Credit: David Wilson Clarke/Flickr

Will city devolution be a boon to business?

George Osborne is promising a 'revolution' in the way England is governed.

by Jack Torrance
Last Updated: 09 Jun 2015

Nine major cities rejected plans for elected mayors in referendums in 2012, but it seems the Government is still keen to push the devolution agenda and hand over more power to the regions. Today the chancellor, George Osborne, will announce plans to offer cities greater control over transport, planning, housing and other spending – but only if they change their minds on the whole mayor issue.

In November, Greater Manchester announced to great fanfare that it had reached a deal with Osborne to control £2bn of additional spending, and it will be holding its first mayoral vote will is planned for 2017. If the city council’s appetite for greater control is anything to go by, we might see dozens more cities taking up the chancellor’s offer in the coming years.

‘The old model of trying to run everything in our country from the centre of London is broken - it's led to an unbalanced economy,’ Osborne is expected to say. ‘It's made people feel remote from the decisions that affect their lives. It's not good for our prosperity, or our democracy. We will deliver the devolution to Scotland and Wales we promised. But today, I can tell you we will go much further - and deliver radical devolution to the great cities of England.’

The plans tie in with Osborne’s much-vaunted plan to create a ‘northern powerhouse,’ spanning Liverpool, Manchester, Newcastle and Leeds, but could also extend to other major cities like Birmingham, the decidely southern Bristol and Nottingham, as well as the smaller cities that make up the Key Cities group.

Although the extra layer of government and elections will come at a cost, it has the potential to benefit businesses in the affected cities. The regions will have control over their own spending on transport, skills and business support, which could make them more responsive to the needs of local employers.

On a macro scale the plans are aimed at rebalancing the economic centre of gravity away from London. While most are happy to tout the capital's success as a benefit for Britain, some would argue its success makes it difficult for businesses, and the talented people they need to thrive, to contemplate being located anywhere else. Giving cities more power over their fate could only go so far in addressing this, but would certainly be a good start. Creating stronger regional cities would be good for everyone, including Londoners, as it would unlock extra capacity for economic growth.

Greater decentralisation does bring with it a big capacity for corruption and pork-barrel politics, as local bigwigs divvy up funding for their own pet projects. Cynics might also suggest Osborne's plans are a tactic for outsourcing unpopular decisions away from central government, but it's nonetheless hard to argue they're not a good idea overall.

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