Devolution Matters

The economy of the north, and particularly that of the northern cities, has seen greater national attention over the past few months than in recent times. Following on from the creation of the country’s first Combined Authority, the Localism Act, the development of City Deals and greater devolution culminating in the creation of a “metro mayor” for Greater Manchester and the announcement of the Northern Powerhouse, focus is now firmly on the growth of the regions and especially that of our won city and its near-neighbours.

The announcement of a mayor for Greater Manchester has been met with a variety of public and business opinion, particularly around its imposition without a local referendum but, for good or ill, the future governance landscape for Greater Manchester is now known. Our attention now turns, therefore, from one of putting the case for a variety of different governance models to one of supporting the implementation of the metro mayor and ensuring that the voice of business is clearly heard within the new structure.

For those of you who remain confused by the announcements, here is an overview of the current situation and the government’s proposals, agreed in the Greater Manchester Agreement, signed by George Osborne and the Greater Manchester Combined Authority (GMCA).

The devolution agreement outlines the powers and budgets that central government will pass to Greater Manchester and the reforms and measures that Greater Manchester must implement, most important of which is a reformed governance system. This is because central government believes it cannot give substantially increased powers to local authorities (and in particular, a combined authority) without strengthening the democratic mandate of that body.

When formed in April 2011, the GMCA was given powers over economic development and regeneration, transport, housing and planning, education and skills, and the environment. These powers were increased in the City Deal of March 2012 and included a £30m per year earn-back fund for infrastructure projects, the creation of a local investment framework, a housing investment board, an apprenticeship and skills hub and a low carbon hub. The GMCA governance is delivered by each of the 10 local authorities appointing an elected official (in most cases this is the leader or mayor of the local authority) with each having equal voting rights. Most decisions require a simple majority, though some require seven votes in favour.

The new proposals (announced in November 2014) expect to create a new position of a directly-elected mayor for the strategic governance of the whole city-region, i.e. the area covered by all 10 local authorities in exchange for additional powers and budgets. The powers that the new post-holder would have will be similar to those currently held by the Mayor of London (though are greater in some areas and less in others), though the governance model is very different from that of London. Whereas the Mayor of London sits alongside a directly-elected assembly (whose role is to scrutinise the work of the Mayor’s office) but separate to the existing structures of London boroughs (local authorities), in Greater Manchester the mayor will become the eleventh member of the Combined Authority, with scrutiny arrangements yet to be confirmed. How the desired concept of a “first amongst equals” will operate is not yet clear, as a directly-elected mandate for the mayor may, in practice, turn out to be more powerful than that of the other appointed members of the GMCA.

In exchange for GMCA agreeing to the new post of a mayor for Greater Manchester, powers and budgets will be devolved from central government either to the GMCA or to the mayor directly. In summary, the Combined Authority would receive business support budgets (including Growth Accelerator, Manufacturing Advice Service and UKTI Export Advice; control of the Apprenticeship Grant for Employers with the opportunity to reshape further education provision; the opportunity to joint-commission the Work Programme; control of the Working Well pilot; and the opportunity to work to integrate health and social care budgets.

The new position of Mayor of Greater Manchester would gain responsibility for a devolved transport budget; responsibility for franchised bus services, integrated smart ticketing and local rail stations; a new £300m Housing Investment Fund; a reformed earn-back deal; and powers over strategic planning, including a statutory spatial framework for the city region (though this would require a unanimous vote of the eleven members of the GMCA). The mayor would become the chair of the GMCA and would also assume the role and powers currently held by the GM Police and Crime Commissioner whose role would then be abolished. The mayor would be free to exercise these powers autonomously, though within the scrutiny arrangements, though the GMCA could, by a two-thirds majority, reject any of the mayor’s proposals which must all be submitted to the GMCA.

It is expected that the new position of Mayor of Greater Manchester will begin in 2017 as primary legislation must be brought before Parliament, and this is extremely unlikely to happen before the general election. In the meantime, the government will move legislation to allow the creation of an eleventh member of the GMCA who will be appointed the interim mayor, a position that will shortly be advertised with an expectation that the full-time, paid position will be filled by 26 June by a person with “… a strong track record at a senior level of local government, [who] must have led 'transformational change' in economic development and public service reform, and have experience negotiating with ministers and national business leaders, among other strict criteria”. During this interim period, the GMCA will assume the powers over business support, skills and health and social care immediately, as well as the powers over the housing investment fund and the reformed earn-back deal that will pass to the mayor after their election. All other powers will be withheld until the directly-elected mayor is in place.

The Chamber of Commerce is working closely with the GMCA to ensure that the views of business are considered throughout this process and the Chamber will keep members informed of progress through its usual channels.