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22.09.16

Brexit vote ‘shows devolution should include struggling areas’

The devolution programme is currently based on the assumption that “no more money is needed” and should therefore be redrawn in order to ensure financially disadvantaged areas aren’t set even further back, a major report has said.

The interim report from the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) Inclusive Growth Commission – which includes leaders from key organisations, such as CIPFA, the Joseph Rowntree Foundation and the Scottish Government's anti-poverty adviser – said that the vote to leave the EU demonstrates increasing economic inequality and dissatisfaction with the status quo in large parts of the country.

It called on prime minister Theresa May to back her promise of “a Britain that works for everyone” with a stronger devolution strategy.

Economist Stephanie Flanders, who chairs the commission, said: “We want the freedom to do things differently in the UK. There were plenty of mixed messages in the result of the EU referendum, but that one came through loud and clear.

“We do not know yet how Theresa May will translate this vote against the status quo into sensible policy. In her first speech as Prime Minister she said she wanted ‘to make Britain a country that works for everyone’. This could be a powerful uniting theme for policymakers in this parliament and beyond - and a great way to use this moment of radical uncertainty to start to do things differently.

“But if we are to take these words seriously, they must be backed by a concrete strategy for delivering inclusive growth.”

The report warned that there is a danger that city-region devolution “will only be offered to – and will only benefit – those places that have the narrow characteristics of places that are already succeeding”.

It recommended that the government publish a plan for inclusive growth alongside this year’s Autumn Statement, and a place-based Spending Review before the end of Parliament. It added that the Autumn Statement should include additional financial resources for localities.

The next Budget and next year’s metro mayor elections in England could also be opportunities for developing an inclusive growth policy, it added.

The RSA also called on the government to set out how it will replace funding from the European Structural and Investment Funds.

It said this should include earmarking repatriated finance for inclusive growth programmes , hypothecated borrowing based on the Prudential Code, social investment finance and new forms of taxation to deliver increases in affordable housing and reformed public services.

In the longer term, the report says the government should “invest in social as well as physical infrastructure”, and develop inclusive industrial strategies.

A recent report from the Centre for Local Economic Strategies (CLES) and Sheffield Political Economy Research Institute (SPERI) criticised the devolution process so far for being too centralised and austere.

The government’s devolution strategy has also been called “inconsistent” by the Public Accounts Committee and “rushed” by the Communities and Local Government Committee.

Research from the Joseph Rowntree Foundation suggests that LEPs in the north have experienced little growth in economic inclusion despite their prosperity growing overall.

(Image c. Yui Mok from PA Images)

 

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