Localis comment: All eyes should now be on the devolution white paper
Localis chief executive Jonathan Werran analyses what Boris Johnson’s big majority Conservative government will mean for devolution, economic growth and local government finances
All hail the conquering blonde Caesar. And what a difference a year makes. A year to the day that the attempted putsch against Theresa May failed for lack of a sufficient number of backbench dagger wielders, her successor has pulled off a stunning strategic electoral victory of historic proportions.
The fear was that Johnson, a classicist sharply aware of precedents from ancient history, would enjoy a foreshortened prime ministership of mere months, a fate that befell the short-lived Roman emperors Galba and Otho in the aftermath of Nero’s deposition.
So let Boris declaim ‘Vae victis’ to his stricken enemies lying before his feet. Let the smoke clear, the cabinet places and ministerial team be reassembled. Let Brexit Get Done – in its own way, pace and style with a Withdrawal Agreement passed post haste before the end of January and the progression to the second phase with its attendant drama.
But what does this dramatic post-Brexit realignment of British politics mean for domestic policy? Especially, what does the changing and spreading pattern of blue across the map of England say about the future direction for public services, devolution and economic growth?
The circumstances of this winter’s general election are unique. The voting public, liberated from tribal loyalties as a result of the Brexit process, proved in consequence to be far more fluid in their political affiliations than previous generations. Classic Dom, one could argue.
The Conservative manifesto declared an ambition for full devolution across England on the model of the city region mayors ‘so that every part of our country has the power to shape its own destiny’. So all eyes should avert to the English devolution white paper, which will set out the details next year.
‘The Conservative manifesto declared an ambition for full devolution across England on the model of the city region mayors “so that every part of our country has the power to shape its own destiny”. So all eyes should avert to the English devolution white paper which will set out the details next year.’
And this will make the combined authority mayoral elections a tasty prospect for Conservative fortunes in the West Midlands and Tees Valley – although London can be added to the party’s urban blues and the chances of the London mayoralty seen to recede.
Sub-regional growth bodies – the likes of the Northern Powerhouse, Midlands and Engine and Western Gateway will act as shop window to attract foreign investment into towns and cities. Other parts of the country are promised a shot at devising proposals for similar growth bodies along the lines of the Oxford-Cambridge.
There will be a political determination to try and hold the spectacular northern and midlands gains. Devolution and industrial strategy offers a route to make good on campaign promises of ‘levelling up’ to these new found Conservative voters. The trick will be to ensure productivity gains from a rebalanced UK economy percolate into the wage packets and lived experience of residents. Not an easy ask in the teeth of post-war economic history.
The manifesto tackles the left behind with the Towns Fund and there will be concerted efforts to spread support to rural and coastal communities once the Brexit boil has been lanced. Presumably the UK Shared Prosperity Fund will take up much of the slack and will be a cash pot from which skills funding can be distributed to disadvantaged people and areas.
The defence of the union might well need some creative and imaginative constitutional thinking to avert the threat and pressure for a second Scottish Independence referendum. Don’t rule out moves to a more overtly federal United Kingdom to redress the asymmetric devolution settlement. There could be a localist dividend to England, if not the promise of an English parliament.
With all the fun of the election out of the way, we can expect not just an horribly late local government finance settlement, but also the prospect of a March Budget to put the public finances in order.
We can look back to last September’s spending round which pumped an extra £13bn in revenue expenditure. This would put unprotected areas of spend around 15 per cent down on 2010 levels by 2023.
The manifesto was pretty thin gruel when it came to social care policy. While we can await the construction of a political consensus there’s £1bn extra in social care funding a year.
Like in the Coalition years, council tax will remain a key cost of living concern for Conservative chancellors. Any hikes above what is presumably necessary to cover social care funding needs would be subject to local referendums. For any authority so minded ‘sound and convincing reasons’ must convince the local electorate. Good luck with that.
The other pillar of local government finance, business rates, will be subject to fundamental review. For optimists among us, this should be an opportunity for serious and sustainable reform of commercial property taxes. And before this expect a 50% cut applicable to small shops, cafes, pubs and cinemas for the sake of preserving the high street.
Capital expenditure will be subject to the hundred billion pound infrastructure bazooka for funding roads rail and other schemes judged ‘responsible, productive investment’ to refurbish the nation’s fabric and generate long-term growth.
Housing targets will remain – the new ask is 300,000 homes by the middle of the 2020s and a commitment for at least one million homes of all tenures over the course of the next parliament. All this to be supported by a further simplified planning system promoting modern methods of construction and a £10bn single housing infrastructure fund to ensure the prior provision of roads and community services such as GP surgeries and schools.
Finally, this is the first election of the net zero/decarbonisation era. There is a case to be made that, in Russian doll fashion, the Greg Clark driven post 2015 devolution agenda was enfolded into the interventionist industrial strategy – Theresa May’s sole note of domestic policy success. And the next doll layer will be the bigger embrace of clean growth agenda.
Perhaps, tellingly, there was not a single mention of ‘industrial strategy’ within the 59 page manifesto. Clean growth was highlighted as a route to generating 2 million new jobs to meet ambitions of offshore wind carbon capture, hydrogen from gas and nuclear (including fusion) energy.
And indeed, in his first major campaign speech, Mr Johnson pledged to deliver a ‘clean growth revolution’ that would harness the power of science, innovation and technology to tackle climate change, spur economic growth and create high skilled, high wage jobs.
There are some considerable green promises to deliver on, including a doubling of Research and Development funding to £18bn over the next parliament, passing an Environment Bill and establishing an Office for Environmental Protection.
For the moment Boris has achieved, in a limited form, his childhood ambition to be King of the World. Success and legacy will be judged on exiting the EU and making the transition, preserving the union and holding on to the realignment achieved by the collapse of the northern red wall.
The seeds of defeat are often found in victory. And winning a fourth term against the odds might, as John Major found in 1992, be the easiest part of the game. But with a commanding majority to pass legislation and a crushed opposition prostrate before him, the comparison might have to end there.
Like his comic book inspiration The Incredible Hulk, with a stupendous supersonic bound in the general election, Johnson is free.
Jonathan Werran is chief executive, Localis
This article first appeared in Public Finance