Devolution could stimulate economic growth but government must do more, says National Audit Office

James Nickerson
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Greater Manchester was one of the regions to first sign up to gain devolved powers

Devolution to regions of England will offer opportunities to stimulate economic growth and reform public services, but the government must do more to provide confidence that deals will lead to their intended benefits, the National Audit Office (NAO) has said.

The government has so far not set out a clear statement of what it is trying to achieve through devolution deals, the NAO added, as it "considers that devolution proposals should be led by local areas, and that central government's role should be to respond to these proposals".

Instead, the deals respond to broadly-framed objectives to support economic growth and rebalancing, public service reform and improved local accountability.

However, the NAO report found that in order to improve chances of success, the central government should clarify the core purposes of devolution deals as well as who will be responsible and accountable for devolved services and functions.

It adds that the central government should ensure it identifies and takes account of risks to devolution deals that arise from ongoing challenges to the financial sustainability of local public services.

Read more: Public spending watchdog warns government over devolution deals

"Despite several iterations of deals, the government’s approach to English devolution still has an air of charting undiscovered territory. It is in explorer mode, drawing the map as it goes along. Some of the opportunities and obstacles are becoming clearer, but we still do not have a clear view of the landscape or, crucially, an idea of the destination," Amyas Morse, head of the National Audit Office, said.

"Devolution deals provide important opportunities to reform public services. As with any experiment, some elements will work better than others.

"As we have said before, it is in the interests of both local areas and the government to know which programmes have the biggest impact for the money invested. Localism is not a reason for failure to learn from experiences or to spread best practice."

Over the last 18 months 10 devolution deals have been agreed, in cities and regions including Greater Manchester, Cornwall, Liverpool City Region and the West Midlands, which outline the transfer of powers and funding for policies previously under the remit of the central government.

All of the deals include an agreement on devolved responsibility for substantial aspects of transport, business support and further education

In some deals, other policy areas are included, on areas such as housing and planning, employment support and health and social care.

The government has announced additional investment funding of £246.5m a year alongside the devolution deals announced so far.

Over time, the government intends to combine this funding with a number of other funding streams into a "single pot" to enable more local control over investment decisions, and has announced £2.86bn of initial allocations over five years for the first six mayoral devolution deals, the NAO said.

Read more: For the devolution revolution to happen, Whitehall has to let go

Labour and Co-operative MP Meg Hillier, chair of the Public Accounts Committee, said: "Devolution does not absolve government of accountability. As more money is devolved it is vital that there is clear tracking of where and how effectively it is spent.

"It is not enough to say the details are still taking shape. The big questions need to be answered, including who taxpayers can hold to account. This is especially important when complex public services, like health, are devolved but where national service standards are to be maintained," she added.

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