Comment Blog 18 March, 2021

Why We Need 'Smart Devolution’

This piece was written for Reform's blog by Deborah Cadman OBE, Chief Executive of the West Midland's Combined Authority and Reform Advisory Board member.

In Reform’s Resilient State essay collection, I reflected on my experiences as a local government leader during the Covid-19 crisis. Whitehall had reverted to type, and gripped departmental levers to try and tackle complex problems rooted in local places. I argued that ‘the centre cannot hold’ and that we needed to think differently.

In a paper published today, Smart Devolution to Level Up, I’ve set out what I think a different approach might look like. As a member of the Commission for Smart Government, I’ve been focussing on devolution to ensure that new ways of working with local and regional government are at the heart of our proposals for reform. The Commission also provides an opportunity to explore the relationship between devolution and other key aspects of good government, including project management, talent and competence, and the use of technology.

The discussion paper argues that devolution is not a threat for Whitehall, but an opportunity. By ceding power to cities and regions, the Government can increase its capacity to deliver on key national agendas like levelling up and reaching net zero.

The scale of the levelling up challenge should not be underestimated, or be addressed with solutions focussed on physical infrastructure investment. In the West Midlands, our immediate future will be characterised by record levels of unemployment, exacerbated health inequalities both between ethnic groups and across our geography, and the impact of structural inequalities on our communities. These challenges cannot – and should not - be addressed entirely from the centre.

In the discussion paper, we set out three key limits to government’s ability to deliver under the current balance of power. Firstly, administrative overload caused by departments maintaining scopes out of step with other comparable countries. By confusing control with agency, Whitehall does too much and achieves too little.

Secondly, the overlooking of crucial innovations and experiments at a local level which can translate abstract national agendas into results on the ground.

Thirdly, the lack of trust in government institutions when they are too distant, ignoring the fact that faith in the state will be key to drive the behaviour change needed for the net zero transition.

Yet in practice the devolution agenda is stalling, and we now find ourselves with a half-baked solution: the devolution genie is out of the bottle following reforms since 2015, but new institutions give regional leaders platforms without real powers. This approach has also bled into the Government’s plans for economic growth, with national competitions and funding pots forming the centrepiece of industrial strategy, often superseding funds that were previously held locally or regionally.

One of the key barriers to progress on devolution is the incentive structure within Whitehall. Doubts about the competence of local and regional government trap officials and Ministers in a self-fulfilling prophecy where capacity isn’t developed. In attempting to maintain ‘grip’, departments engage in micromanagement of operations where a focus on data and accountability would be more effective. And Government reinforces a system where all responsibility rises to the top – helpful when things go well, difficult when they don’t.

Achieving ‘smart’ devolution cannot happen all at once. The Devolution White Paper will need to set out a long-term vision for structures, resources, powers, and accountability, underpinned by spending decisions to be taken later this year. Yet there are some practical initial steps that Government can take now – in both its Ten Point Plan to reach net zero and the recently published Plan for Growth.

On reaching net zero, we argue that regional carbon budgets and carbon reduction plans agreed between metro-mayors and the government could create a new framework for further devolved powers and resources. New accountability models could be trialled to support delivery, such as metro-mayors reporting directly to Parliament and answering to regional versions of a Public Accounts Committee made up of councillors, MPs, and other relevant groups.

Progress could also be accelerated on specific policy challenges, including through the devolution of electric vehicle funds to build intracity charging spines or devolution of energy tariffs to accelerate deep retrofit.

On realising the ‘Plan for Growth’, there is international evidence that strong governance in city-regions is key to sustainable economic development, which means we need to focus on fiscal devolution and improvements in cross-institutional working. Devolved powers against the three pillars in the Plan for Growth of infrastructure, skills, and innovation can also accelerate progress – including the reforms to R&D spending previously advocated by Nesta and Onward.

This phased transition to empowered localities and regions focussed on shared national agendas is the ‘smart devolution’ we advocate. In shifting power and responsibility down to regional and local government, Whitehall can focus on a core set of strategic activities.

By creating systems that have a greater capacity for experimentation and learning, we can support and identify new innovations to improve our society and economy.

And through empowering local leaders, we can build a system where citizens have greater faith in government and become partners in reaching shared goals.