CIPFA conference: devolution can offset worst effects of Brexit

13 Jul 17

Devolution done well could deliver growth that would cancel out the damage that will be done to the economy by Brexit, CIPFA conference delegates have heard.

Richard Holt

Richard Holt told CIPFA conference we should not be "over-alarmed" by the implications of Brexit

Speaking in Manchester, Richard Holt, head of global cities research at the Oxford Economics consultancy, said the implications of Brexit were “alarming, but we should not be over-alarmed”.

He said there was international academic evidence to suggest devolution could drive growth, but “it must be genuine, not [come with] a set of rules to stop it, and it must be large enough to be effective”.

Holt pointed to research by EY that said devolution could generate significant savings of £6-12bn a year “though that requires councils to get genuine control over spending and use it wisely and is based on an underlying assumption that spending grows”, he said.

“It can have significant impact on growth if you have worthwhile projects. It offsets Brexit.”

Holt said a common error when areas tried to decide how to use devolved powers was to follow fashionable economic sectors even when there was no evidence these would grow locally – or were even significantly present.

“The competiveness of places is based on the same factors as companies: distinct capabilities and market strategies to exploit those,” Holt said.

“Places talk about creative industries and life sciences but on the whole telling yourself lies is not a good strategy if you do not have those, be honest about what you are good at and invest in becoming better at what you do.”

He said exports were crucial to the UK, with exports relative to GVA highest in Cheshire West and Chester, Cheshire East and Hampshire, and lowest in Devon, Shropshire and Cornwall, though even in the latter they accounted for 14%.

“If Brexit means exports are not as good, GDP will not grow as fast and public finances will not be so good and you guys will feel that, Brexit affects you very directly,” he told CIPFA delegates.

John Dickie, director of strategy and policy at London First and the Global Cities Business Alliance, also urged places to focus on greater competitive advantage when devising economic plans.

“Do not include sectors you feel are the future with little evidence of it,” he said.

Some London boroughs were mesmerised by ‘green industries’ and media jobs but “London has little competitive advantage in green technology, and while there are media concentrations its hard to replicate that in outer London”.

Dickie said fiscal devolution would be essential, as “everyone is painfully familiar with transfer of responsibility but not resources by central government”.

But he thought Brexit would absorb so much of the government’s focus that “the machinery of government will not be inclined to push ministers to solve that through devolution”.

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