George Osborne overcomes obstacles to pull off Manchester devolution deal

Rivalries within coalition, between Labour local governments and in Whitehall left deal perilously close to collapse

George Osborne’s announcement of a directly elected mayor for Greater Manchester backed by £1bn in devolved funds may prove to be a new model not just to power growth beyond London but also to revive politics in England beyond Westminster.

After Labour’s stillborn elected assemblies and the doomed English city mayoral referendums held in 2012, government officials are hopeful that Leeds and Birmingham will look at the Greater Manchester deal and want a slice of the action.

The pace of change, alongside reforms in Wales and Scotland, is remarkable. But the deal announced between 10 local government leaders in Greater Manchester and George Osborne very nearly did not happen. Rivalries within the coalition and between Labour local governments in the north, as well as in Whitehall, left the deal perilously close to collapse.

It took all of Osborne’s political capital to pull it off, and it is a tribute to the determination of his team including his senior policy adviser Neil O’Brien that he succeeded.

As late as Thursday and Friday, local government leaders were holding out for more powers, while some protested at the chancellor’s insistence that a directly elected mayor, imposed without a referendum, should be at the heart of the package. In Whitehall some departments, including business, battled to minimise the transfer of powers.

Within the Labour party there was anxiety, so close to an election, about Labour councils being seen to be striking a deal with Osborne that might portray the chancellor in a favourable light in north-west marginal seats. Ed Miliband had produced his own blueprint devolving power to city regions in the spring following a report written by Lord Adonis, his adviser on industrial policy.

Labour would have preferred monopoly ownership of this political real estate, and in a visit to Manchester last Friday Miliband accused Osborne of coming late to the devolution party. Miliband even twice refused to tell local reporters whether he would accept the Osborne Manchester offer, and he listed greater tax powers, fairer council funding and better public services as missing from the chancellor’s plan.

“Unless he’s got answers to all of those things, it’s not just that he’s late to the party. I don’t think he will convince people,” Miliband said.

However, Adonis struck a less critical tone, saying: “It is good to see Labour leaders in Greater Manchester taking the initiative in setting up an elected mayor for a city region with new devolved powers. It was Labour that first created the first city regional mayor in London which has been a great success in improving transport in particular. It is time for other city regions to be allowed to follow suit, as Ed Miliband said at the weekend.”

Labour stressed it should be for local councils to decide whether to go down the elected mayor model, a position that reflects differences inside Labour local government.

Osborne argued that it was impossible to transfer powers without a clear line of responsibility. If power lay with 10 leaders inside the combined authorities, then no one would be accountable if something went wrong.

The deal is bespoke to the north-west, and is not a simple transposition of the London mayoral model. This is a not a Boris for the north, but instead more like the model the Conservatives considered for London before proposing the London Assembly.

The mayor will not be answerable to a London-style elected assembly but to a cabinet comprising the 10 leaders, which must be consulted on mayoral strategies. The mayor, not due to be in place until 2017, may be overruled if two-thirds of the council leaders disagree with a decision.

There is a careful split in the roles of the mayor and combined authorities. The mayor has control of a £300m housing investment fund and will be responsible for strategic planning, including the power to create a statutory spatial framework for Greater Manchester. This will need to be approved by a unanimous vote of the mayor’s cabinet.

He or she will also have responsibility for a devolved transport budget, with a multi-year settlement to be agreed at the next spending review, and responsibility for franchised bus services, subject to consultation by Greater Manchester, and for integrated smart ticketing. They will also take on the role of police and crime commissioner, a further sign that this friendless democratic experiment will end.

The Greater Manchester combined authority takes control of public service reform through apprenticeship grants, further education, some welfare funds and the integration of health and social care. The last reform comes close to reinstating the strategic health authorities abolished by the former health secretary Andrew Lansley.

This is only possible because local authorities have statutory responsibility for social care. In London, the mayor has no power over either health or social care. The same is true of the proposals to jointly commission the Work Programme with the Department for Work and Pensions.

Much remains unresolved. Education is missing from this deal. No referendum is proposed and at some point a brave politician is going to propose a fresh look at the equalisation of resources across the UK, including tax-raising powers in regions and nations.

Sir Richard Leese, leader of Manchester council and an early favourite – ahead of Morrissey – to be the first Greater Manchester mayor, was probably not being hyperbolic when he said: “It’s revolutionary and … [a model] other cities around the country would want to adopt and copy.”


Patrick Wintour, political editor

The GuardianTramp

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