The connected kingdom
Helping cities empower themselves could strengthen national ties, but first we must devolve real power
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For decades the UK has been one of the most centralised countries in the OECD. However, recent and rapid policy progress suggests that the UK’s political economy is now starting to show signs of reversing its march towards ever increasing centralisation.
Since the RSA City Growth Commission published its final report in autumn last year, four places in England have received ‘devolution deals’. Most significant of these was the handing over of responsibility for the entire health budget to Greater Manchester’s Combined Authority. The NHS is, to many, a symbol of our welfare state and national heritage. Devolving a large chunk of it (to the tune of £6bn per year from April 2016) is nothing less than a watershed.
The opportunities are significant, if fraught with difficulties. Done right, with greater clarity and coherence of principle, we could strengthen social, economic and political connectivity, strengthening the fibres of national life. Done badly, tangled by territorial party politics or undermined by a persistent lack of clarity and coherence, we risk the very governability of the UK.
Deal-making — perhaps ever at the heart of politics — is enjoying its zeitgeist moment as an instrument of public policy. Arguably, ‘the vow’ committing Westminster to the Barnett formula prior to the Scottish referendum was the deal on offer between the UK government and the citizens of Scotland.
The emerging array of bespoke city deals, across England as well as the devolved nations, means that devolution to local and national level tiers of UK government is inextricably and increasingly linked.
For example, the Glasgow and Clyde Valley City Deal heightened political tensions between Holyrood and Westminster and has gone on to expose deep differences in the extent to which the two Parliaments feel ready to devolve power to sub-national tiers of government: in Westminster, according to a seemingly strict quid pro quo of ‘no mayor, no deal’; in Holyrood, a preoccupation with negotiating with the UK government as the Scotland Bill seeks to legislate for, or potentially augment, the conclusions of the Smith Commission. In Wales, there are rumbles as to whether the St David’s Day agreement of the previous government goes far enough. While in Northern Ireland, the fiscal freedom to set its own corporation tax from April 2017 — a unique step within the UK — is overshadowed by the suspension of its executive power- sharing meetings. The matter of English votes for English laws, itself a matter related to the devolution dynamics elsewhere in the union, as well as the newly differentiated powers to its city- regions and counties heightens complexity and uncertainty. What powers should places be entitled to? Will we come to prize the postcode lottery as the virtue of localism not the thorn in universal welfare? What are the implications for central government, MPs and Parliament? What role for the centre in setting the direction of travel for services and overarching policy — is this reduced to defining and monitoring minimum standards?
The RSA City Growth Commission made the case for city-led growth and devolution of fiscal and strategic policy powers to metro regions, aligning more closely local politics and administration with local economics. Our recommendations included, for example, the freedom for city-regions to set and wholly retain their business rate revenues — a measure announced recently by the Chancellor prior to the 2015 Spending Review. The Commission also argued for a transparent process to give structure and independent scrutiny to a more integrated system of national and sub-national devolved governance, an idea that was further developed within the RSA in the run up to the general election. We need to be clear about the principles under which power in our governance system is distributed.
Three realms of connectivity
In theory, devolution should enable a new type of place- based policymaking, leadership, accountability and delivery. Scottish, Welsh and Northern Irish devolution is about national autonomy. At a sub-national level it is about giving local leaders the space to work collaboratively across traditional boundaries of service or administrative geography, informed by the economic and social needs of their place.
In both instances, place-based identity can bring people together, creating a sense of social connectedness: the feeling of pride (or trepidation) when you watch your favourite national sports team, the feeling of belonging within a city of millions, or the sense of community spirit at a local club or society. Where political institutions can harness this as civic pride, it can be a platform for engagement, activism and enhanced accountability. Ever louder calls for a ‘new kind of politics’ speak to people’s desire for a more responsive, connected government. At a national level, this might lead to greater fragmentation within the UK, but the principles of localism and subsidiary, where decision-making happens at the lowest level possible (given the issues at hand) still apply.
In practice, it remains to be seen how we can avoid devolution being ‘business as usual’ where the structures, systems and shortfalls of the centre are replicated in the next level down. We need to think about three types of connectivity aimed at restoring the link between people, place and government.
First is economic connectivity; the bedrock of growth, driving productivity by linking people, information and finance. It requires strategic (appropriate, integrated and long-term) investment in high-quality local, regional and national level infrastructure. In the UK, officials across local and national governments are used to making business cases for such infrastructure and it is no coincidence that transport projects have dominated the city deal and growth deals announced to date. While transport connectivity is indeed central to realising the value of the Northern Powerhouse, for example, we need to improve our capacity for more sophisticated appraisal and financing of digital connectivity, house building and supporting infrastructure. This is particularly important at the city- regional level where places must be free to tailor, sequence and coordinate their investment decisions over the long term.
