Policy paper

Secretary of State’s annual report on devolution 2019 to 2020

Published 16 March 2021

This was published under the 2019 to 2022 Johnson Conservative government

Applies to England

Presented to Parliament pursuant to Section 1 of the Cities and Local Government Devolution Act 2016.

1. Introduction

1.1 This Annual Report on Devolution has been laid before both Houses of Parliament by the Secretary of State for Housing, Communities and Local Government pursuant to section 1 of the Cities and Local Government Devolution Act 2016 (‘the 2016 Act’).

1.2 This annual report brings together information about devolution agreements reached or implemented between government and areas between 1 April 2019 and 31 March 2020.

1.3 These devolution agreements, in response to proposals from areas, are agreements in which the government undertakes to devolve powers and budgets to an area in return for changes in local governance and local political accountability.

1.4 Devolution within England aims to provide local areas with the levers they need to boost productivity in local economies and improve and integrate public services.

1.5 This government is committed to giving communities more control over how investment is spent so that they can decide what is best for them. That is why we intend to bring forward the Devolution and Local Recovery White Paper in due course. This will cover how Government will partner with places across England to build a sustainable economic recovery and set out our plans for future devolution arrangements.

1.6 These devolution arrangements form part of the government’s plans to level up across the country, and we will continue to engage with local areas looking to agree new devolution deals in the year ahead.

2. Areas with agreements

Legislative requirement: Section 1 (2)(a) of the 2016 Act requires the Report to provide information on the areas of the country where agreements have been reached.

2.1 Between 1 April 2019 and 31 March 2020, the government confirmed agreement with one new area:

On 11 March 2020, a West Yorkshire devolution deal was agreed and announced by the Chancellor at Budget, setting out a total package of increased powers and funding for the West Yorkshire area.

The devolution deal includes investment funding of £38 million per year for 30 years, comprising over £1.1 billionn in total to be invested by West Yorkshire to drive growth and take forward their priorities. It also includes close to £3 billion public and private sector investment and is expected to create 20,600 jobs and add £2.1 billion a year to the economy by 2031.

The draft secondary legislation which creates the position of Mayor and implements the deal was laid before Parliament in December 2020. If approved by each House of Parliament, the order will be made early in 2021 and will lead the way for a directly elected Mayor to be elected in May 2021. The Mayor will also take the on the Police and Crime Commissioner (PCC) functions.

2.2 During 2019/20, the Sheffield City Region (SCR) Combined Authority took the decision to progress their stalled devolution deal, previously agreed in 2015. The required governance review and scheme to implement the SCR deal was published by the City Region in January 2020 and the required public consultation was held throughout February and ended in March 2020.

2.3 The government is also working with the Greater Manchester Combined Authority and Mayor Burnham who have consulted on a second draft of the Greater Manchester Spatial Framework in early 2019. The Greater Manchester Spatial Framework is a key element within the Greater Manchester Devolution Deal and has been contentious across the 10 Greater Manchester district councils. Mayor Burnham has asked the government to consider changes to Planning Regulations to enable him to proceed with the Spatial Framework as a Spatial Development Strategy.

3. Areas that have submitted proposals

Legislative requirement: Section 1 (2)(b) of the 2016 Act requires the Report to provide information on the areas of the country where proposals have been received by the Secretary of State and negotiations have taken place but agreement has not yet been reached.

3.1 Between 1 April 2019 and 31 March 2020, West Yorkshire was the only area to submit a formal proposal. Initial devolution deal discussions began in 2019, leading to a period of negotiations which subsequently resulted in their agreement on 11 March 2020 as set out above.

3.2 The Secretary of State received no other formal proposals from local areas over this period.

4. Functions exercisable by a Minister of the Crown that have been devolved

Legislative requirement: Section 1 (2)(c) of the 2016 Act requires the Report to provide information on functions exercisable by a Minister of the Crown that have been devolved as a result of agreements so as to become exercisable by a mayor for the area of a combined authority (including information as to any such functions that remain exercisable by a Minister of the Crown as a result of an agreement providing for functions to be exercisable jointly or concurrently).

