The future of devolution under Labour

Amardeep Gill and Louise Kavanagh consider the future of devolution under Labour, and specifically what this could mean for regions within England.

In its manifesto, Labour said it would “transfer power out of Westminster, and into our communities with landmark legislation to take back control”. 

With Labour drawing up a devolution bill and Sir Keir Starmer's decision to sit down with England's Metro Mayors in Downing Street – the first meeting of its kind – Labour's push for devolution certainly seems to be central to the new Government's growth strategy.

Deepening and widening of devolution

Labour has pledged to deepen devolution settlements in England for existing Combined Authorities and widen devolution to those areas currently without a deal. Deputy Prime Minister, Angela Rayner recently wrote to all council leaders currently without a devolution deal, telling them that the Government’s door is open to areas that want to take on extra powers for the first time.  

New devolution deals could mean local leaders will be able to make decisions directly affecting their communities, with the intention of encouraging local authorities to come together to take on new powers through new Combined Authorities of the type that already cover about half the people in England. 

The Kings' Speech also signalled Labour's intent to make devolution a priority, with the right for local leaders to request devolution of functions, expected to become the new default setting. 

More local powers and review of governance structure

The King's Speech confirmed Labour's intention for local decision making and confirmed that legislation would also be introduced providing new powers to Metro Mayors and Combined Authorities. 

Labour's plans to provide more powers to local authorities over transport, adult education and skills, employment support, and housing and planning, are aimed at allowing towns and cities the tools they need to pursue growth, create jobs, and improve living standards. 

A new statutory requirement is also expected which will create an obligation on local authorities to provide local growth plans that align with a new national industrial strategy where local leaders will work with major employers, universities, colleges, and industry bodies to produce long-term plans that identify growth sectors and put in place the programmes and infrastructure they need to thrive and build on their local advantages.

Labour also promises to review the governance arrangements for Combined Authorities to unblock decision making and has plans to provide greater flexibility through integrated settlements for certain Mayoral Combined Authorities that can show exemplary management of public money. 

Funding and infrastructure

By empowering Mayors, Combined Authorities and local government, Labour believes it can create and advance a supportive environment for its new growth strategy that will enable our cities and regions to become economic powerhouses in their own right, however the detail remains to be seen in terms of how Labour will ensure the right support, funding and infrastructure is in place for our regions to be able to make best use of new powers and functions, for the benefit of local communities.  

With greater devolution, funding becomes even more critical for local authorities. While devolution is a positive step towards allowing local authorities greater autonomy, greater financial independence and accountability can also mean increased pressure to efficiently manage revenue streams in what are already extremely challenging times for many. 

Labour has promised that there will be no return to austerity and in its manifesto promised to provide greater financial stability to local authorities through multi-year funding settlements and by putting an end to wasteful competitive bidding, however there are still a lot of questions that need to be answered around the support that will be offered to local authorities, especially given the recent announcement in the £20bn black-hole in government funding. 

The future of devolution

Labour's push towards further devolution is viewed by many as the key to unlocking the potential for growth and prosperity in every part of the country, with regional and local leaders being best placed to identify their communities' requirements and to harness their potential, however the success of devolution will hinge upon Labour ensuring devolved funding is adequate, that there is equitable infrastructure development, as well capacity and expertise within local government in order for them to manage their new responsibilities effectively.

As devolution evolves it will become increasingly important for Labour to strike the right balance to ensure that this does not simply become an exercise of offloading responsibility, or one which creates greater disparities between the regions, particularly where there is a disparity in funding. 
Careful management of the relationship between central and local government will be crucial to this, and again balance will be needed to ensure that support comes from Whitehall without too much influence, and that local authorities can exercise their independence, whilst still allowing for national policy alignment and integration. 

We will be tracking developments of the Devolution Bill as it passes through parliament and, as for many, are waiting to see what devolution across the regions could mean as Labour's plans take shape. 

Further insights will follow from our Public Sector Team, but if you would if you would like to discuss what the future of devolution could look like or mean for your local authority, please contact us.

Amardeep Gill is a Partner and Imelda Kavanagh is a Professional Support Lawyer at Trowers & Hamlins.