Economic connectivity means giving firms ready access to finance and business support, as well as ensuring locally applicable industrial strategies where supply chains connect across the UK, linking cities and their complementary competitive advantages. For example, developing stronger ties between the ‘Golden Triangle’ of biotech and healthcare research clusters in London, Cambridge and Oxford universities (and their associated enterprise communities) with other emerging and established innovation clusters across the county, including the Royce Institute (itself a collaboration between Manchester, Leeds and Sheffield universities) or the high-tech ‘Silicon Corridor’ between Bristol and Swindon.
Finally, at a national level, we need a fiscal system where the tax code and regulatory framework reflect the nature of 21st-century enterprise and our knowledge-based economy. This will be no mean feat, particularly as online businesses and their customers need not be located in any one place; a business rate revenue option for local areas could become narrower, requiring greater reliance on national level fiscal arrangements (such as income tax and corporation tax). While the political case for fiscal devolution might be strengthened on the back of city deals, the economic case will be a much harder sell, both to cities and central government.
Second, we must consider social connectivity. By looking at the social fabric of a place we start to get under the skin of what makes it thrive and we better understand the different components that enhance communities’ well-being: its universities and colleges, its environment, heritage, nightlife and cultural vibrancy, all of which help to attract and retain skilled people. Social connectivity speaks to the degree to which citizens feel an affinity with their place, identifying themselves as of their city or town, connected to their community.
The RSA’s work has shown that, by harnessing the power of connected communities, we can improve a range of social and economic policy outcomes, from increased life satisfaction to greater participation in education and training. We have looked at how community engagement and volunteering can inform a new, ‘people-shaped localism’ and have explored the importance of heritage in bringing communities together around a shared appreciation of their place.
In understanding the importance of shared identity we are starting to look at how ‘living heritage’ assets, such as local sports clubs or community groups, can be an important ingredient in place- shaping. Here is where people invest their time and energy to foster social productivity, leveraging the value of their social networks with potential for wider social and economic spillovers. Amid increasingly global investment flows, a strong place-based identity can put places on the map; this is why Yorkshire sought to host the Tour de France Grand Départ in 2014 and Hull the City of Culture in 2017. Economic connectivity without social connectivity is empty.
“Calls for a new kind of politics speak to people’s desire for more connected government”
Finally, political connectivity is essential if we are to restore the link between people and government. The current yearning for a new kind of politics is symptomatic of a chronic lack of political connectivity at a local and national level. The politics of Russell Brand or Jeremy Corbyn gropes towards a new system that reconnects the electorate. Whether you agree with the new Labour leader or not, his initial attempts to change the tone of PMQs with questions sourced from the public is a small, but significant, illustration of this bid for change.
Support for devolution and self-determination on the part of the constituent nations of the UK is itself arguably an expression of a deeper demand to be heard and understood. This looks set to continue as governments’ responses have been characteristically staid and top-down, with the Smith and Silk Commissions resulting in deals negotiated largely behind closed doors; a top-down rejection of the surge of political engagement in Scotland during the run up to the referendum.
Similarly, the requirement of Greater Manchester to have a metro mayor was thought by many local people to have been a top-down imposed by London, where the capital and its political elites could be from, to quote one of the Mancunian deal-makers, ‘another planet’. How will the metro mayor defend its legitimacy if turnout is as poor as it has been in the city over recent years? The irony is not lost in the fact that Tony Lloyd — interim metro mayor until elections are held in 2017 — was elected Greater Manchester Police and Crime Commissioner with a turnout of just 13.93% in 2012.
New forms of governance need to seize an opportunity to reconnect with their citizens, enabling a talented network of public, private and civic leadership. Rather than the divisiveness of traditional identity or territorial politics, where you are either ‘like us’ and therefore ‘with us’, a connected, collaborative place-based leadership could ecourage a genuine flourishing of civic, social and economic life.
Together, these three strands of economic, social and political connectivity could help us to create a more empowered, safe, resilient society and thriving political economy. As our constitutional footing becomes more variegated and uncertain, there is an opportunity to be more ambitious for our people and places. Devolution to cities and county regions presents significant challenges and risks, perhaps the biggest being ‘business as usual’ where the structures, systems and shortfalls of the centre are merely replicated in new tiers of government. The other major risk is that devolution will heighten inequality and economic imbalance between and within the nations, cities and rural areas of the UK, undermining the driving rationale behind many of the policy objectives of successive governments – of all colours — over the past 60 years.
If places are to be allowed to tackle inequality and economic disadvantages, we will need to strengthen their capacity to anticipate, manage and respond to increasingly complex socio-demographic pressures, all at a time of continued public sector budgets cuts. This will be a largely technocratic process. The more difficult job will be in bringing people together to agree a geographical footprint and define a clear vision for their place. People will define themselves as outside the tent, dividing as much as unifying along the way. But the prize of greater connectivity within our diverse political economy will be restoring the link between people, place and government.
Find out more about the RSA City Growth Commission
This article originally appeared in the RSA Journal Issue 3 2015
