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14.11.16

Devo cash will reflect mayoral stance, says Northern Powerhouse minister

English regions will need elected mayors in order to be prioritised for local government funding, the Northern Powerhouse minister Andrew Percy has confirmed.

The latest round of £1.8m growth funding will be focused on areas with mayors, confirming that mayors remain central to the government’s devolution proposals. There are 39 areas currently bidding for this funding but together they have requested around three times the allocated amount.

While elected mayors remain unpopular with many local authorities, the government’s stance is forcing large counties like Lancashire and Yorkshire to consider dropping their objections, with attaining central funding increasingly crucial for councils as EU funds become inaccessible.

“Where there are devolution deals in place we know there is a degree of accountability with a mayor and local growth allocations will reflect those deals,” Andrew Percy, Northern Powerhouse minister said.

Percy confirmed to the FT that combined authorities run by elected mayors are likely to get the “main share of funding”.

Fifteen local authorities, including Lancashire County Council, have formed a shadow combined authority in order to boost their chances of negotiating with government successfully.

The county, made up of 1.5 million people, is thought to be seeking a mayor whose role will be closer to a chairman than a traditional chief executive role. 

Areas with mayors have already been rewarded by government, benefiting from up to £30m a year extra funding and some input over Whitehall spending. Greater Manchester, the West Midlands, Liverpool and the Tees Valley are now set to hold elections next May with the West of England soon to follow.

Other regions have signed mayoral deals but not yet ratified them, such as Sheffield, whose deal including Chesterfield in Derbyshire is being legally challenged by Derbyshire County Council.

The most significant potential mayoralty is elsewhere in Yorkshire, with South Yorkshire and West Yorkshire likely to back a region-wide solution after initially wanting separate deals. A pan-Yorkshire deal would create an entity of over five million people with an economy larger than Scotland’s. North and East Yorkshire council leaders, along with Percy, all back the move. 

However, continued political resistance towards a mayor could make the North East miss out on funds, despite them being vital in the region with the highest unemployment in the UK. Almost 40% of investment secured by the North East Local Enterprise Partnership since its creation has been made up of local growth funding. 

In October the North East Combined Authority (NECA) voted not to proceed with the deal signed by seven council leaders. The three councils who voted in favour are now discussing their own independent devolution bid.

“[Funding] should go on the quality of the scheme in terms of the return on the public money invested,” said Cllr Paul Watson, chair of NECA and leader of Sunderland City Council.

He added that it would be “unfair and capricious’ for the government to allocate money solely on whether areas had an elected mayor as there is no proof that the system offers any obvious benefits compared to areas without elected mayors.

A CCN spokesman told PSE: “Allocations are meant to be based on the strength of local bids, in line with the competitive spirit of the Local Growth Fund process, with substantial evidence on how this funding will support growth, employment, and housing that county areas sorely need. Instead, it would seem that the government is targeting funding on areas who have accepted arbitrary governance arrangements with little link to their potential impact on supporting national growth.  

“There is a real risk that local business and private enterprise will be disenfranchised. A system where funding decisions are being predetermined on the basis on governance structures rather than focusing on delivering real and equitable growth across the whole of England won’t create an economy that works for everyone.”

(Image c. Conservatives)

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