Devolution, often lauded as a crucial step towards rebalancing the UK economy, carries the risk of widening the gap between thriving and struggling regions, according to economic analyst Sanjay Raja. While initiatives like Greater Manchester's Bee Network demonstrate the potential for bottom-up, place-based policies to stimulate growth, Raja cautions against viewing devolution as a universal cure for regional disparities.
The UK has experimented with various place-based policies over the past decade, including City Deals, Growth Deals, Enterprise Zones, and the more recent levelling-up agenda. However, the results of these initiatives have been mixed, suggesting that good intentions alone are insufficient. Raja argues that past devolution efforts have often focused on specific projects rather than establishing the fundamental conditions necessary for sustained long-term growth.
For devolution to succeed, several key ingredients are essential. Firstly, building institutional capacity within local authorities is paramount. Powers are only effective if the organisations wielding them possess the capability to deliver. This would necessitate a substantial investment from central government, potentially involving paid commissioners, experts, and secondments from Whitehall to bolster local expertise. Additionally, local governments should leverage the knowledge of universities and academics to strengthen regional strategies and foster a network of local stakeholders.
Secondly, developing political capital among regional institutions is crucial. Mayors and combined authorities rely on collaboration and trust between council leaders to make funding and major decisions. Fragmentation can lead to slower progress, highlighting the need for leaders to prioritise 'place before politics'. This political capital is built through repeated successful collaboration and requires buy-in from both households and businesses within the electorate.
Finally, Raja advocates for staged fiscal autonomy. Currently, the Treasury controls most core funding, with local authorities largely spending allocated and ring-fenced money rather than funds they raise themselves. This often leads to regions competing for Treasury funding instead of addressing local needs. A gradual increase in fiscal autonomy would empower regions to develop tailored growth strategies and create incentives for local economic development, while ensuring value for taxpayer money. Raja concludes that without an honest acknowledgement of these challenges and a sequential, rather than simultaneous, approach to implementation, devolution risks creating more regional 'winners and losers'.