Westminster Hall debate, Future of the UK constitution and devolution, 8 March 2023

• The LGA has long called for genuine devolution to local areas. We believe that greater fiscal freedom, the power to raise more money locally and have greater control over how this money is spent in local areas is a crucial part of this process.
• Local leaders are well placed to deliver the best outcomes for local communities. They are also best placed to align the work of government departments and agencies with the assets and opportunities of different places.
• Councillors and their councils have the democratic mandate, expertise and local insights to change our communities for the better. The LGA regularly undertakes polling to look at residents’ views on their local council and area. The latest survey published last month (October 2022) shows that trust in local councillors remains high; 68 per cent of respondents selected ‘local councillors’ when asked who they most trust to make decisions about local service provision.
• The Levelling Up and Regeneration Bill acts upon long running asks from councils and the LGA for further devolution in England. We are pleased that the Government has proposed to speed up the process and make good on its commitment to offer all of England the opportunity to benefit from a devolution deal by 2030. It is also important that councils of all sizes are engaged in the devolution process.
• We want to work with the Government to ensure that the metrics used to produce an annual report on the Levelling Up missions are fully consulted on and reflect the diverse needs and aspirations of communities across the country.
• Research commissioned by the LGA highlights that the UK is an international outlier and one of the most fiscally centralised countries in the developed world. Countries with a greater level of devolution experience lower levels of regional inequality. Given the tools and resources to tailor spending to local needs and opportunities councils will deliver better outcomes than a centralised system characterised by micro-management and duplication. Crucially, place-based approaches such as the Supporting Families programme, demonstrate the value of early intervention and preventative activity.
• Councils believe that levelling up should be locally led by evidence of where crucial investment needs to go to, not based on costly competitive bids between areas.
• Where devolution has taken place in England, there is already evidence that it has benefitted local communities. For example, the recently published Greater Manchester Population Health Plan update shows significant health benefits for local residents following the devolution of health and social care. This includes a substantial increase in school readiness and a smoking prevalence rate falling twice as fast as the national average.

Devolution to local leaders, with real power genuinely devolved and backed by sustainable funding, is the most efficient and effective way to address the current fiscal crisis and secure a path to long-term prosperity. Devolution of powers and money to our local leaders should not require reorganisation. As well as continuing to press ahead with new devolution deals across the country, we are calling on the Government to pilot a new approach to public service investment, building on the experience of whole-place community budgets, troubled families and total place and asking areas to come forward with radical proposals to bring together budgets and public services under the leadership of local government.

For example, the current skills and employment system is fragmented and unable to adequately address current labour market and productivity challenges. Recent analysis by the LGA reveals that across England, £20 billion is spent on at least 49 nationally contracted or delivered employment and skills related schemes or services, managed by nine Whitehall departments and agencies, and delivered by multiple providers and over different geographies.

Giving democratically elected local leaders the power to join up careers’ advice and guidance, employment, skills, apprenticeships, business support services and outreach in the community has the potential to save money and improve outcomes. A cost-benefit analysis based on a medium sized authority estimated that the LGA’s Work Local Proposal would improve employment and skills outcomes by about 15 per cent, meaning an extra 2,260 people improving their skills each year and an extra 1,650 people moving into work. This would boost the local economy by £35 million per year and save the taxpayer an extra £25 million per year.

In addition, evidence from the Greater Manchester Population Health Plan update shows significant health benefits for local residents following the devolution of health and social care. This includes a substantial increase in school readiness and a smoking prevalence rate falling twice as fast as the national average.

The Levelling Up and Regeneration Bill acts upon long running asks from councils and the LGA for further devolution in England. We are pleased that the Government has proposed to speed up the process and make good on its commitment to offer all of England the opportunity to benefit from a devolution deal by 2030. It is also important that councils of all sizes are engaged in the devolution process.

We want to work with the Government to ensure that the metrics used to produce an annual report on the Levelling Up missions are fully consulted on and reflect the diverse needs and aspirations of communities across the country.

Local government finances have been under sustained pressure, even before the current COVID-19 pandemic. Given the intrinsic role they will play in the levelling up agenda, this needs to be addressed.

Councils want to work with Government on a long-term plan to fund local services and a turbocharging of wider devolution where local leaders have sustainable funding and greater freedom to take decisions on how to provide vital services in their communities.

The Final Local Government Finance Settlement 2023/24 was the fifth one-year settlement in a row for councils which continues to hamper financial planning and their financial sustainability. Only with adequate long-term resources, certainty and freedoms, can councils deliver world-class local services for our communities, tackle the climate emergency, and level up all parts of the country.

The Government’s Levelling up funding for councils has been welcome and will give those councils who have been successful the ability to forge ahead with ambitious plans to transform their communities and improve the lives of residents.

