Devolution and Governance Structures in the UK: Lessons from Evidence

The Industrial Strategy Council in collaboration with WM REDI have developed this report on “Devolution and Governance Structures in the UK: Lessons from evidence”.

The aim of the report is to contribute to the debate on devolution by identifying principles which will support and facilitate successful future devolution particularly at the sub-regional level. To do this:

• The literature was reviewed to understand the benefits from devolution as well as the limitations to successful implementation of devolution.
• The history of devolution in the UK was set out to shed light on why, despite a long history of attempts at devolution, the UK remains an unequal county both within and between regions.
• A range of primary evidence was gathered from stakeholders who engage with or work in sub-national governance across the UK, to understand what works, and what needs to change, regarding sub-national devolution.

Based on the array of evidence gathered the information was synthesised in order to draw sensible lessons from it. Building on the OECD model for decentralisation, which covers fiscal, political and administrative, a fourth pillar covering ‘people and place’ was added. This research and evidence was then translated into a devolution framework. The framework was designed to provide a structure and a set of principles that can survive changes of government and ensure that this process does not have to be repeated. The devolution framework contains two parts policy principles and guiding principles. The policy principles are tangible, actionable recommendations. Good devolution policy will meet all the criteria set out under each of the pillars in this policy framework. The guiding principles are a set of behaviours which should be embodied by those who work with, or in sub-national governance structures. The recommendations identified under each of the four pillars are as follows:

• Political: increase the number of elected leadership positions; transfer powers across a wide range of policy areas (not whole policy areas, only subsets of policy); ensure there are checks and balances particularly over finances and reporting on outcomes
• Administrative: ensure structures and institutions have clear jurisdiction with own agenda to eliminate duplication; inbuilt review mechanisms to ensure power is transferred on the basis of delivering outcomes.  
• Fiscal: Long-term certainty of funding for all agreed responsibilities based on an updated and improved Barnett style formula; additional funding available through competitive bidding. This bidding process would need to be more streamlined, less prescriptive and removal of ring-fenced funding; possibility of local tax raising powers over time.
• People and Place: Transparency - public access to information should form part of the formal review mechanism; where necessary boundaries should be redefined to align to policy areas and to ensure economic functionality.  

The Council’s research has confirmed previous findings that there is no one optimal scale at which to implement devolution in the UK. Successful examples of sub-national governance in the UK cut across scales, and do not share the same institutional set ups. The proposed multi-scalar implementation model satisfies the need for both place-led solutions and good governance. This approach is iterative and fits with the idea of devolution as a process and not an event and builds on the structures already in use in the UK.  It prioritises strengthening the multitude of structures already in place by drawing on the concept of ‘slack resources’. This concept is based on flexibility – flexibility enables resources to be moved between tiers as appropriate. Slack resources must be balanced with safeguards and the report identifies examples of what these criteria could include. In practice how it could work would be for central government to choose areas that it knows to be ‘too big’ as the first step in the devolution process. These larger areas would put in place a strategic oversight of the whole region and initially hold the budget and responsibility for spending until the next stages in the devolution process have been identified. The prize of greater devolution provides the incentive to establish the necessary and appropriate governance structures in the region.

Kate Barker, member of the Industrial Strategy Council said:

“Devolution takes decisions closer to the local people, businesses and communities they affect, and brings greater awareness of local concerns. This has the potential to have a positive impact on reducing spatial economic and social disparities, as long as the devolution process is considered, coordinated and implemented appropriately at scale and over a long period of time. This report sets out a framework to help achieve this.”

Andy Haldane, chair of the Industrial Strategy Council said:

“Devolution, comprehensively and consistently applied across the whole of the UK, is a necessary condition for making a success of levelling-up. This final report from the Industrial Strategy Council provides a possible roadmap for doing so.”