4.1 Between 1 April 2019 and 31 March 2020, three statutory instruments (‘SIs’) were made to implement devolution agreements between the government and areas. These SIs provided for the conferral of new functions and changes to governance arrangements in Greater Manchester Combined Authority, the establishment of a Mayoral Development Corporation in Stockport called the Stockport Town Centre West Mayoral Development Corporation in Greater Manchester, and devolution of adult education functions in the North of Tyne Combined Authority.

The following SIs were made between 1 April 2019 and 31 March 2020, listed in chronological order:

Place(s) affected	Statutory Instrument	Date order made
Greater Manchester	Greater Manchester (Functions and Amendment) Order 2019 No.793	3 April 2019
Greater Manchester	Stockport Town Centre West Mayoral Development Corporation (Establishment) Order 2019 No.1040	24 June 2019
North of Tyne	The Newcastle Upon Tyne, North Tyneside and Northumberland (Adult Education Functions) Order 2019 No.1457	4 November 2019

5. Additional financial resources and public functions that have been devolved

Legislative requirement: Section 1 (2)(d) of the Act requires the Report to provide information on additional financial resources and public functions (so far as not falling within paragraph (c)) which have been devolved as a result of agreements.

5.1 Financial resources devolved to devolution deal areas between 1 April 2019 and 31 March 2020

This section provides information on financial resources that have been devolved to combined authorities as a result of devolution agreements.

Funding stream: Investment funds
Description: Capital and Revenue funding agreed through devolution deals for local investment. Forms part of the single pot arrangement.
Accountable Government Department: Ministry of Housing, Communities and Local Government
Place(s) affected: Cambridgeshire and Peterborough, Greater Manchester, Liverpool City Region, North of Tyne, Tees Valley, West Midlands, West of England
Total amount paid in 2019-20: £181, 500,000
Payment schedule: Over 30 years^{[footnote 1]} - Total Amount: £5,445,000,000^{[footnote 2]}
Commentary: Payments made by Section 31 grant.
The National Local Growth Assurance Framework (2019) has replaced the Local Single Pot Assurance Framework (April 2016) as HM Government’s guidance for how MCAs and LEPs should appraise, monitor and evaluate schemes to achieve value for money. All LEPs and MCAs have been required to update their Local Assurance Framework(s) to reflect the requirements set out in the Framework.

Funding stream: Multi-year Transport Grants
Description: Made up of Integrated Transport Block and Highways Maintenance Block funding to be treated as part of a flexible Single Pot. (In 2019/20, funding was instead provided from the Highways Maintenance Block to the constituent LAs of the North East).
Accountable Government Department: Department for Transport
Place(s) affected: Cambridgeshire and Peterborough, Cornwall, Greater Manchester, Liverpool City Region, North East, Sheffield City Region, Tees Valley, West of England, West Midlands, West Yorkshire.
Total amount paid in 2019-20: £274,183,000 with notional BRR allocations.
£213,294,000 without BRR allocations.
Payment schedule: Schedule of payments each year until 2020/21, first payment commenced in 2015/16. Total amount agreed £1,478,802,000.
Commentary: Payments made by Section 31 grants, apart from Greater Manchester, West of England and Cornwall, as their transport grants are rolled into their 100% Business Rates Retention pilots as agreed through their devolution deals.

Funding stream: Transforming Cities Fund
Description: Capital grant funding to support and promote sustainable and public transport; and is part of the Single Pot.
Accountable Government Department: Department for Transport.
Place(s) affected: Cambridgeshire and Peterborough, Liverpool City Region, Greater Manchester, North of Tyne, Sheffield City Region, Tees Valley, West of England, West Midlands, West Yorkshire.
Total amount paid in 2019-20: £190,000,000
Payment schedule: £1,080,000,000 over five years from 2018/19 to 2022/23^{[footnote 3]}.
Commentary: Payments made by Section 31 grant.
In addition, some combined authorities received part of the overall fund through a competitive bid process. Their funding is not part of the total £1,080,000,000.
Sheffield City Region £8,296,005.
North of Tyne £9,901,196.
West Yorkshire £15,791,058.

Funding stream: Work and Health Programme
Description: Funding for locally commissioned programmes aimed at long term jobseekers and claimants with disabilities.
Accountable Government Department: Department for Work and Pensions.
Place(s) affected: Greater Manchester
Total amount paid in 2019-20: £4,585,637
Payment schedule: Funding for 2019/20 determined by DWP on receipt of the contractual performance profiles and unit prices agreed between Greater Manchester and their suppliers.
Maximum indicative amount over 8 years £30,000,000^{[footnote 4]}.
Commentary: Payments are made by section 31 grant.

