Business has long been calling for a renewed focus on the domestic agenda; to address education and skills, connectivity, and living standards across the country. The Government must make the most of the golden opportunity that comes from a new parliament.
This means considering new ways of working to ensure that all parts of the country, including Yorkshire and the Humber, remain globally competitive in a post-Brexit world. Kickstarting devolution is one way of doing this.
Devolution in England has had a fairly slow start, and to many it remains a vague concept. Here in Yorkshire and the Humber we have seen limited progress. Devolution is based on the principle of giving local areas greater control over funding, and allowing those key decisions that will drive economic growth to be made closer to the places they affect. This in turn could support in unlocking regional growth, closing the productivity gap across Yorkshire and the Humber and across the country.
In our new report Powering Up Places, the CBI calls on government to provide a long-term plan for the future of devolution as a way of reigniting the regions, addressing the productivity puzzle, and closing the gap on inequality across the country. Despite various attempts to address the UK’s productivity puzzle, the UK lags behind international competitors. With productivity a key driver of wage growth and living standards, addressing this must be a priority, from Whitehall to town halls. Stagnating productivity across the UK and within Yorkshire and the Humber is estimated to cost private sector workers on average £5,000 in lost income every year.
Alongside this growing productivity gap, inequality in the UK has grown faster than EU comparisons. This is a business issue, impacting skills, infrastructure, and the health and wellbeing of the workforce. With the country facing growing levels of inequality, there is a need to improve local decision-making and develop new funding models to drive productivity growth locally.
Whilst devolution won’t be the silver bullet to addressing stagnating productivity and growing inequality across the country, it can be a useful tool that sits alongside other growth initiatives.
The CBI has set out three key steps for government in order to turbo-charge devolution in England:
Step One: Develop and publish a clear framework for devolution so that local leaders understand what powers government are willing to consider devolving
Step Two: Optimise Westminster and Whitehall for devolution including buy-in and support from Treasury who hold the purse strings
Step Three: Deliver new deals to cover 60 per cent of the English population and streamline local government by championing unitary authorities.
Business recognises that there are many opportunities to come from further devolution in England, including a raised international profile and clarity over the region’s strategic direction. Devolution provides the opportunity to improve collaboration with neighbouring regions, and across the country. In the case of a mayoral deal devolution has also provided a clear figurehead for the region, helping to attract inward investment, and providing a new point of contact for businesses seeking to operate in the region.
That is not to say there aren’t challenges. Businesses have cited concerns around the additional bureaucracy and complexity that devolution may bring. There is also the risk that a patchwork approach to devolution could exacerbate the exiting inequalities within and between regions.
In order to address some of these challenges, the recommendations we have put to government seek to remove politics from the decision-making process giving Yorkshire and the Humber the best chance of securing new devolution deals.
Similarly, they seek to simplify boundaries across the regions, avoiding overlaps of Local Enterprise Partnerships and Combined Authorities in the future and championing Unitary Authorities across the country.
With the Government now planning to bring forward a White Paper on English devolution, we hope that this report will kick-start the national conversation on devolution, with business at the heart. In doing so we believe Yorkshire and the Humber has the greatest chance of driving economic growth locally, closing its productivity gap, and addressing inequality.