Devomanc is the shorthand given to the idea of devolution to the ten Greater Manchester local authorities.  The area chose falls somewhere between the built up urban area and the wider functional urban area from which commuter’s travel every day.  The inclusion of satellite municipalities of Oldham, Burnley, Bury, Stockport and Bolton is no surprise as these have worked together since the abolition of the Greater Manchester Authority by Margaret Thatcher’s government in 1986 and the ten authorities together form the Association of Greater Manchester Authorities.  They have a long history of close collaboration and are the owner of a major asset in the shape of Manchester Airport, the UK’s third largest. 

The original offer focused on transport, housing and training.   A more recent announcement proposed that health will also be included in the package which open up the potential to better integrate health and care services and to increase the focus on prevention and public health. 

Back to the Future: but with elected mayors

URBACT has been working on city regions since the start of URBACT 2.  Projects have included  Joining Forces and CityRegionNET which looked at the governance of different urban functions and EGTC which dealt with issues in cross border conurbations. 

The Devomanc version of the metropolitan city region is a sort of triumph for Back to the Future urban policies. It also reflects a wider trend across Europe to find new ways to enlarge urban governance to address new urban realities.  In the UK it is nearly 30 years since the abolition of the directly elected metropolitan tier in Manchester, Merseyside, Newcastle/Gateshead, West Yorkshire and the West Midlands.  Now it is being reinvented. But there are subtle twists.  The key one is political, Chancellor (the equivalent of a Minister of Finance) George Osborne has insisted that there should be an elected mayor for the new Metropolis.  When the public have been consulted about elected mayors they have rejected the proposal in eight out of ten referendums including in Manchester.  Bristol is the only big city outside London to have an elected mayor so it is difficult to argue that there is popular demand. 

On current trends in which most of the Councils are Labour controlled, Conservatives have little chance of winning control of Greater Manchester if the leader is either selected by the representatives of the ten constituent parts or if there is a city wide election to a new directly elected assembly (a version of which was abolished in 1986). However, the election of Boris Johnson for two terms in London shows that a charismatic candidate in a popular vote can overcome normal electoral arithmetic.  

Manchester’s directly elected mayor will be accountable to the ten local authority leaders of the constituent municipalities who can outvote the mayor with a two thirds majority.  This contrasts with arrangements in London where the mayor is accountable to the directly elected Greater London Authority. 

Although directly elected mayors are in fashion (see Benjamin Barber’s book ‘If Mayor’s ruled the world), there is not much hard evidence that such mayors are better for cities than other forms of leadership.  If you are lucky you get good ones (Park Wonsoon in Seoul, Bloomberg in New York, Annise Parker in Houston) and if you are unlucky you get the corrupt or the incompetent.  Elected mayors have much higher name recognition than ordinary city politicians but the system contrasts with the Westminster system of prime ministerial leadership in which the leading party provides the leader.

Why Manchester?

There are many different arguments about why Manchester has been chosen to lead this experiment in city-region devolution.  Some argue that it is because Osborne is a local MP for the wealthy area of Cheshire just south of Manchester.  

The Guardian[1] paints an interesting picture of the negotiations for devolution of central government powers to this one city region and highlights the two decades of stable leadership of the Manchester City Council by Sir Richard Lease as Leader  and Sir Howard Bernstein as Chief Executive.  It also mentions former Treasury official Mike Emmerich who lead the city-region wide New Economy Manchester and negotiated much of the package.  

None of the other options would have been as straightforward.  Birmingham has major financial difficulties, Leeds and Bradford lack the joint working arrangements that have been maintained in Manchester.

A Manchester pilot was attractive for another reason.  Osborne could give additional powers to Manchester without rocking the boat with his ministerial colleagues who would see their budgets reduced if the process was repeated across all of the metropolitan areas.  Now, since the minibudget that followed the May election all of the city regions will be made a similar offer.

The ground for this whole city devolution process was laid by Jim O’Neill’s Cities Growth Commission which reported ‘unleashing metro growth’ in October 2014 and claimed that UK GDP growth would be significantly enhanced by devolution to metropolitan city regions.  The presence of luminaries such as Bruce Katz of the Brookings Institution and consultant Greg Clark guaranteed strong support for a metropolitan approach.  

Other commentators had been chipping in.  Evan Davies an influential broadcaster and economist had proposed that the Northern Cities (including Leeds, Sheffield, Bradford and Liverpool could somehow be combined in a single northern Metropole linked by a High Speed rail system.   

Tax raising powers: representation without taxation?

British cities have limited tax raising powers. This can make it risky to take on new responsibilities unless there are guarantees long into the future that central government will continue to pay the cost. Compared to Nordic local authorities (specifically Sweden, Denmark and Finland)  that can raise a local income tax which is typically near 20% of earnings and can cover the vast majority of local government expenditure.  The contrast with the UK is acute, there the sole direct tax relates to domestic property and only raises just under a quarter (22%) of total expenditure.  Local authorities They also receive a pro rata share out of money that central government raises through the business rate on property – this provides a further 17%.  The remaining 60% comes from central government grants with some other small income streams from parking fines, traffic violations etc.

In short local authorities  have only one tax – the Council tax and their ability to increase it is heavily circumscribed by central government.   The cities are more reliant on central government than the more rural shires.

Central government controls most of the funding streams for departmental expenditure on everything from social security and welfare, active labour market policy, housing and health.  The central government grant for local authorities is administered by the Department for communities and local government.  This grant accounts for approximately 60% of their expenditure and had been cut by 30% in real terms by May 2015.  The result is that many non-statutory services such as libraries and youth work are under threat or have closed.  As the cuts deepen even statutory services such as child protection and services for the elderly are at risk of not being adequately funded to do their job.

What budget will the new Greater Manchester have?

It is difficult to calculate what impact the new reforms will have on Greater Manchester’s overall public expenditure but the figures announced such as 260meuro  on the housing budget and 650meuro   for training and apprenticeships across a population of around 2million.  Manchester alone with a population of a quarter of the 10 councils has a turnover of approximately 2billion euro.    The total for the city region has not been reported but could be as much as 8billion euro.  

However, what is significant about the new devolution is that it goes not to the individual municipalities but to the conurbation as a whole.   This will facilitate strategic initiatives at the metropolitan level in a way that has not been possible since Greater Manchester was abolished in 1986.  

Towards a new urban policy

The DEVOMANC solution is a pilot and by itself is not a fully-fledged urban policy.  However, the new government has said that it hopes to replicate DEVOMANC in other city regions across England.  Scotland and Wales will make their own devolved arrangements.  

However, the UK Treasury runs the most centralised tax system in the OECD.  Without some new deal over tax sharing, the risk is that responsibilities will be devolved but with inadequate funds to deliver high quality services. Without greater fiscal autonomy, what central government gives with one hand it can take away with the other.  This has been the experience of British cities for the past 35 years.  The challenge for British Cities is to negotiate a deal that brings new powers with guaranteed revenues 

Cities in other parts of Europe face similar difficulties, how to take on more powers handed down from central government, but with no guarantees about future financing.  They can possibly learn from the UK example that negotiating a deal could be a way forward.