However, levelling up should be locally led by evidence of where crucial investment needs to go to, not based on costly competitive bids between areas. This is not a sustainable approach to economic development or public service delivery, as it falls short of the challenge set out by the Levelling Up White Paper and the ambitions of local leaders for their residents and places.

The Government must boost local productivity and save money, through building on the White Paper’s commitment to streamline the long list of individual local growth funds.

Alongside the introduction of greater funding certainty there should also be a move away from piecemeal pots of funding allocated through wasteful competitive bidding processes. LGA research estimated that the average cost to councils in pursuing each competitive grant was in the region of £30,000, costing each local authority roughly £2.25 million a year chasing down various pots of money across Whitehall.

Government should instead adopt a place-based approach in which funding is aligned with local needs and opportunities.

Local government must be trusted with the powers and funding to deliver for their communities.

The UK is one of the most centralised democracies in the world. This has contributed to some of the highest levels of regional inequality and stood in the way of local leaders striving to do their best for people and places. The Government’s Levelling Up White Paper was a radical step towards addressing these challenges, but progress has been limited due to the significant control Whitehall still has over local government.

Councils are calling on the Government to:

• Give them the tools and resources to tailor spending to local needs and opportunities to councils. This will deliver better outcomes than a centralised system characterised by micro-management and duplication. Crucially, place-based approaches such as the Supporting Families programme, demonstrate the value of early intervention and preventative activity.
• In the longer term, the Government should pilot a new approach to public service investment, by asking areas to come forward with radical proposals to bring together budgets and public services under the leadership of local government, without the requirement to reorganise.
• In addition, while the level of flexibility in the delegation model of the UKSPF enables councils to develop imaginative approaches, the short time frames to develop investment plans and the timescales of funding of 1-3 years prevents real innovation. If Government provided longer term funding, this would provide space for imaginative schemes.
• In the immediate term, the Government could help councils bring forward existing investment programmes by:
  • expediting allocations for all current grant schemes (Housing Investment Fund, Levelling Up Fund, Local Transport Schemes)
  • relaxing the conditions around their expenditure and, within the context of high and rising inflation
  • extend deadlines to support delivery where completion timescales are now under pressure.

We welcome that the Government recognised a greater role for local government as democratically elected leaders of place, as part of the UK Shared Prosperity Fund (UKSPF). We also welcome the move towards the allocation of funding to places, instead of competition, and the intention to offer local flexibility on how the funding is spent, removing funding silos. The fund is an opportunity to boost productivity and enhance employment opportunities, tackle inequalities and deliver real change to local communities, places and businesses to support the levelling up agenda.

However, the UKSPF does not yet provide the quantum or longevity of the European Structural Investment Funds (ESIF) programme. The Government needs to confirm the funding allocations beyond year three, as well as flexibilities between in year spending caused by the delay in approving UKSPF local investment plans. This will provide funding stability that will enable local areas to leverage private funding. Longer term funding will also enable lead authorities to develop new local partnerships that were unable to be made in the shirt timeframes available to develop investment plans.

Councils and combined authorities are demonstrating their place leadership by being the lead authorities for the replacement of ESIF funding (the UKSPF) and other growth funding. it is essential that R&D funding can be easily aligned so universities, research institutes and local government can collaborate in the design and delivery of R&D programmes. With better alignment, councils and combined authorities could help develop infrastructure and skills element that can support R&D programmes providing the benefit to local communities. In order to achieve this, longer term funding and building local capacity is needed. The importance of collaboration between universities, local government and businesses has been evidenced in the successful Leading Places programme lead by the LGA, and the LGA supports the commitment to continuing to invest in local collaboration through the Strength in Places Fund.

The LGA supports the principle of subsidiarity - that decisions should be made at the most local level, as close as possible to the communities they represent. We have been making the case for more local responsibility not just because our members believe that decisions are best taken as close as possible to the people they affect, but because the evidence shows that devolution leads to better outcomes. This was particularly clear through the pandemic when councils and combined authorities worked at pace to support communities and businesses and deliver in partnership with national government. Where councils and combined authorities have taken on devolved powers, they have begun to demonstrate the possibilities of devolution.

The LGA would welcome efforts by the Government to formalise protections for local self-government, including in law where possible. This would also help the UK to comply with both Article 2 and Article 11 of the Charter of Local Self Governance. At present, the UK is not currently compliant with the Article which states that "The principle of local self-government shall be recognised in domestic legislation, and where practicable in the constitution." This is because the UK has an uncodified constitution, so it is not currently possible for the principle of local self-government to be recognised in this way. The LGA has previously called for the inclusion of the Charter in domestic legislation, as the Scottish Parliament attempted to do, before being overruled by the Supreme Court following a referral by the UK Government. The UK is also not fully compliant with Article 9 of the Charter, as local authorities are limited in their ability to raise and utilise financial resources freely, with central government having significant oversight in how local authorities are funded and how these taxes are spent.

Iredia Oboh, Public Affairs and Communications Manager

Email: [email protected]