黑洞社区

The eldest of the Scottish National Party鈥檚 56 MPs, Marion Fellows, is, at 66, old enough to collect her bus pass. At the other end of the age range is 20-year-old Mhairi Black, the youngest MP since the 17th century. The SNP took all but three of the available seats north of the border, up by 50 MPs on the 2010 general election. Having failed to secure independence in last year鈥檚 referendum, the party has gathered momentum that confounded conventional political logic. Scotland has been won over by its insistence that all manner of powers, from control of housing benefit to corporation tax, should be handed to Holyrood.

As Scotland closes in on a devolution that could include full fiscal autonomy, so the English regions have been promised greater control of their budgets. No sooner had the Conservatives embarrassed pollsters by seizing a parliamentary majority last month, than chancellor George Osborne was outlining a Cities Devolution Bill, which was included in last week鈥檚 Queen鈥檚 Speech. This would allow city regions to oversee spending on housing and transport, provided they agreed to have an elected mayor.

It was a surprising policy to prioritise, particularly as elected mayors were rejected by nine out of 11 cities that held referendums on the issue in 2012. But, as the Tories have vowed to balance the public finances by 2018, it at least means that regional authorities will be able to make sure the most pressing local needs are met.

For the construction industry, such devolution could bring a plethora of housing and infrastructure projects, as mayors look to improve facilities for their voters. There are fears, though, that the policy will not be sufficient to overcome the Treasury鈥檚 centralising instincts. Others fear that mayors will simply add an unnecessary layer of bureaucracy, creating a logjam, rather than smooth pipeline, of projects.

The plan

Greg Clark鈥檚 elevation to the Cabinet as communities and local government secretary in the post-election reshuffle shows how seriously David Cameron and Osborne are taking devolution. Clark has long been an advocate of decentralisation, telling parliament in March that 鈥渆very part of the country is different鈥� and so should not be subjected to uniform policies directed by officials in central London.

鈥淕reg鈥檚 a very clever guy and really passionate about this,鈥� says one minister. He adds that the chancellor is 鈥�120% behind devolution鈥� and there is 鈥渁n absolute desire to do things locally鈥�.

Local authorities, hospitals and housing associations would have more freedom to award procurement contracts to local construction firms

Paul Hackett, The Smith Institute

There is also broad cross-party support. Labour leadership contender Liz Kendall says: 鈥淧eople want power over things that matter to them, like jobs and housing. Transferring from Whitehall to the town hall, to people, is what will work 鈥� we鈥檙e too centralised in this country.鈥�

Greater Manchester is the pilot for the plans. It will elect a mayor in two years鈥� time, who will sit above a combined authority (CA) of 10 councils, including Oldham, Salford, and Wigan. Already a unique structure that sees the CA pool resources and control 拢5bn of public money, the addition of a mayor will see it receive an extra 拢2bn. This will be the centrepiece of the 鈥渘orthern powerhouse鈥� (see box, overleaf) 鈥� Osborne鈥檚 plan to rebalance the economy from its dependence on London and the South-east.

Major metropolitan areas are keen to follow 鈥� Birmingham Chambers of Commerce president Greg Lowson has said this could 鈥渦nlock even more resources鈥� and Hull council leader Steve Brady describes devolution as an opportunity 鈥渘ot to be missed鈥�. For his part, Osborne wants the plan to be open to 鈥渁ny major city鈥�. Rail contractors could particularly benefit, as the Department for Transport鈥檚 dissatisfaction with the performance of Network Rail may lead to its work being regionalised under the mayoral model. Similarly, Highways England contracts could be partly directed by authorities that see road improvements as vital to their economic growth.

