The radical rewiring of the state: what devolution must deliver

The debate about devolution has reached an important moment. The argument about whether power should move from Westminster to places is largely settled – though has not yet been fully delivered on. There has been broad cross-party consensus on the need for devolution for many years. But while there is growing consensus that greater devolution should happen, there is little practical understanding on exactly what it can and should achieve and how it can deliver for citizens and the state. This is further complicated by the complexity, and interconnectedness, of policies being delivered by the state, at both the national and local levels.

The role of a modern state

Too often prevention, public service reform, productivity, fiscal sustainability and devolution are treated as separate policy debates. They are not. They are different expressions of the same underlying challenge: how a modern state allocates finite public resources to maximise long-term public value.

Across successive governments, the ambitions have been remarkably consistent: healthier populations, higher productivity, more sustainable public services and a shift to prevention. Yet these ambitions have repeatedly proven difficult to realise. Political leadership matters. Investment matters. Fiscal choices matter. But so too does the architecture of the state through which those choices are made.

Prevention, productivity, and the problem of siloes

Consider prevention. Few now dispute that intervening earlier improves lives and reduces future demand for services. The difficulty is sustaining preventative investment when costs are immediate, but benefits accrue later – and often to different organisations. Annual budgets, departmental accountability and fragmented funding continue to make long-term investment harder than responding to immediate pressures.

The same logic applies to productivity. Economic inactivity remains one of Britain's greatest constraints on growth, yet it rarely has a single cause. Health, housing, transport, skills, childcare, employment support and local economic conditions combine to determine whether people participate in the labour market. We increasingly understand these challenges as interconnected systems, but continue to organise funding, accountability and delivery largely through separate departmental and organisational structures. In fact, even on the front line, we continue to diagnose problems in silos (for example PIP assessments) when practitioners are fully aware of the complex contextual reality of a person’s life.

This is why the next phase of devolution matters. Its significance is not simply that more decisions are taken locally. It is that it creates the possibility of a different operating model of the state. One in which economic development, public service reform and prevention are increasingly aligned around shared outcomes, and where the objective is not simply to spend public money efficiently within organisations but to allocate public resources efficiently and effectively across whole systems.

Devolution should not replicate Whitehall locally; it should enable fundamentally different ways of allocating resources, organising public services and operating state capability.

Greater Manchester is the blueprint for the next stage of devolution

Greater Manchester shows both what it takes to deliver devolution and what devolution is actually for. The government designated Greater Manchester as the first national Prevention Demonstrator. That means cross-government backing to show how a shift to prevention can deliver better outcomes, reduce pressure on public services and provide better value for the public purse.

The Prevention Demonstrator agenda is often described as a test of prevention. While not untrue, it is testing something more fundamental: whether a different political, fiscal and institutional settlement enables prevention to become the organising principle of public investment rather than an aspiration repeatedly displaced by immediate demand. 

The programme builds on the foundations that Greater Manchester has spent decades putting in place. Through devolution, the city-region has sought to align economic growth, health improvement and public service reform around a shared ambition: helping residents live good lives while creating a more productive and financially sustainable system.

Our Live Well ambition reflects that approach, making it real to people and deliverable in practice – a new delivery model for public services. Its premise is that people rarely interact with services and support in neat organisational categories. Someone who is ‘economically inactive’ (as defined by the state, if not necessarily the person) may face health challenges, housing insecurity, financial pressures or caring responsibilities. Effective support requires services to deliver and be designed around citizens’ real lives rather than expecting people to navigate multiple disconnected systems or simply placing people on programmes.

In rhetoric this is not new, but in tangible delivery supported by a fundamental rewiring of the state it becomes of national significance. Without that rewiring, the delivery remains partial and risks being interpreted as an add-on programme of work or piece of innovation rather than a new public service operating model.

A move towards real neighbourhood delivery

Through Live Well and the Prevention Demonstrator, Greater Manchester is pursuing real neighbourhood delivery. Fully integrated neighbourhood teams, Live Well Centres, Spaces and rewired Public Service Live Well offers across health, employment, family support, housing, advice and additional support for those nearing or in crisis.

Importantly this is not as an add on but as the way public services and support are delivered for all residents. The objective is not simply coordination or alignment but a different way of delivering core public services – and of organising resources around the reality of people’s lives.

The Prevention Demonstrator takes this logic further. It is exploring how public resources can be organised around earlier intervention and improved outcomes rather than around organisational boundaries. In doing so, it is showing how prevention can move from being something that individual programmes pursue to becoming a principle that shapes wider public investment decisions and sets out the necessary rewiring to fully realise this in delivery. 

Practically, in Greater Manchester we have been able to increase coordination of our spend around priorities, but this is still relatively small amounts of the public purse and is limited in terms of local ability to pool and direct resources at scale and the relevant powers and accountability needed over that spend.

The way public service resources are allocated shapes both the productive capacity of places and the long-term sustainability of public services

This matters because the potential benefits extend well beyond prevention itself. A state that allocates resources earlier is likely to improve healthy life expectancy. A healthier population is likely to increase labour market participation. Higher participation supports productivity and economic growth. Greater productivity strengthens the public finances. This opens up the possibility of moving from a ‘doom loop’ around public finances and economy to a ‘virtuous circle’.

In that framing, public service reform and economic policy cease to be separate conversations. 

Despite progress, barriers prevent us going further

At the same time, the Demonstrator has highlighted barriers that continue to constrain places. Funding, accountability and decision making remain organised largely around departmental responsibilities rather than the interconnected conditions that shape outcomes. Despite recent progress, local areas still operate across multiple funding streams, programme requirements and accountability frameworks, limiting their ability to align resources around long-term outcomes and prevention.

These challenges matter not only for Greater Manchester. If prevention and public service reform are to become a genuinely national agenda, realised in practice not rhetoric, other places will need the capability, stability and institutional flexibility to pursue similar approaches. Our experience suggests that success depends not simply on local leadership or innovation but on the incentives and architecture created by central government.

The next phase of devolution

Further devolution is essential but the real test should not be how many freedoms are devolved, but whether places can genuinely allocate resources differently and create greater public value from the same public pound. 

Three priorities stand out.

The first is ensuring that places can make sustained investments where benefits may accrue over many years and across multiple parts of the public sector. That is only possible with long-term fiscal settlements that provide certainty for places. That will help shift the focus away from managing annual pressures.

Second, integrated settlements, place settlements or alternative local mechanisms should be broad enough to allow investment and powers across the interconnected drivers of prosperity, health and opportunity. At a very minimum that should include health and care, criminal justice, employment support and skills, children and family support, early years, housing, homelessness and complex disadvantage, and related public service capital. The challenges government is seeking to address do not sit neatly within departmental boundaries, and neither should the resources available to tackle them. This is fundamentally a question of allocative efficiency: enabling places to direct resources towards where they create the greatest long-term value.

Third, accountability arrangements should increasingly reward long-term public value and improved outcomes. If government wants places to invest in prevention, then performance frameworks should recognise success in reducing demand, improving participation and creating better outcomes rather than focusing primarily on programme management and compliance. Again, much of this can only be achieved when done at a level of place.

Devolution is not solely about the UK constitution but the lives of its citizens

The lesson from Greater Manchester is that devolution is not simply a constitutional project. Its purpose is to materially improve ordinary lives. At its best, it is a means of building a more capable state: one that can connect prevention, productivity, growth and fiscal sustainability rather than treating them as separate agendas.

That is the deeper promise of devolution: not imagined but realised. The task for the next phase of reform is to make it possible everywhere.