UK Regional Mayors can now borrow much more money, and actually invest in the regions they serve.
On Friday, it was announced that there would be a guaranteed transfer of a portion of centrally collected tax receipts, specifically income tax and business rates. I was part of regional devolution 25 years ago when I joined the Northwest Development Agency, and have been keeping an eye on its tortuous history ever since.
The Achilles heel of every single attempt at devolution was the death grip on funding – it’s all very well creating organisations to push a local agenda, but if you make sure they never have the money they need, or need to go cap in hand to central government every time, you still end up with projects that the centre agrees on.
But that’s not actual devolution – if you still control the purse strings, you’re still in charge.
So the announcement is good news, especially when coupled with the other announcement that mayors can go ahead with transport projects of up to £500m (up from £200m) without having to go and beg permission. This could lead to significant regional projects delivering significant value.
However, to actually deliver those project, the real win is that the greater certainty of the funding model for regional mayors will allow them to borrow more, and over a longer period. It is expected this will unlock 30 year loans, which means bigger projects, paid for over that time (and, presumably, from the benefits they deliver).
There are still some unknowns, however.
Firstly – this is a proportion of tax collected in that area. So economically successful areas get more money to invest, and struggling areas get less… This seems A Bad Idea. There is talk of looking at some form of “formula” to tackle this, but local government funding formulas have a long history of difficulty in achieving a result seen as ‘fair’ by all.
Secondly – this is for regional mayors. It has been suggested that central government will encourage new mayoral authorities for the quarter of England’s population not covered by a regional mayor. But do these areas want a mayor? Do they even work as a regional unit? That question could be asked of some of the existing mayoral authorities, and creating more predominantly rural mayoral authorities is not necessarily going to be a success. Even without a mayor (another option floated) the questions around these strategic authorities will persist.
So, broadly positive, but let’s keep an eye on the details.
Trevor Roberts is a programme and project management consultant and the founder of Dull Industries – a consultancy focused on project turnaround, AI implementation, and digital strategy.