There is broad consensus on devolution, but the next government will first need to address local government finances or put more responsibility on an already broken system.
Voters will go to the polls today to elect 10 metropolitan mayors in England's biggest devolution election to date. Following the election, there will be a total of 12 metropolitan mayors, including all of England's largest cities, up from just one a decade ago.We expect more mayors to be appointed in the coming years: 22 areas in England have devolution deals in place or are in the process of devolution and there is cross-party consensus on devolution, including plan Devolution under Labour’s shadow cabinet could finally see everyone in England have an elected mayor.
Decentralization is necessary and valuable to create more inclusive regional economies and bring decision-making closer to residents.Combined authorities including Greater Manchester, the West Midlands and North of Tyne have already included buses in their operations people control and Promote worker cooperatives and employee ownership.At NEF we have seen first-hand some of these great local initiatives and work with colleagues from the Center for Local Economic Strategies (CLES), UK Co-operatives and the Center for Thriving Places (CTP) as part of three pilot joint remit areas: Regenerating Our Regional Economies (RORE) Plan.
Devolution has the potential to create many benefits for cities and regions across the UK. But as one of the most concentrated developed economies, the UK is squandering this huge potential through a one-size-fits-all financing system that fails to meet local needs. It’s time for the central government to put its money where its mouth is.
“this crisis is result Years of chronic underfunding by central government have left local councils in dire straits.
The political fervor to bring power closer to the people has brought about a dramatic abatement of the crisis in local government, with one council after another effectively bankrupt.this crisis is result Years of chronic underfunding by central government have left local councils in dire straits.Mayor's funding and performance closely linked connected For local councils, the knock-on effects are already being seen. As local authorities and the coalition government share responsibilities in some sectors such as housing and transport, cuts in local authority spending will have a knock-on effect on the coalition government, whose budget is too small to make up the shortfall.In the case of the West Midlands, all consolidated authority budgets this year Is Birmingham City Council alone, one of the seven constituent members of the West Midlands Combined Authority, is seeking to sale of public assets To balance the books.as admit For mayors, the local government funding crisis is an immediate threat to devolution.
In October 2023, the Local Government Association estimated that the funding gap facing councils in England was £4 billion Just to maintain the service at its current level over the next two years.This is partly due to the rapidly rising costs faced by councils, including in areas such as temporary accommodation for homeless locals and housing for children in care. exceed inflation, and the growing demand for services in recent years. But this is a crisis that has been brewing for a long time. For 2024-25, the Council has been awarded Actual amount reduced by 24% than in 2010-11 to meet its core spending requirements (i.e. funds that the Council can spend of its choice). Increasingly, councils are being forced to divert funding from other services to maintain the most essential services, such as adult social care and homelessness prevention.Core budgets for some councils have been reduced halved Since 2010.
“There is no shortage of evidence that devolving power to local governments without providing them with more funding can lead to adverse consequences.
Even the newly devolved regions of England experienced net decrease Locally controlled spending has increased since 2009. There is no shortage of evidence that devolving power to local governments without providing them with more funding can lead to adverse consequences, Poor economic performance arrive higher mortality rateDuring the Covid-19 pandemic.
Since 2017, successive governments have promised an overhaul of local government funding but have never delivered. As a result, the way funding is allocated between different councils is not based on current needs. 20 years ago.despite all the talk Number'Over the past five years, the link between local needs and actual funding for councils has become increasingly weak due to a lack of proper annual assessment.The council budget is increasingly Reliance on council tax – one of the most regressive taxes in the UK, based on estimated home value 33 years ago. With the power of taxation and public spending largely concentrated within Westminster, Parliament is helpless in the face of central government's failure to fund it.
Against this backdrop, it is worrying that the two largest parties have trumpeted devolution without putting forward a credible plan to address the local government funding crisis. This government has put that pot aside and is only using extra money to deal with the council's £4 billion shortfall. £600m funding, most people are cared for by society.Labor Party local elections campaign documents Contains some sensible proposals, such as long-term funding solutions for combined authorities, but the proposals for local government finance are far removed from what councils need. England urgently needs an overhaul of how local and combined authorities are funded.
The success of devolution depends on providing local governments with the funding they need. Any future government that takes devolution seriously will need to face up to this fact.
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