Background to the report

In the UK, ‘devolution’ has historically focused on the transfer of powers from Westminster to national institutions such as the Scottish Parliament, the Senedd in Wales and the Northern Ireland Assembly. But since the early 2010s, in response to highly centralised decision-making in comparison with many industrialised nations, there has been a greater focus on devolution as the transfer of responsibilities from central government to local government bodies in England. This aims to give local areas greater powers and resources, allowing them to tailor policies to their specific economic, social and geographic circumstances and support growth locally.

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Policy responsibility for English devolution rests with the Ministry of Housing, Communities & Local Government (MHCLG), which is also responsible for the local authorities’ financial framework. Local government bodies receive funding from MHCLG and other government departments. HM Treasury determines overall funding levels and sets the rules for how departments provide funding to local government bodies.

A key element of English devolution has been the creation of combined authorities – statutory bodies, formed of two or more constituent local government areas, that exercise functions on a greater geographical scale than a single authority. The Greater Manchester Combined Authority was the first, established in was the first, established in 2011. From 2014, the then government began negotiating bespoke deals with groups of local authorities, to form new combined authorities chaired by elected mayors.

Scope of the report

In 2017, we reported on the establishment of combined authorities. We found there was a clear purpose to the existence of more strategically focused bodies, particularly in metropolitan areas dealing with cross-cutting issues such as transport and economic regeneration. But we concluded that combined authorities needed to demonstrate, in an accountable and transparent way, their ability to drive economic growth, contribute to public sector reform and help deliver improved outcomes in their areas.

This report assesses whether MHCLG is implementing devolved arrangements – with a particular focus on funding and accountability – in a way that supports improved outcomes for local people. It does not cover wider issues such as workforce skills, economic growth or local government reorganisation.

  • Part One sets out the recent history of English devolution and explains the further changes planned.
  • Part Two examines devolved funding and powers.
  • Part Three assesses the arrangements for accountability and scrutiny.

Conclusions

MHCLG and HM Treasury are implementing Integrated Settlement funding in a way that stakeholders regard as a significant step forward. MSAs are starting to take the opportunity presented by this new approach to be more creative and to think in a longer-term way about the programmes they deliver. These arrangements have the potential to deliver better value for money as they are rolled out more widely.

At the same time, the reporting burden on MSAs to demonstrate what they have delivered with much of the Integrated Settlement funding they receive is currently greater than initially envisaged. And the way the current framework will address underperformance has not yet been tested. As a result, there are questions about future capacity, both within local and central government bodies, as new MSAs are brought on board and engage with government departments over their Integrated Settlements and Outcomes Frameworks.

The accountability mechanisms for central government funding are well established and important. But there is a clear tension between departments’ responsibilities and the ambition of the English Devolution White Paper that central government should end the top-down micromanagement of decisions and approaches by local leaders and replace it with a principle of locally accountable autonomy.

This tension will need to be resolved, and local accountability arrangements substantially strengthened and tested, before the devolution of funding and accountability can be considered to be working effectively to support improved outcomes for local people.

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