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How can devolution deliver regional growth in England?

Only coherent devolution can drive economic growth in England.

Manchester Metrolink tram leaving Victoria Station.
Manchester Metrolink tram leaving Victoria Station in Manchester. The government is right to devolve some key economic policies – such as transport and skills – to mayoral combined authorities.

This report sets out where devolution of policy responsibilities would be most beneficial.

It finds that international evidence on the link between devolution and economic performance is inconclusive at best and regional growth is not guaranteed when powers are devolved.

The report argues that devolution of powers across England must be coherent – devolving the right responsibilities to the right institutions with flexible funding – to achieve the positive economic outcomes desired by both main parties.

It says the government is right to devolve some key economic policies – such as transport and skills – to mayoral combined authorities, as the appropriate geography for these policies is one that broadly covers a local labour market. But it recommends that the government should go further or amend its approach in several key areas.

The report’s recommendations include:

  • Extending the trailblazer devolution deals agreed with Greater Manchester and the West Midlands to other combined authorities.
  • Providing combined authorities with additional control over employment support and later-stage research and development funding – both of which are gaps in existing trailblazers.
  • Ending competitive bidding for economic projects, and providing more flexible funding committed over multiple years for local authorities and combined authorities.
  • Considering tax devolution, including the piloting of tax revenue sharing arrangements on income tax with combined authorities.
  • Prioritising consistency over speed while continuing to move further in those places with the most developed local institutions when devolving powers and moving away from ad hoc deal making towards a consistent approach based on the government’s devolution framework.

The report also concludes that devolving policies is not always the right answer. Central government should retain full central control of basic R&D funding, national rail routes, university education and social security. By setting clear national priorities, sharing consistent national data in areas like skills, and helping to coordinate devolved policies across combined authorities, central government can also enable local and combined authorities to deliver policy effectively after powers are devolved.

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