In late 2014, the Cameron-led UK Government announced its flagship Northern Powerhouse initiative. City regions were to be given more ‘powers’ to develop initiatives in their local areas, in order to regenerate city economies, which for many years lagged behind in terms of growth and prosperity. The Northern Powerhouse in effect expands on and consolidates previous devolution initiatives allowing the Local Enterprise Partnerships (LEPs) and local authority leaders from Manchester, Leeds, Liverpool, Newcastle and Sheffield to collaborate strategically on key issues. This included increased powers over transport and economic planning; electing their own Mayors; some powers to manage health; new employment and skills power via apprenticeships; and in 2017, the co-commissioning of welfare to work policies.
Much of the devolution debate has focused on economic ‘growth’, but pressing questions remain as to what kind of local and regional development is optimal, and for whom? We argue that devolution involves austerity driven cuts which reinforce social and geographical inequalities. The nature of labour market disadvantage in the Sheffield City Region typifies most deindustrialised areas and is complex and relates to a variety of groups such as women, young people and BAMEs as well as those on long term sickness and disability benefits. These groups are disproportionately impacted by austerity driven cuts causing financial hardship. The other area we explore is devolution policies and here we argue that the Devolution Deals and Agreements are closely linked to austerity policies and the various cuts (some of these being welfare-rated). Whilst the Devolution deal for the Sheffield City Region financially involves £900 m over 30 years (subject of course to an elected Mayor and other milestones), we have found that cuts to welfare and local authority budgets between 2010- 2014 amounted to £1.1 billion. Devolution has conditions and strings attached. The October 2016 Devolution Agreement, made and signed between HM Treasury and the Sheffield City Region, makes this clear; on page 5 it is stated that: “The devolution proposal and all level of funding are subject to the Spending Review …” and in paragraphs 49 to 53 under the ‘Fiscal’ heading, the devolution table has to run alongside and not fundamentally challenge the Spending Review timetable. These are parallel developments. The SCR also has responsibility for chairing Area-Based Reviews of the landscape of 16+ skills provisions for instance, which having been subjected to intense budget cuts in recent years, are designed to legitimise and facilitate the restructuring of further education colleges and other providers. Furthermore devolution will incorporate a new health and work programme which will be run on a significantly reduced budget than that allocated to the Work Programme. Welfare cuts are in no way actually contributing to raising employment rates. In reality, austerity is contributing to increased personal and family impoverishment and debt, but it is also seriously undermining the city-regional growth model trumpeted by the Northern Powerhouse. This is because of the distortions to the labour market through increasing segmentation, which welfare conditionality actually creates. This means that the actual impact of policies is that a more limited cohort of labour can actually access skills and apprenticeships, which is deemed as essential to devolution growth strategies. So, we would certainly welcome widening this important debate.
By Dr David Etherington Middlesex University and Professor Martin Jones University of Sheffield
The Sheffield Institute for Policy Studies 