2%. In addition, the new body would be able to borrow a small amount of money.

How are those in charge held to account?

The mayor would be directly elected by the voters of the region every four years. On some matters, the mayor could be outvoted by the remainder of the combined authority’s cabinet, consisting of local council leaders. The work of the combined authority would be scrutinised by a group of councillors drawn from the councils in the area.

What are the concerns?

Many people welcome devolution deals because they recognise the need for greater coordination among local councils to promote economic development and efficient service delivery.

But there are also concerns:

Some people are worried about the processes through which devolution deals are being agreed: closed-door negotiations between local councils and the Treasury in London, from which local people are excluded.
In addition, the process is taking place in a piecemeal fashion, with different powers agreed for different places at different times. The basic plan that the government is pursuing was original designed for large cities such as Manchester. Whether it is also suitable for more rural areas is less clear.
Others are concerned that the systems created by these deals are not democratic enough – that it will be difficult to hold mayors properly to account between elections.

Where to from here?

Recently, the government signed a devolution deal with the nine local authorities in the Sheffield City Region.
It is currently considering a proposal for a further deal in Hampshire and the Isle of Wight.
You can see a summary analysis of all the devolution bids as of 11 Nov 2015
Read a list of the September devolution submissions, organised by area, and links to their relevant document here.
House of Commons Library note on devolution to local government in England.
House of Commons Library briefing on the Cities and Local Government Devolution Bill and progress on the bill.
Commons Library Blog on retention of Business Rates.
However, there remain important unanswered questions.
What areas will the deals cover and what exact powers will be devolved?
How will elected mayors and combined authorities be held accountable?
How will different deals with different combined authorities impact on the services provided to the public?

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