Funding stream: Fire and Rescue Service
Description: Fire National Resilience
Accountable Government Department: Home Office
Place(s) affected: Greater Manchester
Total amount paid in 2019-20: £323,441
Payment schedule: Annual payment
Commentary: Payments are made by section 31 grant.

Breakdown of total -
Fire Revenue New Dimensions grant: £86,583
Fire Revenue Firelink grant: £236,859

In 2019/20 GM received a one-off payment of £1,101,377 through S31 Grant towards additional costs of Moorland fire costs.

5.2 Capacity funding paid to devolution deal areas between 1 April 2019 and 31 March 2020

Funding stream: Mayoral Capacity Fund
Description: Available to MCAs with elected mayors. This fund supports the new mayors by boosting their capacity and resources to deliver for their local area.
Accountable Government Department: Ministry of Housing, Communities and Local Government
Place(s) affected: Cambridgeshire and Peterborough, Greater Manchester, Liverpool City Region, North of Tyne, Sheffield City Region, Tees Valley, West of England, West Midlands
Total amount paid in 2019-20: £8,034,000
Payment schedule: £15,250,000 over two years between 2018/19 and 2019/20^{[footnote 5]}.
Commentary: Payments made by Section 31 grant.
Each MCA received £1,000,000 in 2019/20, except Sheffield City Region which received £966,000 in 2018/19 and therefore received £1,034,000 in 2019/20.

Funding stream: Skills Advisory Panels
Description: To analyse their local needs and priorities, which could include employing a labour market analyst.
Accountable Government Department: Department for Education
Place(s) affected: Cambridgeshire and Peterborough, Greater London Authority, Greater Manchester, Liverpool City Region, Sheffield City Region, Tees Valley, West of England, West Midlands.
Commentary: Each MCA received funding (£75,000 per MCA) at the end of 2018/19 which rolled over and was spent in 2019/20, therefore the MCAs did not receive an additional payment in 2019/20.

Funding stream: Housing Deal Capacity Fund
Description: To help the West of England meet their ambition of 7,500 homes per year in the between 2018/19-2020/21.
Accountable Government Department: Ministry of Housing, Communities and Local Government
Place(s) affected: West Midlands
Total amount paid in 2019-20: £2,000,000
Payment schedule: £6,000,000 over three years, from 2017/18 to 2019/20.
Commentary: Payments made by Section 31 grant.

Funding stream: Housing Deal Capacity Fund
Description: To help the West of England meet their ambition of 7,500 homes per year in the between 2018/19-2020/21.
Accountable Government Department: Ministry of Housing, Communities and Local Government
Place(s) affected: West of England
Total amount paid in 2019-20: £1,050,000
Payment schedule: £3,000,000 over three years, from 2017/18 to 2019/20.
Commentary: Payments made by Section 31 grant.

Funding stream: Adult Education Implementation Funding
Description: Funding to assist preparations for the devolution of the Adult Education Budget.
Accountable Government Department: Department for Education
Place(s) affected: Cambridgeshire and Peterborough, Greater London Authority, Greater Manchester, Liverpool City Region, North of Tyne, Tees Valley, West of England, West Midlands.
Total amount paid in 2019-20: £1,560,838
Payment schedule: £5,800,000 over 5 years, from 2017/18 to 2020/21.
Payments commenced in 2017/18 and final payments will be made in 2019/20. For North of Tyne payments commenced in 2018/19 and will finish in 2020/21.
Commentary: Payments made by Section 31 grant.

Funding stream: Adult Education Budget
Description: Devolved budget which funds qualifications and programmes for learners aged 19+.
Accountable Government Department: Department for Education
Place(s) affected: Cambridgeshire and Peterborough, Greater London Authority, Greater Manchester, Liverpool City Region, Tees Valley, West of England, West Midlands.
Total amount paid in 2019-20: £395,799,636
Payment schedule: Annual payment
Commentary: Payments made by Section 31 grant.
North of Tyne had the AEB devolved from the start of academic year 2020/21. Sheffield City Region will have the AEB devolved for the academic year 2021/22. West Yorkshire given the successful passing of legislation, will have the AEB devolved from the academic year 2021/22.

