Devolution deals will be limited without mayors, says O'Neill

22 Jul 15

The government will only offer limited devolution to areas that do not adopt elected mayors, with places such as Cornwall needing to implement the reform if they want further powers, Treasury minister Jim O'Neill has said.

Speaking to Public Finance at a National Institute of Economic and Social Research event on the economics of UK constitutional change, O'Neill said that for areas to contribute more to the UK’s economy, they needed more responsibilities, but this had to be matched by greater accountability.

This was why chancellor George Osborne has attached such importance to the concept of a directly-elected mayor since the general election, he said.

“The core rational is that the degree of devolved powers that the prime minister and chancellor are prepared to give will be bigger to areas that are prepared to go for an elected mayor-type figure,” he told PF.

“If Cornwall wants to get more, including in areas where it has been given some powers [in a landmark agreement singed with government last week], it would have to consider a stronger form of accountable leadership for the whole area.”

O'Neill told delegates that the underlying premise was focused on the biggest urban areas.

“If you give them a lot of responsibility, given the number of people and their weighted contribution to gross domestic product, it is more likely to have a positive influence on the overall growth trend,” he stated.

The deal agreed with Cornwall council last week gave the county greater control of adult skills spending and regional investment. It also introduced an integrated health and care system, without a requirement for a directly-elected mayor.

The minister said this showed some form of devolution would be available without creating mayors, but these would be more limited.

“As evidenced by the Cornwall deal, there are devolution offers on the table –some version of the old city deals – which may not require the same degree of accountability that we are trying to encourage the largest urban areas to take.”

However, he highlighted that the combined authority for the North East of England indicated last week they would consider the creation of an elected mayor, meaning four regions were now open to adopting mayors in addition to the existing plan for Greater Manchester.

Leaders in the North East had now joined those in Merseyside, Sheffield, West Yorkshire in negotiations to adopt mayors.

“They have all agreed in principle to the idea of an elected mayor, and during the summer – leading up to the Spending Review – we hope to move towards completion with each of those areas. [These may] have perhaps some similarly to what has been agreed in Greater Manchester, and/or may have some areas that are unique to what they see as being appropriate for them,” O'Neill stated.

“We would hope there are other urban areas, especially including the West Midlands but not only the West Midlands, where similar conversations will take place going forward.”

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