Paul Hackett, director at the Smith Institute think tank, says such a shift could result in more work for regional firms: 鈥淟ocal authorities and other major 鈥榓nchor institutions鈥�, like hospitals and housing associations, would have more freedoms and flexibility to award procurement contracts to local construction firms, and include contract clauses to support local apprenticeships. The power of local procurement is not being utilised enough because of rigid Treasury rules.鈥�

Andrew Crudgington, strategy director at the Institution of Civil Engineers, believes mayors will be able to develop infrastructure plans, which means they will know what workers they will require over the coming years so they can establish skills academies, focusing on areas such as plumbing, surveying, or engineering, depending on the local shortages. However, he warns that the bill must avoid a 鈥渙ne size fits all approach鈥� where every area is modelled the same and handed similar powers. He says not all city regions will be as 鈥渕ature as Manchester鈥� in their governance model 鈥� the CA structure means Manchester鈥檚 mayor will not have to establish a fresh bureaucracy.

The problems

In a sign that the government has recognised this danger, 黑洞社区 can reveal that ministers are keen for counties, as well as city regions, to bid for devolution packages. A government source points out that Suffolk is eager for greater budgetary control and adds that it is 鈥渧ery much up to them [counties] to make proposals鈥� as to why they would be the right bodies to which to devolve power. An industry source adds that this means government understands that the 鈥渃entre of gravity鈥� of a region is not always defined by metropolitan boundaries.

A greater issue is the idea of mayors themselves. Osborne has insisted that he is not imposing mayors on cities, yet cities can only gain the powers if they agree to having mayors. Having failed to introduce the system in the 2012 referendums, many cities feel they now have little choice but to accept something that goes against the will of the people. For example, former Leeds council leader Keith Wakefield says his city 鈥渁nswered this conclusively鈥� in the referendum. Graham Brady, a Conservative backbencher and MP for Altrincham and Sale West, is considering tabling an amendment to the bill so that elected mayors are not the price of greater autonomy.

Richard Threlfall, head of infrastructure, building and construction at KPMG, believes the reforms will mean infrastructure is 鈥渓ess stalled in Whitehall鈥� but hopes 鈥渨e don鈥檛 live to regret鈥� elected mayors being part of the deal. He says that London has been lucky in having two 鈥渉igh calibre鈥� mayors 鈥� Ken Livingstone and Boris Johnson鈥� since the capital鈥檚 assembly began in 2000. With much UK talent sucked into London and the South-east, Threlfall fears that it is 鈥渇ar from certain鈥� that other regions will get the standard of mayor needed to oversee complicated development plans. He also says it will take regions at least two years from electing a mayor before they see the benefits of devolution.

Clive Betts, the Labour MP who chaired the communities select committee in the last parliament, is gloomy. He believes the reforms could be the 鈥渨orst of all worlds鈥�, with added bureaucracy, minimal budgets transferred, and authorities 鈥済etting the blame鈥� when new houses, roads and facilities fail to appear. The key, he adds, is for the Treasury to allow authorities to borrow money at a time of record low interest rates. 鈥淭here is no sign that the Treasury is amenable to that,鈥� he says. 鈥淔reedom to borrow would let authorities build the housing and infrastructure that we need.鈥�

The bill, published last week, focuses on the institutional framework, such as removing the statutory limitation of functions 鈥� transport, policing 鈥� that can be conferred to a combined authority. The specifics of the powers themselves are deliberately vague, allowing authorities to tailor their plans before applying for them from the government. However, the bill does, as Betts feared, state that 鈥渢he power conferred on the mayor may not include a power to borrow money鈥�. Pro-devolution politicians could seek to amend this when the bill is debated later this year.

The future

Devolution has heavyweight support from Osborne, who has gained greater clout since acquiring the title of first secretary in the post-election reshuffle. This means he is considered senior to the rest of the Cabinet, with some believing the position implies he is Cameron鈥檚 preferred successor.

Generally, the industry and politicians from across the House of Commons are in favour of devolution and its potential benefits. And even if they weren鈥檛, political impetus is against them. The drive to an ever more autonomous Scotland has inevitably led English regions to conclude that they want greater control of their own spending. What鈥檚 more, Cameron would have faced a backlash from his own MPs had England or the regions not be given powers as the price for granting Scotland so much autonomy.

But there are problems that will need to be addressed quickly 鈥� notably whether elected mayors really should be the price of devolution. Only then can the government claim the reason it wanted power was to be able to give it away.

Mark Leftly is political correspondent at The Independent on Sunday and associate business editor across the Independent and London Evening Standard titles