If devolution is to succeed, combined authorities need fiscal autonomy - Sir Andy Street
The argument for devolution has, by now, largely been won. The Mayoral Combined Authorities (MCAs) in the West Midlands and Greater Manchester now sit amongst the most successful and visible examples of this.
However, as the Starmer Government seeks to expand the model further across the country and into communities with very different geographic footprints to the initial trailblazers, it creates a challenge: are MCAs set up for success, or are they simply treading water?
To understand that challenge, it is worth recalling why the mayoral model emerged in the first place. When the Conservative-Liberal Democrat Coalition Government took office in 2010, it inherited one of the most fiscally centralised countries in the world. Over 95 per cent of tax revenue in the United Kingdom was, and still is, held by central government, which remains heavily concentrated in London.
A pivotal moment came in May 2015, when the Government announced the expansion of the Mayoral Combined Authorities, following the first devolution deal with Greater Manchester in November 2014.
In the years since, ten MCAs and one mayoral combined county authority have been established. Following the first wave of mayoral elections in 2017, it was clear that there was a strong desire across government to provide the resources and the funding to make devolution a success.
The increasing evidence of the success of the mayoral experiment prompted Greater Manchester and the West Midlands to be designated as ‘trailblazers’ in 2022 as an essential part of the then Conservative Government’s ‘Levelling Up’ agenda.
This ‘trailblazer’ designation referred to deals between central government and those two regions that gave new autonomy and responsibility to mayors.
Yet despite the welcome progress since 2010, there remains a crucial missing component. The ‘trailblazer’ deals never succeeded in winning full fiscal devolution, which is essential to the political and economic autonomy upon which this model of devolution relies.
This brings us back to the central challenge posed at the outset, namely, whether plans for the next phase of devolution are being set up for success. There are two ways to measure this. The first is whether the new mayoralties are being set up with sufficient powers and resources to make a real difference. On the face of it, there is much to be welcomed.
There are, however, two serious problems with the current Government’s approach. First, there has been no meaningful increase in the funding allocated to those pots than had previously existed overall in the separate funding streams.
The second problem is that the current Government did not advance the principle of fiscal devolution in its plans, so the single pot it has proposed will continue to be a pot given by London to devolved authorities. As such, the UK looks set to continue living up to its reputation as one of the most fiscally centralised countries, at least for the foreseeable future.
What must come next is genuine full fiscal devolution.
Sir Andy Street CBE is the former Mayor of the West Midlands and is now co-chair of Prosper UK. This is an extract of an essay from a new book, ‘Liberalism liberated,’ published by Bright Blue.