Devolution deals 'lack proper accountability to taxpayers'

The Government's devolution agenda is not doing enough to protect taxpayers' interests as its objectives are not clear, the full financial implications are not known and there are no plans in place for proper accountability to the public at central, local and parliamentary level, MPs have warned.

The cross-party Public Accounts Committee said some deals lack clear goals and it is therefore unclear how Whitehall will be able to judge if they are a success. Outside of proposed five-year reviews, it is also not yet clear how quickly central government would be able to react if things are going wrong and how it would intervene.  

In the 18 months to April 2016, 10 devolution deals were agreed for the transfer of powers, funding and accountability from central government. They cover Greater Manchester; Cornwall; Sheffield City Region; the North East; Tees Valley; Liverpool City Region; the West Midlands; East Anglia; Greater Lincolnshire; and the West of England.

The committee noted there are already "clear tensions" in some areas and evidence that some deals are "beginning to unravel".

It found a lack of transparency over funding for different areas, with funding per capita ranging from £11 a year under Greater Manchester's deal to £27 a year in the West of England.

It added that the full financial implications of the deals are unknown because although the March 2016 confirmed that "single pot" transport and local growth fund money for six devolution areas would be £2.86bn over five years, the Government has yet to provide an area breakdown other than for the additional investment funding element. This funding appears to have been "more a product of local areas seeking to achieve parity with each other than a structured assessment of each area's local needs".

MPs warned that the timetable for implementing the deals is "extremely challenging" as the Government needs to pass secondary legislation by November in order for elections for new "metro mayors" to take place in May 2017. This requires all areas to publish and consult on governance arrangements, and final geographical composition over the summer. Any delays could put the proposed elections at risk, the committee said, and the Government must have clear contingency plans in place for such a scenario.  

It also called on ministers to be "specific and clear" about what devolving services to local areas is designed to achieve and to explain how they will monitor progress against these goals, particularly where it believes outcomes will be a matter for local leaders and where centrally imposed targets will be used.

Furthermore, the committee raised concerns about the role of Local Enterprise Partnerships, saying it is "alarming" that they do not meet basic standards of governance and transparency, such as publicly disclosing conflicts of interest. Stakeholders also told the committee that the private sector-led bodies are "dominated by vested interests" and do not properly represent business communities. In the last six years, 39 LEPs have been created.

MPs also said that Whitehall has not been clear with local areas about what is required when putting forward devolution proposals and what is, and what is not, on offer from central government. Negotiations have not been consistent with the Government's "bottom-up" approach and localist rhetoric. In practice, central government has made demands in areas such as local governance without making them sufficiency clear up front. For example, some areas have been unhappy with the requirement to adopt an elected mayor.  

The committee said there are "unresolved tensions between a stated wish to let local areas put together innovative arrangements and a central desire to impose particular governance models".

Meg Hillier, chair of the PAC, said: "Devolution involves big changes to the way large sums of taxpayers' money are spent on their behalf. It is therefore alarming to report that, as we hurtle towards mayoral elections planned for next year, so many questions still hang over the process.

"Parliament and the public must be assured that devolved spending is subject to effective scrutiny and there are clear lines of accountability for delivering value for money.  These vital arrangements are still very much work-in-progress and must be confirmed as a matter of urgency. 

"The Government has set an ambitious timetable to implement devolution deals but it must not skip over crucial details in a blinkered race to the tape. It must be far clearer about what these deals are intended to achieve and set out in detail where accountability for areas of public spending will lie."