DevoBudget: Devo needs budget – and democratic – boost

Today’s guest DevoIntelligence blog comes from Dr Peter Kenway, director and co-founder of independent think tank New Policy Institute which focuses on local government finance, taxes and poverty.

Devolution cannot escape its context. If it had followed on the heels of the 2007 Lyons Inquiry, devolution would have been taking place at a time when the share of UK economic resources deployed by local government was approaching a post-1945 high.

Peter_user_imageDevolution then would have been very different from what’s unfolding now, with local government’s share of resources approaching a post-war low. This is the world in which the new institutions of devolution are starting their life. Businesses and politicians as well as think tanks are now looking towards next week’s budget to see some new money for investment devolved to really breathe some life into the Northern Powerhouse project. London has by dint of public policy and market forces moved east, can the UK through a similar combination of forces move north?

Whatever the final sums, how to allocate resources across its area is a question every new devolved authority will have to face. It is not just one for political leaders and senior executives. Sooner or later, public opinion must give at least its grudging consent to how its money is being spent. To meet that challenge, cities must construct a solid basis for reconciling the different interests of its constituent parts – and be able to explain it.

Transport for the North has to be ready to do the same. The Northern Transport Strategy, published earlier this week by Transport for the North includes a global sum of £13billion investment over the course of this Parliament but as yet contains no figures for the distribution of that money (apart from £150million for smart ticketing).

Once the numbers are put in, the debate about what is right will become sharper. To take one example: the Strategy has nothing to say about bus services (although it does have some nice pictures of them). Would the Northern public agree with this if asked?

If ‘devo’ is to have a chance of working properly, no democratic deficit must be allowed to develop. Engagement of the public has in most cases been an afterthought – done only after the deal has been struck with the Treasury. And there is a pervading cynicism created by the fact that devolution is marked by a shift of risk from central government and the national taxpayer to local government and local taxpayers. As NPI argued at the time, this shift was exemplified in the move from Council Tax Benefit to Council Tax Support.

With devolution, if local economic growth is slow the danger is the devolved body and not central government may have to stump up for the capital. This can be said to strengthen the incentive facing the devolved authority but the risk sits on the shoulders of local residents, possibly way in the future. The devo project not only needs a boost in the budget. It also needs a democratic boost so that when elections are held in May 2017 there is a turnout that is not derisory. If northern residents are taking on risks as well as opportunities, they ought to know – and ought to get involved to have a say.

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