Devolution is one of the main planks of the Northern Powerhouse project, but it comes at a price. George Osborne has made it clear that he will not devolve powers to city regions unless they agree to directly elected metro mayors.
James Wharton, minister for the Northern Powerhouse, said that this has become a “red line” for the chancellor. “We’re not taking powers up from councils but pushing powers down towards metropolitan areas,” he said. “With that significant devolution of control comes a requirement for accountability; that needs to be ultimately to the people who are affected by those decisions.”
Nor will he countenance the prospect of holding a referendum over whether a region will have a metro mayor. “I am confident that — if we get the deals right, and I think that we can — [areas] will recognise the benefits that flow from that.”
Once authorities have agreed to this point, talks can begin over their own bespoke devolution deal. Greater Manchester agreed last year, appointing an interim mayor in advance of elections in 2017. It has since become the exemplar for devolution, winning significant powers back from Whitehall, from transport to housing and control of a £6 billion health and social care budget.
Mr Osborne announced in the summer budget that the government was working towards similar deals with Sheffield, Liverpool and Leeds. Mr Wharton said that Newcastle was also officially in talks.
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Joe Anderson, the mayor of Liverpool, said last month that the city region had not yet had its first session with the government and that it was only meeting with local authority leaders to discuss its demands.
Leeds has submitted its expectations but has yet to get a response. The government wants a decision on the powers to be devolved by next month, Mr Anderson said, so that it can give details of what the regions will receive at the comprehensive spending review in November.
Mr Wharton is coy about the content of the discussions with city regions. “To talk about it in a public forum like this wouldn’t be conducive to properly ensuring we can reach a deal that works for those areas,” he said.
Local councillors are not so reticent: an article in the Yorkshire Post last month examined the 27 items on the Leeds city region’s wish list. Above all, the regions want fiscal devolution: the ability to raise funds from their residents and spend the proceeds.
Mr Wharton said that the government was open to all options and pointed to Greater Manchester, which won the right to retain all growth associated with business rates.
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17%
Share of UK population, 2013
16%
Share of British jobs, 2013
13%
Share of total UK gross value added (GVA), 2013
13%
Share of jobs that are knowledge-intensive, 2013
£44,850
Average GVA output per worker, 13 per cent behind the UK average, and 29 per cent behind that of London