Of the many plans that went awry for George Osborne in March, the postponement of a visit to East Anglia was a comparatively discreet setback. The chancellor had hoped to highlight a regional devolution deal, announced on budget day as covering the counties of Norfolk, Suffolk and Cambridgeshire. But as with much of the budget, his calculations proved unreliable.
The city of Cambridge had already rejected the proposal. The county council followed suit only days after Mr Osborne told MPs that “the devolution revolution is taking hold”. His revolutionary fervour had to be put on hold. Some variant of the “eastern powerhouse” devolution deal will go ahead. The reluctance of some local authorities to participate in Mr Osborne’s reconfiguration of regional powers is a stage of negotiation, not a final rejection. The chancellor has too much political capital invested in his devolution agenda to let it wither away. His problem is scarcity of more tangible investment. To many councillors, the advertised benefit of policy control has a different hue in the context of deep budget cuts; they fear it will mean administering austerity.
The template, available to any region that is interested, consists of a straight bargain. Whitehall surrenders control in certain fields – transport, housing, business rates, a negotiable list of services – and the Treasury puts up cash to develop local infrastructure. In exchange, the regional authorities club together to create the institution of a directly elected mayor for their whole bloc. But the money on offer – tens, sometimes hundreds of millions of pounds – is meagre in comparison with a multibillion-pound squeeze on local authority finance. Most council leaders are suspicious of a deal touted by the Treasury, and Labour ones doubly so when the deal is offered by a Conservative chancellor. That mistrust has made it hard to advance the devolution agenda in Yorkshire and the north-east. But tribal politics are not an insurmountable obstacle. Labour-run Manchester provides the prototype model.
At a national level, Labour is confused, signed up to a principle of decentralisation but unwilling to show any kind of complicity with Mr Osborne. Some Conservatives are also wary, as the East Anglian hesitation shows. The creation of directly elected mayors diverts power from existing councils. Tories express their jealousy of this rebalancing as aversion to waste and reluctance to create new tiers of bureaucracy. But the chancellor has understood that his devolution “revolution” will only be taken seriously by voters, and only succeed, if it creates powerful institutions. Ambitious Labour figures are eyeing up the mayoralties of Greater Manchester and the West Midlands as opportunities to escape from opposition. Taking charge of a city region, demonstrating that even with shrunken budgets there is a progressive alternative to Conservative rule, showing a practical aptitude for administration as distinct from impotent, protest gesture politics in Westminster – such are the opportunities that devolution deals offer a Labour party with imagination and courage. Austerity will not last for ever. It would be a mistake to refuse devolved powers on the basis that those powers entail cuts, which will be implemented with or without devolution. There is longer-term potential here: the development of local government as a site of innovation in the delivery of public services, the promotion of local government leaders to the political premier league as wielders of executive authority with direct mandates: a generation of experienced governors from whose ranks future prime ministers may arise.
There is no guarantee that Mr Osborne’s plan will effect such a transformation but it increases the likelihood. Suspicion of the chancellor’s motives should be set aside where devolution is concerned. He may drive a hard bargain but he gives away powers only once – powers that the beneficiaries might wield for generations.