Funding stream: Office for Data Analytics
Description: Funding to support the establishment of the Office.
Accountable Government Department: Ministry of Housing, Communities and Local Government
Place(s) affected: West Midlands
Total amount paid in 2019-20: £300,000
Payment schedule: £800,000 over three years, from 2018/19 to 2020/21.
Commentary: Payments made by Section 31 grant.

5.3 Financial resources paid to devolution deal areas for pilot agreements between 1 April 2019 and 31 March 2020

Funding stream: Housing First Pilots
Description: Funding to three combined authorities to help them support rough sleepers with the most complex needs into safe and secure homes.
Accountable Government Department: Ministry of Housing, Communities and Local Government
Place(s) affected: Greater Manchester, Liverpool City Region, West Midlands
Total amount paid in 2019-20: £5,950,377
Payment schedule: Payment made on a 6-monthly basis (April and October)^{[footnote 6]} based on performance indicators.
Maximum of £25,300,000 over 4 years (GMCA and WMCA funding ends in 2021/22) and over 5 years (LCRCA ending 2022/23).
Commentary: Payments made by Section 31 grant.

Funding stream: Labour Market Pilots
Description: Five innovative labour market pilots to support those that are hardest to help.
Accountable Government Department: Department for Work and Pensions
Place(s) affected: Cambridgeshire and Peterborough, Liverpool City Region, Tees Valley, West of England, West Midlands
Total amount paid in 2019-20: £8,028,348
Payment schedule: Annual payments commenced in 2017/18. Up to £23,350,000 over three years^{[footnote 7]}.
Commentary: Payments made by Section 31 grant.

6. Consideration of devolving powers to local government

Legislative requirement: Section 1 (2)(e) of the Act requires the Report to provide information on the extent to which consideration has been given by a Minister of the Crown to the principle that powers should be devolved to combined authorities or the most appropriate local level except where those powers can more effectively be exercised by central government.

6.1 Over the reporting period, the Government continued to have discussions with areas about devolution, and to support the adoption of directly elected mayors.

6.2 In addition to commitments involving the immediate transfer of budgets and functions, deals negotiated to date include a wide range of commitments to further joint working between local partners and Government, including the development of business cases and Memoranda of Understanding on particular themes.

Annex A: Underpinning legislation

The Cities and Local Government Devolution Act 2016 (the 2016 Act) received Royal Assent on 28 January 2016. It amends the Local Democracy, Economic Development and Construction Act 2009 to facilitate the implementation of far more ambitious and wide-ranging devolution agreements with combined authority areas and with other areas. It is enabling legislation which provides a legislative framework which can be applied flexibly to different areas by secondary legislation. In particular, secondary legislation may:

• confer any local government function on a combined authority;
• confer any public authority function on a combined authority;
• provide for an elected mayor for a combined authority’s area who would exercise specified functions individually and chair the authority;
• provide for the mayor to undertake the functions of Police and Crime Commissioner (PCC) for the combined authority area (in place of the Police and Crime Commissioner); and
• confer any public authority function on a county council or district council.

In addition, the 2016 Act’s amendments to the 2009 Act streamline the process for establishing and changing the area of a combined authority, remove geographical limitations as to the establishment of combined authorities, and provide for streamlined governance reforms where these are agreed by one or more of the councils involved.

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Footnotes

1. Subject to 5-yearly ‘Gateway Review’ assessments whereby an independent evaluation panel of experts will assess investments’ impact on economic growth ↩

2. Following the Sheffield City Region deal being ratified and implemented in law in July 2020, the MCA has taken control of additional £30 million a year funding allocation over 30 years (the first payment for which, covering 2020/21 was made in September 2020). ↩

3. At Autumn Budget 2018 it was announced that there will be an extension of the Transforming Cities Fund by a year until 2022/23 to provide an additional £240m to the six metro mayors for “significant” transport investment in their areas. ↩

4. Subject to future Spending Review. ↩

5. This fund was previously reported as £16,000,000 over two years, however due to the timing of the North of Tyne devolution deal implementation they received £250,000 in 2018/19. ↩

6. Subject to a performance review. ↩

7. Up to £6,321,008 per MCA based on performance indicators agreed between the Combined Authority and DWP. ↩