speri.comment: the political economy blog

Devolution and austerity needs to be debated, challenged, but not ignored

Words are important for framing policy problems and also finding solutions.  We need more devolution dialogues

Martin Jones, Deputy Vice Chancellor, Staffordshire University, and David Etherington, Principal Researcher, CEEDR, Middlesex University

We would like to thank Mike Emmerich, founder director of Metro Dynamics, for his blog reply, which engages with our research on devolution and city-region building. Words are important for framing policy problems and also articulating forms of state intervention with proposed solutions.

What do we mean by austerity? It is a policy intervention aimed to reduce the budget deficit but it is integral to a neoliberal (and long term strategy) to roll back the (qualitative) state and give primacy to the market, tax cuts and reduction in social expenditure. It is underpinned by an ideology and narrative that the public sector, rather than the banks, are a cause of the crisis.

How does devolution involve devolving austerity, a point which Mike Emmerich takes issue with?

Devolution ‘growth’ strategies assume austerity politics in terms of their emphasis on the role of the private sector being key in terms of policy delivery (contracting out, outsourcing etc.) and where the contribution of the public sector to achieving economic growth is marginalised. The Greater Manchester Public Sector Reform process (GMPSR), for instance, is about renewing public services based on responding to ‘reducing levels of public spending’. There may be improvements and innovations arising from this process but the GMPSR is a strategy of managing the cuts imposed by the centre. Similarly the Area Based Reviews (ABRs) relating to the Further Education Sector, which devolved authorities have to manage involve a rationalisation based on major cuts in funding. Government guidance on the review process, included in a parliamentary briefing on Post-16 Area Based Reviews states that the ABRs need to be undertaken ‘in a way which also addresses the significant financial pressures on institutions including a declining 16-19 population and the need to maintain very tight fiscal discipline in order to tackle the deficit.’

Unsurprisingly Jim McMahon, MP for Oldham West and Royston, has called for Greater Manchester Area Based Review to be scrapped because ‘the government has some gall promoting strong and financially stable colleges, whilst colleges are hit with a barrage of cuts and poorly thought through national policy changes.’ As the IPPR state in relation to health, devolution is also more about delegation rather than actual real local control with the commensurate resources to meet needs of GM. We would argue the financial deals associated with devolution bear no relation to the deeply embedded structural problems of the de industrialised cities. This point is also raised by the NAO’s report Funding and Structures of Local Growth, which highlights the funding lost by the transitions from Regional Development Agencies and Local Enterprise Partnerships and deal-making public policy.

Mike is absolutely correct that devolving austerity can apply throughout the country and in areas not directly linked to devo-deal making. We call though for a full-picture analysis of what is happening in economic and social policy across the UK and England particularly. Researchers analysing the cuts to local government in Liverpool and Bristol describe austerity as rewriting national and local budgets ‘to justify the reconfiguration of the relationship between central and local governments, and between the state and the citizen…The depth, breadth and nature of the ‘great risk shift’, as well as the impact of the crisis and austerity and responses to them, are localised and translated unevenly between and within cities, and across different household types.’

Devolution also involves a risk-shift but in a pro-active and more interventionist way in which funding promises by the Northern Powerhouse is conditional on the collaboration and cooperation of city region ‘stakeholders.’ We also refer to this as ‘de-politicisation’ in which the devolution process closes off any space and opportunity to question frameworks and narratives of austerity.  As we emphasise in our reports on Manchester and Sheffield the devolution process takes little account on both the actual as well as potential impacts of billions of pounds of local government and welfare cuts but also how these cuts and austerity will impact on and undermine the growth model emanating from the devolution of economic governance. There is little that the growth strategies say about how they will benefit disadvantaged groups or how they will mitigate the impacts of welfare cuts. The scale of the cuts are massive and even catastrophic but are being assimilated within the devolution process. This reality needs to be debated, challenged, and not ignored.

We welcome Mike’s comments about politics being the ‘art of the possible’. We have devoted pages of recommendations in our policy reports on Manchester and Sheffield, arguing for a different type of devolution deal. Make no mistake, we are pro-devolution; we favour a model where growth strategies are linked to poverty reduction, a different model of welfare, social dialogue, promoting employment rights and a more transparent analysis of the impact of austerity. In our research, these are the subject of analysis and debate within Sheffield and Manchester by trade unions, welfare organisation and civil society organisations as well as recommendations by the Inclusive Growth Analysis unit. In fact one of our recommendations relates to a public discussion on austerity and actions around the impact of welfare reforms within the devolved authorities. There are positive indications of this with Andy Burnham currently bringing together a wide range of organisations within Greater Manchester to call for a halt in the rollout of Universal Credit. We need more of these dialogues.

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