‘Ramp up devolution to aid the economy’

Study says new powers would benefit areas outside London

THE next government must fully implement devolution before 2030 in order to complete a “job half done”, a new report has urged.

Research by the Institute for Government (IfG) independent think-tank found that 85 per cent of England must be covered by a devolution deal in order to tackle the economic underperformance of areas outside London.

The 12 metro mayors in place following this month’s local elections represent nearly half of the country’s population and over half of its economic output.

Despite the progress made on projects such as improved transport networks, the IfG found that English devolution is an “incomplete patchwork of mismatched deals” with areas such as Greater Manchester enjoying superior powers to those in Yorkshire.

The powers available to mayors are still “inadequate for the job in hand”, the think-tank said.

Increasing the powers available to mayors would be in the interests of Labour and the Conservatives, it argued, with the Tories able to revitalise its levelling up mission, and Sir Keir Starmer’s party helped to achieve its mission for growth.

Following the next general election, all of Yorkshire will be covered by a devolution deal, with the Hull and East Yorkshire joining mayors in North, South and West Yorkshire. The new combined authority for East Yorkshire could be established by the autumn ahead of the mayoral election in 2025.

The paper by the IfG suggested that Yorkshire’s mayors should be given a new wave of “trailblazer deals” such as those enjoyed by their counterparts in Greater Manchester and the West Midlands.

This would involve the ramping up of powers to “level 4” devolution deals in time for the next spending review, with South and West Yorkshire seen as a priority.

This would be in preparation for single settlement deals which involve flexible departmental-style budgets agreed in the first two years of the next parliament.

Despite both Labour and the Conservative’s reluctance to introduce “fiscal devolution” by giving mayors powers over taxation, the IfG also called for a trial of devolving a share of national insurance to strengthen incentives for local leaders to boost job creation.

Report author and IfG programme director Akash Paun, inset, said: “Metro mayors are now well-established leaders of place in England’s biggest urban regions – but we are still in the early stages of the devolution journey.

“Whoever is prime minister a year from now will have a historic opportunity to move beyond the current patchwork of deals and put in place a more coherent and durable settlement for England as a whole.”

Thomas Pope, another report author and IfG deputy chief economist, said: “English cities outside of London are not fulfilling their economic potential, dragging down overall UK economic performance. “Devolving the right economic powers, like skills and transport, to combined authorities should help areas develop coherent economic strategies and grow faster in the long term.”

It comes as the Bank of England said that it is not ruling out cutting interest rates next month after deciding to hold borrowing costs at current levels of 5.25 per cent.

But Governor Andrew Bailey said he was “optimistic that things are moving in the right direction”, with inflation set to fall to its two per cent target between April and June.

Chancellor Jeremy Hunt said he would “much rather” policymakers “wait until they are absolutely sure inflation is on a downward trajectory than rush into a decision that they had to reverse at a later stage”. But he added that it was encouraging to see “real optimism” from Mr Bailey for the first time.