The ‘Devolution Revolution’

Governance of the North shouldn’t be reduced to technocratic questions or administering Osborne’s fiscal plans

Simon Lee’s blog is also a chapter in a new e-book ‘The Politics of the North: Governance, Territory and Identity in Northern England’, co-edited by SPERI’s deputy director Craig Berry and SPERI researcher Arianna Giovannini. Find out more and download the e-book here.

simonlee-100From the Venerable Bede in the eighth century to the pamphleteers of the English Civil Wars, through the Chartists, trades unionists, and Rochdale Pioneers of the nineteenth century, and the suffragettes of the early twentieth century, the people of the North of England have made a rich and often vital contribution to key developments in both England’s national and local political and institutional identities. They have also played a major role in the development of the party political expression of liberalism, conservatism, and socialism in England.

This rich tradition of political thought, engagement, active citizenship and frequent non-conformity, has often been galvanised by exclusion from important questions of political representation. Given this history, it is notable that both the ‘devolution revolution’ unleashed by George Osborne’s ‘Northern Powerhouse’, and the reaction to and implementation of it by political and business elites in the North of England, have manifested a shared process of popular democratic exclusion.

On the one hand, Osborne’s ‘devolution revolution’ has maintained the neo-liberal ‘developmental market’ tradition initiated by Margaret Thatcher and Sir Keith Joseph, with its preference for devolving power to markets and corporations, and individuals as entrepreneurs and consumers, rather than to directly elected institutions, and individuals as citizens.

On the other hand, technocratic champions of Northern civic renaissance from Lord Michael Heseltine to Lord Jim O’Neill of Gatley, now Commercial Secretary to the Treasury (but formerly chair of the Cities Growth Commission) and prime mover of the ‘Northern Powerhouse’, have preferred to devolve power to expert bodies and executive mayors, rather than elected parliaments, assemblies or councils. Their technocratic pragmatism has conceived of English devolution as a series of elite-to-elite negotiations or ‘deals’, bypassing the English demos.

Where mass public participation (especially among the young) in the devolution referendum of the 11 September 1997 and the independence referendum of the 18 September 2014 was celebrated on all sides as an expression of a civic national Scottish identity, in the case of the ‘devolution revolution’ for the North of England, the opportunity to forge new politico-institutional identities has been bypassed.

Less than a year after his 23 June 2014 personal political epiphany and discovery of the ‘Northern Powerhouse’, Osborne revisited Manchester on the 14 May 2015 to claim ‘We’ve put the Power into Northern Powerhouse’, and duly promised: ‘a revolution in the way we govern England’. Barely three years after nine out of ten referendums in English cities had rejected directly elected mayors, that ‘revolution’ would now take the form of a ‘one-size-fits-all’ elected, executive mayor model for English governance: ‘a single point of accountability: someone they elect, who takes the decisions and carries the can’.

Osborne’s contradictory further statement: ‘I will not impose this model on anyone. But nor will I settle for less’ laid bare the ‘deal or no deal’ political realities of governance by Treasury diktat, and the ambition of the Viceroy of England. There would be no alternative to his centralised prescription.

The efficient, functional management of English territory, itself divided into administrative regional economic spaces, and in accordance with the technocratic principles of agglomeration and scale, has subordinated vital questions of local political identity and democratic voice, participation, accountability and legitimacy which have tended to surround questions of governance elsewhere. As I have argued elsewhere, it has amounted to ‘sham devolution’.

Northerners are not indifferent to the potential advantages of devolution, but they have been kept in the dark by an elite-to-elite policy-making process. When the BBC commissioned a ComRes opinion poll on public awareness of the ‘Northern Powerhouse’, it found that no fewer than 44 per cent of those asked had never heard of the term, while a further 20 per cent had heard of, but knew nothing about it. However, the same poll also disclosed that no fewer than 82 per cent of those questioned agreed that local politicians in the North of England, rather than MPs at Westminster, should have control over services such as health and transport..

