Devolution revolution — the Adonis-Heseltine consensus on city regions not England

In the north, the UK is stirring. The locals are fed up with Westminster control. The cry is for more powers, more freedom, more independence. The place? Manchester, rather or perhaps aswell as Scotland… and this week’s historic decisions will reverberate here too. The “Reunited Kingdom” will never be the same… powers will flow from Westminster to Scotland and other nations and regions want the same too. But it’s not just Wales and Northern Ireland, but city regions like Manchester. So Forget Devo — max. What about Devo-Manc?

In what was derelict east Manchester: an example of what can be done already… new housing, schools, and sports facilities, building on some government spending, but now investment from the wealthiest middle eastern oil funds. They get to add their name, their brand, to council-owned stadiums and tram stops. But the Devo Manc report by Respublica, out this week, says the prize is much bigger. The offer to Westminster and the rest of the country from the city’s leaders is stark: Let us, eventually, pay our own way instead of spending nearly £5 billion in taxes raised elsewhere. Just free us to make our own spending decisions and boost our economy. The report details a myriad of funding agencies and streams, thousands of permutations for public money to be spent in this conurbation of 2.7 million people. All of I — from health to education, from benefits, to the work programme, from crime, to problem families, to transport and housing – the whole lot should be spent locally.

The theory is that at a local level, the money could be much better deployed in innovative, integrated public services. Better spending, not more spending. For example, helping long term disabled jobless, with a combination of work support programmes and the local health service. Sir Richard Leese, the Labour council leader, told me: “Cities like Manchester and Glasgow and Edinburgh are suffering from excessive centralisation. In our case from Westminster, in their’s from Holyrood. It’s not a good use of money and it is not achieving the growth we are capable, and it is not rebalancing the economy. The Scottish referendum is about your choice of jailer. Our cities, and even more remote areas need to be set free from the shackles. The size of our economy is bigger than some nations. It’s completely unacceptable that we should have less powers than Wales”. I put it to him that there is no way that the rest of the UK could contemplate handing over the purse strings for £22bn of public spending in Manchester, when the area only raises £17bn in taxes. A deficit partly filled by fiscal transfers from the south of England. “We don’t want people in London and the South East to continue paying taxes that come to Greater Manchester. We want to eliminate that position. We cant do it overnight, it will take time. But Im convinced that the only way we are going to do that is by us having far greater control of public sector spend in Greater Manchester. To the people of London and the South East: If you want to stop paying taxes to help us, give us the freedom to do something about it”.

A look at the fascinating Treasury tables that compare public spending in different regions and nations of the UK is rather revealing, Scotland and Wales already have freedoms over their spending priorities. In the north west of England £140 per head is spent on housing- less than half of that in Scotland [at £307], and much less than Wales [£224]. Likewise the same pattern with transport: the north west at £265 per head. Wales at £365 per head. And Scotland at £539 per head, some of which is of course to be expected given Scotland’s geography. But what about spend on enterprise and economic development: it is an even starker difference. £59 spent per north westerner, a third of the level in Scotland (at £185), and half of that in Wales at £120.

At a booming Mancunian digital tech company you can begin to see what that looks like in practical terms. Tom’s social media apprenticeship is supported by local council funding. Central government apprenticeship funding is focussed on teenagers. Manchester wants to control this stream because it believes the money would be spent on slightly older apprentices, such as Tom. but it’s not just New Media jobs booming here, while you won’t find bowlers hats in newly regenerated Spinningfields, — this is what they call “northsourcing” — the quiet migration of thousands of banking jobs from the City of London.

All this with just the existing limited regional powers — but Manchester wants every penny of the £22 billion pounds spent here to be controlled locally. It’s at the top of the Chancellor’s in-tray, and privately he’s making warm noises. There’s a deal to be done here — and soon. Labour point out that hey have already committed to a £30bn devolution of spending powers to city regions, with greater Manchester at the top of the list.

But it is less noticed that George Osborne is on pretty much monthly trips to this City. The Conservative chancellor and the leaders running what is now a one party Labour city state have developed a rather interesting political relationship… stretching from high speed rail, to the so-called northern powerhouse to the prospect of these new powers. In a previously unpublished interview done last month, George Osborne told me: “Im absolutely passionate about building this northern powerhouse… not just fixing what went wrong in the financial crisis but what went wrong over many decades for which government of all colours are responsible”. Haven’t you just copied the Adonis proposal I asked him: “what we have brought forward has got a positive response from civic leaders.. I want to seize this opportunity to deliver real change. I pointed out that he cut capital investment and the UK has nit seen a geographical rebalancing under his chancellorship, in fact it is further imbalanced: “I want to speed this up. I want to capture the cluster effect you see in London. I’m not saying job done… theres a bigger prize here: what do we do to really make the difference.. And add 50bn to the economy [from Northern England catching up with the south east]…Myself and the PM are willing to do difficult things…we believe passionately in the future and the opportunity. This is a government full of new ideas bristling with energy wanting to make a difference for many decades”.

We are focussing right now on the spats between labour and Conservative over the prospect of English devolution to mirror the vow made to Scotland. But there is perhaps a far more interesting consensus developing — what you might call the Adonis-heseltine consensus, shared by Miliband, clegg, Osborne and Cameron, that could tangibly change Britain far more, and indeed is far more certain to happen, than the discussion on English votes and English laws.