Devolution: new powers, new responsibilities

5 May 15

Councils want the momentum towards devolution to be maintained after the election. But there are risks attached to handling the bigger budgets involved

Local government has long been interested in the prospect of central government devolving budgets and responsibilities. DevoManc and the announcements made by George Osborne in the March Budget have no doubt boosted hope that what many authorities have long hoped for is now just around the corner.

The chancellor made a commitment to two big schemes for local government in Greater Manchester and Cheshire East, in which local authorities in both areas will retain 100% of any additional business rate growth. West Yorkshire Combined Authority will also be given new powers over regional skills policy, business support and transport.

However, these announcements are only the start and local civic leaders are keen to ensure that the momentum will be maintained post-election, regardless of who is in power.
While the desire to have greater control over local services is unsurprising, local authorities should be careful not to pursue devolution blindly. Council chiefs need to understand that the success of devolving powers will depend on local government’s ability to manage a number of critical challenges – especially on two key issues: accountability and funding.

With huge questions still surrounding the issues of governance and risk sharing, local government must ensure that the right systems are in place to ensure the lines of responsibility are clear. The risk landscape for local government is more complex than ever before, with budget cuts meaning that councils are increasingly relying on new partners and third parties for service provision. Lines of liability may therefore be blurred, and a thorough review of governance is needed before further changes to how the council operates are made.

Whilst the fiscal arrangements surrounding the devolution of power are still unclear, there can be no doubt that any devolution of central government power is going to have a significant impact on the way in which local authorities handle their finances. Councils may soon find themselves responsible for significantly larger budgets than they have managed in the past. In itself, this will generate new risks for local authorities, especially as the potential for fraud and criminal activity is likely to become ever greater.

Needless to say, local government will have to develop strategies to deal with these risks. However, no one strategy will be appropriate for all authorities, and councils will need to work with their partners to ensure they have a tailored risk management programme in place.
Council chiefs will also need to become far more fiscally and commercially minded as new responsibilities, especially around welfare and social care provision, require additional funding.

It is clear that new powers come with new pressures too, especially as the expectations from local communities towards their authorities become greater than ever before. With the policies surrounding devolution still unclear, it is now up to local government, more than ever before, to ensure that they have the robust strategies in place to deal with risk in this new landscape.

So far, councils have remained remarkably resilient to the challenges they face. Many have innovated and improved efficiency to ensure the delivery of core services, as well as maintaining their reputation. This has been no easy feat in the face of ongoing funding cuts, but with a robust approach to managing risk, local authorities should feel reassured that they can deal with the challenges ahead

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