Opinion: Can devolution unlock innovation?
THERE’S been a lot of buzz around the UK for the past several years regarding the devolution of governmental powers. The Cities and Local Governments Devolution Bill is now proceeding through Parliament, paving the way for other regions to follow Greater Manchester’s lead.
Already, a deal has been approved for Cornwall and other regions have been asked to draw up plans, including assurance that there would be an elected mayor.
The movement is fuelled by the belief that locally elected officials are closer to the electorate and can respond better to their needs than can the Government in London. Moreover, devolution is seen as a means to help rebalance the economy, moving the locus of power away from the nation’s capital.
During the last election campaign and in the summer budget the Chancellor gave Greater Manchester control over the region’s health and social welfare, transportation, policing, strategic planning, business support, housing investment, and apprenticeships programmes, and the ability to “earn back” substantial amounts of investment capital.
I want to focus on one aspect of this devolution that has not been emphasised, but is a major selling point: it recognises that innovative governance cannot be achieved by a “one size fits all” approach. Different regions will design their version of devolution in their own way, to suit their own political and economic reality. The plan emerging in West Yorkshire, for example, leaves health and social care out of the regional equation.
This notion that different regions, given freedom to design their own approaches, will create a marketplace of competing ideas, enabling good practice to be copied where appropriate, is related to a long-standing intellectual history in the United States, called “laboratories of democracy.”
In brief, in the US each of the 50 states has sufficient autonomy to create its own model. The states use tax policy, as well as different approaches to housing, welfare, education, and transportation, to attract the kinds of individuals and businesses they seek. The role of central government is to provide the context and ground rules.
The UK is not yet the federalist country that the US is. There are arguments for and against moving in that direction by giving Wales, Scotland, and Northern Ireland more freedoms, and devolving some taxing and spending to the regions. One real benefit of such federalism would be a greater incentive for innovation which could help raise the game everywhere.
Michael Luger is a professor at Alliance Manchester Business School, where he formerly served as Director. He is also chairman of a local NHS Foundation Trust and a member of the board of the Office of Rail and Road.