This latter finding reflected the trend in surveys of English public opinion from the polls which accompanied John Prescott’s aborted elected regional assemblies’ initiative between May 2002 and November 2004, to the recent The Future of England survey. Such polls have consistently demonstrated strong public support throughout England not only for devolution to English local government, but also the principle of ‘English votes for English laws’ (EvfEl), as well as a reform of the archaic Barnett formula for the territorial allocation of public expenditure.

In terms of its implications for governance, the ‘Northern Powerhouse’ has done nothing to dismantle the 1294 statutory duties imposed on English local government, identified in June 2011 by Greg Clark, the then Minister for Decentralisation. Nor have the ‘deals’ negotiated between the Treasury and local authorities in the North of England served to mitigate the fiscal constraints, political risks and policy challenges entailed in Osborne’s ‘devolution revolution’, whose magnitude only became apparent with the publication of the Spending Review in November 2015. This has detailed a further 24 per cent real terms cut in central government funding for English local government by 2020-21, including a phasing out of the redistributive Revenue Support Grant. Resource Departmental Expenditure Limits for English local government will have been cut by 56 per cent during a decade of austerity.

In substantive policy terms, Osborne’s ‘devolution revolution’ has meant the devolution of responsibility to current local civic and future mayoral leaders for shrinking the size of the state in Northern England. It constitutes nothing less than a revolution in the political economy of the public sphere in the North.

It is also important to reflect upon the nature of the ‘deals’ negotiated between the Treasury and local authority representatives in the North of England, when compared with ‘deals’ done by the Treasury with others elsewhere. On the 23 October 2015, the deal agreed between the Treasury and the North East Combined Authority Leadership Board included the commitment:

‘The deal would enable the Combined Authority to create an Investment Fund focused on supporting the North East to compete in international markets, worth up to £1.5 billion, with an initial allocation of revenue funding for capital financing of at least £30 million a year for 30 years. The incoming Mayor would also have the option, with business support, to raise up to a further £30 million a year through a business rate supplement’

It should be remembered that annual identifiable public expenditure for public services in 2013-14 in real terms (outturn) for the North East of England administrative region was £25,347 million (see Table 9.3, p118). Consequently, the cost to the Treasury of agreeing this ‘deal’ was a measly 0.1 per cent of total annual identifiable spending on public services.

This could scarcely be described as a revolution in the devolution of political or fiscal responsibility, especially when compared with the terms and scale of the Treasury’s ‘deal’ with Chinese and French largely state-owned corporations to build the Hinkley Point C nuclear power station. That ‘deal’ has provided £2 billion of guarantees to China General Nuclear Corporation and China General Nuclear Corporation. Furthermore, for a duration of 35 years, the Strike Price for energy generated by Hinkley Point C has been set at £89.50/MWh (or £92.50 if the final investment decision on Sizewell C is not taken), more than twice the existing wholesale electricity price, and fully indexed to the Consumer Price Index. Moreover, the Cameron government has confirmed ‘it is not continuing the ‘no public subsidy policy’ of the previous administration’. Thus, while the Treasury has been prepared to grant only a highly limited degree of financial or political autonomy to local government in the North of England, it has been prepared to make a far larger and longer term financial and political investment in a project involving foreign, largely state-owned corporations.

Questions concerning the government of England, and in particular the government of the North of England, should not be reduced to technocratic questions of the efficient and functional management and administration of territory. Nor should the government of England be reduced to a series of ‘deals’, drawn up in secret between Treasury officials and local civic elites, without the active participation and democratic legitimation by referendum of the citizens of the North.

With the passing of the 800th anniversary of the signing of Magna Carta, in lieu of authentic devolved government, and a democratic and political identity for the North of England, the most that George Osborne ‘devolution revolution’ has been able to offer the North’s local government elites is shared ownership of the responsibility for implementing the policy consequences of his fiscal Charter for Budget Responsibility, and the target of a £10.1 billion surplus on public sector net borrowing by the end of 2019-20.