Devolution – what does it mean for the tech sector?

A huge topic condensed into a 1500 word essay following the explanatory Devolution event last week.

(cc) Monika

Last week I attended an event at the Electric Works called “Devolution – the future for Sheffield”, which was a series of talks and roundtable discussion, hosted by Sheffield First Partnership.

The event was convened to:

“…offer an opportunity to hear more about the case for devolution to places, learn more about the detail of the Sheffield City Region Devolution Deal, and hear about some of the challenges and opportunities devolution and decentralisation could present for Sheffield.”

Over the course of the morning, we heard from Councillor Leigh Bramall (Cabinet Member for Business, Skills and Development), Ben Harrison from the Centre for Cities, Prof Matthew Flinders (from the Politics dept at UoS), and John Mothersole (the Chief Exec of Sheffield City Council).

I was interested to gain a deeper understanding of the devolution process, and also to try to work out how it might impact on the digital sector in the city and beyond it.

So, in this vein, I’m going to take info from all of these speakers and divide this post into three parts:

  1. What is devolution really about?
  2. What deal is currently on the table?
  3. Why should we care about it?

So. Are you sitting comfortably…?

What is devolution really about?

Here are some important points:

  1. Devolution is a hot topic, but not a new topic. Lots of work has been going on for years in think tanks and fora like the Core Cities around the question: why do UK cities underperform in comparison to cities in most other developed nations?
  2. There is a significant body of evidence that shows that UK cities underperform, and that they do so because they have less autonomy than in other countries (even in very centralised countries such as France). The UK is an oddity. And therefore devolution is really about moving the UK to parity with other developed countries.
  3. UK cities have very little control over their own local economies, budgets and investment (less than 20% of their budgets, compared with a European average around 50%!).
  4. Why is it a hot topic now? Partly because of the recent moves for Scottish independence, but also due to globalisation and increasing need for the UK to compete internationally at a more rapid pace. This means that institutions of governance and democracy need to be able to respond much quicker.
  5. Centralisation is very inefficient (certainly the way we do it is – examples were cited of minor things that need to be signed off by the Secretary of State which were prone to sitting on his desk for months unattended).
  6. It’s now clear that a central bureaucracy can’t handle the volume and detail and context of decisions that need to be made. Central government is too distant and too generic.
  7. Furthermore the ability for cities to develop distinct identities is seen as being increasingly important. Bespoking and differentiation are key to economic and social success. Cities are becoming much more attractive places to live than in the past, and thus more economically important, and devolution will help this transition.
  8. There is also the sense that centralisation equates to a London-centric perspective on policy, as people with authority over local decisions remain inside the capitol’s ‘bubble’ and fail to understand issues of great significance to other UK cities.
  9. Some are even of the opinion that years of reliance on London for approvals has led to a form of ‘Stockholm Syndrome’ in which people’s ability to do and think differently has been stifled, and has dissuaded capable and innovative thinkers from joining the public sector.
  10. This said, devolution is not a panacea, and will not be successful without investment. Equally, some areas (such as policing and infrastructure for instance) will likely always be better governed at national level.
  11. There is also the possibility of failure, or that local policy-makers may ‘not be up to the job’. But on the other hand our cities have been failing for years anyway, so perhaps there is little risk of doing worse.
  12. It was also noted that the Devolution process has not been an easy or nice one, partly because it has been conducted under the cosh of spending cuts. And even with devolution, central government will still be able to enforce cuts even if cities control their own spending.
  13. On the plus side, the Sheffield City Region has been forthcoming in its relationship with government over devolution, and the reputation of South Yorkshire as difficult to do business with is, hopefully, starting to wane.
  14. The impacts of devolution will be slow to become visible, but they are long term and highly significant. Devolution will be uneven (currently many cities and urban areas are negotiating individual deals), but more control should lead to better planning, transport, housing and economic development.

What deal is currently on the table?

I should first note that “Sheffield’s” devolution deal is really for the Sheffield City Region “Combined Authority”, which is Sheffield, Barnsley, Rotherham and Doncaster (but not North Nottinghamshire or the Derbyshire Dales, which are included in the Sheffield City Region Local Enterprise Partnership area – confused yet..?). So when I say Sheffield, or ‘the city’, I really mean the Combined Authority. And, as I understand it, the proposed Mayor would be also mayor of the Combined Authority. Please forgive the Sheffield-centricity in my writing.

Anyway, “Sheffield’s” devolution deal is not currently complete, but a number of key provisions have already been agreed:

  1. The city region will receive £900m of new investment over the next 30 years, which may not sound like much, but this is a single pot with no ring-fencing or strings, it consists of a 60/40 capital/revenue split (so can be spent on people and services not just buildings and infrastructure), and the city has the power to borrow further against that money.
  2. The proposed Advanced Manufacturing Innovation District will be adopted nationally (which helps to safeguard the city’s investment in that project).
  3. The city will gain full control over the skills and education portfolio for post 18 education, while 16-18 and employment budgets will be reviewed and co-designed with the Department for Work and Pensions.
  4. The city will gain control of the local bus network franchising, and smart ticketing, and there will be mayoral control of broader transport budgets.
  5. Regarding fiscal devolution, the city will receive 100% of growth in business rates from April 2015, and is working with government on the design of full localisation of business rates.
  6. The city region will gain a dedicated capacity and support from UKTI, to boost our international trade and exports.
  7. The areas of housing, planning and land are still under discussion and any powers transferred will likely not be wide-ranging initially.
  8. Control of these new powers will be vested in the Sheffield City Region Combined Authority, which will have an elected mayor. A corresponding constitution will be drafted to effect this, and as I understand it, the mayoral proposal will be put to a local election within the next 18 months.

This wasn’t completely clear, but as I understand it the devolution agreement is being offered on an ‘opt-in’ basis to the areas within the Sheffield City Region, and this will be written in to the constitution.

Why should we care about it?

Good question. Perhaps we should care about it more as citizens, than as business owners and workers. I think it’s certainly true that not enough has been done so far to educate local people about this – public engagement seems to consist of meetings such as the one I attended (which was hardly inclusive as it consisted of self-engaged & interested people) and a public consultation which was advertised in the local press and which finished last Friday. I can report that the lack of engagement, accessible & simple information and debate, especially on social media, was re-iterated to the negotiating authorities very strongly following the round table debates.

That said, though, if we accept that the authorities negotiating on the city’s behalf are doing so in good faith, and the rationale for devolution (achieving parity of city performance with other developed nations) is a strong one that the evidence supports, then the prize is that more of the city’s income stays within the local economy, and that we (collectively and democratically) gain far greater control of planning, education, skills, economic development, transport, infrastructure and inward investment than we have currently. Which should be very good news for all businesses whether they are tech businesses or not.

Furthermore, the drivers for devolution are very closely related to a vision of the future UK economy which is dominated by high-skilled, highly innovative, digital and technology companies, which prefer to operate from within cities, and look to attract people who also prefer to live within cities. Thus, if devolution is successful here, it will necessarily also focus on the health and development of our industry and support all of us in our attempts to grow.

For these reasons, I think we should regard these developments with some hope. And while we need to hold our authorities to account, and push for more transparency, more information and more engagement with the public, we should also help push at the open door that this moment in political time affords. For all we know it could close again quite soon…

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