More devolution is welcome – but it needs strengthened metro mayor accountability

Both the government and England’s metro mayors are eager to see powers and finances moved out of Whitehall, with Rachel Reeves using her 30 October budget to announce a roll out of “integrated settlement” funding pots for the most advanced mayoralties, starting with Greater Manchester and West Midlands next April, and then to four other mayoralties from 2026/27. Greater devolution and local autonomy are welcome, but there is a problem: since the demise of the Audit Commission in 2015 and the recent hollowing of local audit capacity, ³⁰ Lynn Bradley, David Heald & Ron Hodges (2023) Causes, consequences and possible resolution of the local authority audit crisis in England, Public Money & Management, 43:3, 259-267, DOI: 10.1080/09540962.2022.2129550 there are few local mechanisms that can adequately hold mayors and mayoral combined authorities (MCAs) to account for their performance. 

Existing processes are limited. Granted, mayors can be voted out once every four years, but genuine democratic accountability also requires institutional structures to hold decision makers to account. This is something the Productivity Institute has defined as “inward accountability” – processes within an organisation which demonstrate it can hold itself to account through scrutiny and the separation of functions. ³¹ The Productivity institute define four types of accountability: “top down” central government monitoring and oversight of local leaders; “bottom up” scrutiny of central government by local leaders; “inward” accountability of mayors and combined authorities and, “outward” democratic oversight of local leaders. For more details see: Newman J, Warner S, Kenny M and Westwood A, Rebuilding local democracy: the accountability challenge in English devolution, The Productivity Institute, 2024.  MCAs do have audit and scrutiny committees, but their effectiveness has been blunted due to a lack of prestige, limited capacity and insufficient powers. ³² Paun A, Nice A and Rycroft L, How metro mayors can help level up England, Institute for Government, 2022, p.51 www.instituteforgovernment.org.uk/publication/report/how-metro-mayors-can-help-level-england

This local accountability gap is widely recognised. ³³ Weinberg N, Turner D, Elsden E, Balls E and Stansbury A, A Growth Policy to Close Britain’s Regional Divides: What Needs to be Done, Harvard Kennedy School, 202 ³⁴ Kaye S, Devolve by Default: Decentralisation and a redefined Whitehall, Reform, 2024. ³⁵ Newman J, Warner S, Kenny M and Westwood A, Rebuilding local democracy: the accountability challenge in English devolution, The Productivity Institute, 2024.  According to the head of the National Audit Office (NAO) ‘the audit support for scrutiny of sub-regional and combined authority spending is in my opinion not commensurate with the demands of local accountability.’ ³⁶ https://committees.parliament.uk/publications/44743/documents/222238/default/ 26 April 2024.  More money, and more power, needs to come with more accountability.

Whitehall may be reluctant to genuinely let power go so long as local accountability systems are weak

The relative lack of local accountability processes means greater reliance has been placed on Whitehall’s regime. With most mayoral funding coming direct from Whitehall departments for individual projects, Treasury rules state that the departments which disburse funds to mayors are held to account for the value for money of their spending. But this is not sustainable. A reliance on Westminster to scrutinise local spending goes against the spirit of devolution and limits the ability of mayors to develop innovative local solutions for their areas. 

The chancellor’s “integrated settlement” funding pots will see MCAs receive money direct from the Treasury and then held to account via high-level outcomes frameworks rather than for the delivery of specific outputs agreed with Whitehall. This model, which will grant greater freedom to develop local programmes to address local problem, is a step in the right direction, but institutional changes are needed to fill the accountability gap.

Three key reforms are needed to strengthen local accountability

In our new deal for England report, the IfG recommended three key reforms to strengthen local accountability. ⁴¹ Paun A, Pope T, Fright M, McKee R and Allen B, A New Deal for England, Institute for Government, May 2024, www.instituteforgovernment.org.uk/publication/next-government-complete-english-devolution  The first is the creation of Devolved Public Accounts Committees (DPACs), an idea which builds on proposals for Local or Regional PACs first suggested by the Centre for Governance and Scrutiny (CFGS) in 2014. ⁴² The CFGS this year suggested changes to the local PAC model and can be seen at www.cfgs.org.uk/wp-content/uploads/2024-07-30-Regional-Public-Accounts-Committees.pdf  We suggest that these bodies should be focused only on MCAs rather than the wider local government system, with a membership drawn exclusively from local councillors to ensure democratic accountability. Other operating principles to protect the independence and powers of DPACs are outlined in our full report.  ⁴³ Paun A, Pope T, Fright M, McKee R and Allen B, A New Deal for England, Institute for Government, May 2024, www.instituteforgovernment.org.uk/publication/next-government-complete-english-devolution

Alongside this we recommend turning MCA chief executives into accountable officers for fully devolved budgets: this will clarify lines of accountability and mirror accountability approaches in Westminster. Scrutiny of senior accountable officials rather than politicians alone will help to focus attention on the performance of projects and programmes rather than political point scoring.

Finally, we favour the creation of a system of ‘mayoral directions’. These would occur when an MCA chief executive considers that spending fails to meet regularity, propriety, feasibility or value for money criteria, but the mayor wishes to proceed regardless. ⁴⁴ Paun A, Pope T, Fright M, McKee R and Allen B, A New Deal for England, Institute for Government, May 2024, page 21, www.instituteforgovernment.org.uk/publication/next-government-complete-english-devolution  This would be analogous to the ministerial letter of direction by which a secretary of state can override official advice in Whitehall, but on the basis that he or she is then held personally accountable for the decision. 

Left unreformed, the current lack of effective local accountability will continue to hamper efforts to transfer more spending powers to mayors. Instead, by creating more independent and robust local scrutiny, ministers can help to drive value for money to taxpayers and also ensure mayors deliver on their personal mandates which will ultimately contribute to wider government objectives like securing faster growth.