How Theresa May is changing the government’s devolution drive
Jessica Studdert, published in Public Finance, 7 October, 2016

The UK’s vote to leave the European Union and the subsequent change in Downing Street is likely to alter the role of devolution in government policy. Here are some assumptions about Theresa May’s emerging agenda.

Unsurprisingly, Brexit dominated the agenda in Birmingham as the Conservatives convened their first political gathering since the referendum. Mentions of local government were few and far between but, as key figures in the new government set out their priorities, we did get some new insights into how the May administration will approach devolution and regional strategy. Here are some emerging assumptions:

Devolution will have to play a different role in post-Brexit Britain

Domestic political, strategic and economic priorities have changed and devolution will now need to serve a different purpose. In post-Brexit Britain May needs an agenda that actively works for the “left behind” – those who voted leave and feel economically and politically isolated. She has promised an economic and cultural revival of “all our great regional cities” – the implication being to move beyond a model favoured by Osborne that worked in Greater Manchester but has not been so successfully adapted elsewhere. This creates an interesting opportunity to imagine a more radical approach, but the challenge with broadening the strategy will be to avoid diluting it.

The political calculations behind the current model of devolution are changing

Cynics of Osborne’s model of devolution argued that the imposition of directly elected mayors was a route to giving the Conservatives a fighting chance of political inroads into Labour heartland urban areas. Any long term electoral calculations in this regard are changing in the face of short term political realities. The Labour candidates that are favourites to win in Liverpool City Region and Greater Manchester are a Corbyn ally and an outspoken former Labour leadership candidate respectively. Meanwhile the only mayoral candidate the Conservatives have so far selected is the West Midlands. Andy Street’s prominence at the Birmingham conference suggests his campaign will receive strong leadership backing. Although recent experience provides extra caution that the outcome of no election is certain, it would seem fair to suggest that approaching May 2017 we may see Westminster’s political energy tilting towards the West Midlands, where there is already a second devolution deal underway.

The Midlands Engine will become as strategically important as the Northern Powerhouse

This government’s eagerly awaited mentions of the Northern Powerhouse have always been swiftly followed by just as enthusiastic remarks about the Midlands Engine. In addition to the perceived more winnable mayoral seat the region contains, there are strong personal links through Sajid Javid’s Bromsgrove constituency and to Birmingham through May’s key adviser Nick Timothy. These personal and political links, combined with an economic strategy that might seek productivity “quick wins” in the region, especially with the first phase of HS2, might mean there is increased energy at Westminster to rev up the Midlands Engine. This is not zero-sum calculation with the Northern Powerhouse, but it does mean that leaders across the more complex political landscape and larger economic footprint of the North will need to make sure they push a coherent collective agenda more forcefully.

Devolution will be increasingly fused with the industrial strategy

Key to ultimately changing the fortunes of the “left behind” is stimulating the right sort of growth in the right places, and ensuring local people are able to access new opportunities. May’s plans for an industrial strategy is the route through which her more interventionist approach to the role of the state and economic policy will play out. With the passionate devolutionary Greg Clark the minister responsible for this, we will likely see future devolution fused more explicitly through this framework. How “place-based” the strategy will be in practice remains to be seen, but there is for the first time now a clear opportunity for a more agile national strategy to work with the grain of local advantages.

Public service reform remains a notable absence from the devolution agenda

So far, some important opportunities for the government to be creative about the future role of the locality in public service reform have been missed. The question about how to replace our economy’s reliance on migrant labour with “home grown” skilled labour has resulted in a few swipes by the government at businesses for ducking their responsibilities, but no recognition that local partnerships could be given the tools to play a more active role coordinating skills pipelines and linking them to local labour market requirements.

There is a risk that May’s social reform agenda sits between separate boxes of existing services and institutions, rather than approaching how incentives and funding flow across places. If devolution sought to better align how services worked to place outcomes, this could reduce demand on services and increase people’s independence. None of this is box office stuff politically, but if May wants her legacy to be a country that works for everyone, it will be important that she tackles the huge amount of public expenditure tied up in the costs of reactive services like hospitals and prisons, where cheaper community alternatives require up-front investment for long term payoffs.

Devolution cannot continue to be primarily seen through a growth prism: public service reform has to become the other side of the coin. Otherwise those communities that stand to gain from increased economic opportunities will continue to be left behind.




A devolution revolution?
July 13, 2016
devolution dilemmas
April 17, 2016