Scottish independence debate can pave way for more devolution in England

Much of the debate about devolution rightly focuses on the prospect of 5.2 million Scots waving goodbye to the UK in a couple of weeks. In the background, away from the fiery spray of words between Edinburgh and London is a debate about how the 53 million people in England could benefit from a bit of devolution themselves.

There are plenty of ideas floating around about how power and influence can be drawn away from London to the regions, and in particular, the bigger cities that create jobs. Birkenhead MP Frank Field argues that moving parliament to Manchester would make a good start. Michael Heseltine, the former Tory minister, presented his views in 2012, calling for a major restructuring of local government and the pooling of £58bn of Whitehall cash for local regeneration projects.

Arguably, English devolution got underway in April when parliament gave its blessing to a north-east combined authority to pool resources from local councils covering Durham, Gateshead, Newcastle upon Tyne, North Tyneside, Northumberland, South Tyneside and Sunderland. Its creation immediately followed the birth of council clubs covering West Yorkshire, Merseyside and Sheffield and Greater Manchester in 2011.

All these bodies are children of the 2011 Localism Act, which Manchester was almost panting for, but other authorities found more difficult to negotiate given local hostilities.

Each new authority hopes to pull together the rag-bag of regeneration agencies in their area to greater effect, primarily to shake off old allegiances to low-margin, outmoded manufacturing and develop service-oriented economies to rival London.

Yet at the very moment devolution is supposed to take off, a further five years of cuts to local authority spending is looming into view. The big northern councils can expect to lose 20% of their budgets, on top of what has been since 2011 an already draconian budget settlement.

Liverpool, home to many of the most-deprived areas in the country, will have lost 27% of its budget by 2016. Having a another fifth top-sliced from its depleted resources by 2019 could undermine the whole project.

So devolution cannot simply be about taking on more powers to tax and spend, but must involve a total reinvention of what councils are for. Inside the Treasury, reforms mean them spending as much time and money on promoting entrepreneurial activity as on their core welfare purpose.

The problem for Whitehall, which is already a reluctant partner in this plan, is that MPs in the north, Midlands and west of England (with the exception of parliament's communities and local government committee) show little appetite for devolution.

Maybe the sense that Tory ministers see it as a way to make Labour authorities carry the can for cuts during a second term has influenced their view.

Lobbying by some of the big cities for very different ways of managing devolution has also muddied the waters.

Sir Howard Bernstein, chief executive of Manchester city council, is known for his abilities as a fixer. A string of audacious regeneration projects, including the Commonwealth Games and subsequent investment in the east of the city by Manchester City FC's Abu Dhabi owners, are among his victories. Bernstein is championing HS2 and a trans-Pennine HS3 to provide the kind of infrastructure that can compete with the south-east. He was ready with a blueprint for Greater Manchester before the ink was dry on the Localism Act.

Away from the big statement projects, he wants to move quickly and that means rejecting a Heseltine-like overhaul of quango and local government structures. The combined authority is enough of a structural change for him.

"The future of the authority is as a partnership. Some people say to me, 'What you want is a mayoral model to drive things through', but it is not about that. It is about co-operation and joined-up implementation based on integrated methods," he says.

Bernstein wants Whitehall departments and national agencies such as the Skills Funding Council (SFC), which has £4bn a year to spend, to adapt how it works to cater for the idiosyncrasies of the north-west. In a world of empires, he considers his big enough and the SFC can keep its staff and cash.

This approach stands in contrast to, the West Midland region, (which has failed to combine forces). Birmingham city council leader Sir Albert Bore backs a combined authority but has been undone by local rivalries and a string of problems, ranging from the Trojan Horse affair in Birmingham schools to the city's massive financial liabilities.

Bore relies on the Greater Birmingham and Solihull local enterprise partnership (LEP). There are 39 LEPs, which form the basis of the current government's regeneration strategy following the demise of regional development agencies. Manchester's is fully integrated into the combined authority, but the Birmingham and Solihull LEP, as its name implies, excludes Coventry, Wolverhampton, and the surrounding Black Country.

Mark Rogers, chief executive of Birmingham city council says the structure is less important than gaining the trust of ministers, who worry whether money is being spent effectively.

"There should be no apron strings. And we shouldn't need to report back about every little thing and have our homework marked," he says.

Rogers wants Whitehall experts to bring themselves and their budgets to his town hall and follow his orders, free from centralised control. It is a grab for people and money that Bernstein appears to judge will antagonise and delay devolution as everyone fights their corner.

Sir Edward Lister, Boris Johnson's chief of staff, takes a different tack again.

He doesn't need to steal any Whitehall or quango staff, just a bigger slice of taxpayer cash and the powers to override nimbyism from London boroughs. Whereas Bernstein is keen to talk about hard-to-reach, low-income families and how they can be helped by regeneration schemes, Lister argues that strong leadership is key.

"Having a very powerful mayor with a clear remit, who can call in the councils, the utilities, the Waterways board, is very important. We have to push things through, but the boroughs know that," he says.

Lister denies consultation is a forgotten word, but his conversation is littered with references to driving through one scheme after another, much of it in the more deprived east London, even though the biggest scheme is in Battersea – now being criticised as an enclave for the super rich.

"These discordant voices reveal a big problem and a potential solution," says Alan Trench, an academic and devolution expert at University College London. "It shows a top-down approach based on a one-size fits all method is not going to get off the starting blocks."

Trench is sceptical that the combined authorities will provide a long-term solution without a tighter governance structure tying what are in some cases very disparate councils together, although he believes a framework that can cope with the demands of Birmingham, Manchester and London is possible.

A focus on the big cities also leaves out areas of increasing political significance. The entire east coast of England is in quiet rebellion and many of the agencies – the LEPs, enterprise zones and in Kent's case "prosperity boards" – find themselves victim to in-fighting between district, unitary and county council officers, sometimes ending up in court.

The task then is for the political parties to stop the drift. There is little appetite for a Heseltine-inspired constitutional shake-up, but Trench and others must be right when they argue for government to put in place more robust structures. Inter-city collaborations are a good start, but Britain needs so much more.

Powered by article was written by Phillip Inman, economics correspondent, for on Sunday 7th September 2014 15.54 Europe/London © Guardian News and Media Limited 2010