Extreme devolution

Exhausted Better Together campaigners thought they had won. With 55% of Scots voting against independence, it seemed the argument over their people’s relationship with the rest of the UK had been settled, for a generation at least.

Instead, those 1.6 million votes for secession, a far greater number than had been forecast only a few months earlier, marked the start of a movement calling for extreme devolution, not just for Scotland but across the UK’s four constituent countries.

“In principle, devolution is absolutely necessary for housing.”

Ed Cox, director, IPPR North

In the immediate aftermath of the independence vote, David Cameron called for a revamped legislative system of ‘English votes for English laws’, while campaigners demanded a UK-wide ‘constitutional convention’ to look at establishing regional parliaments and power bases.

It’s not only at a national level that power is shifting outwards from Westminster. Campaigners for regional devolution are gradually winning the argument for greater autonomy, particularly over areas such as housing development. As the last government drew to a close, the coalition made the creation of a ‘Northern Powerhouse’ to rival London a key plank of its economic policy. The Conservatives have made the Cities Devolution Bill one of their first pieces of legislation in this parliament, offering new powers over areas such as housing to cities that opt for an elected executive mayor.

Decentralising Whitehall’s functions and decision-making burdens are seen as a way to reduce its costs, and the appointment of devolution enthusiast Greg Clark as communities and local government secretary was a sure sign that city regions would be granted greater financial freedoms, a move that seems almost universally popular. ‘Devolution is one of the few areas of broad policy agreement,’ says Paul Hackett, director of left-wing thinktank the Smith Institute. ‘There is unprecedented cross-government, cross-party consensus.’

Housing is at the centre of this quiet revolution. It’s an obvious policy area for devolution, by its nature strongly linked to location. ‘In principle, devolution is absolutely necessary for housing,’ says Ed Cox, director of thinktank IPPR North. ‘Housing markets vary from place to place. The London housing market is very different from the housing market in Manchester, which is again different from the housing market in the north east, so we need devolved housing policy in order to address the particular needs of local markets. The problem, historically, is that too much housing policy was driven by London, with an almost counterproductive impact on places outside.’

Scottish independence

Scottish housing providers in particular will be watching the progress of devolution closely in the months ahead. Mary Taylor, chief executive of the Scottish Federation of Housing Associations, contributed to the Smith Commission on devolution, which reported last November, proposing a range of additional freedoms. As the SNP’s enlarged cohort of MPs headed to Westminster, she urged them to secure the proposals ‘as soon as possible’.

“I think that devolution for cities and other parts of England will be a key policy strand of the next five years.”

Alex Thomson, chief executive, Localis

At a national level, the Scottish, Welsh and Northern Irish governments already have significant control over many policy areas. But there are some contentious exceptions - notably welfare. This was the subject of an IPPR North report in January, Poverty and devolution, which argued that just as the level of poverty and the form it takes varies across the UK, so too should approaches to tackling it. In particular, IPPR North is pushing for the devolution of welfare budgets to both devolved national and regional bodies, citing housing benefit as a particularly suitable case.

It is, significantly, linked to local factors but is neither used as a counter-cyclical tool to stabilise the economy in difficult times, nor a contributory benefit funded through national insurance. ‘At a local level, we believe authorities can use it to reconfigure housing markets, building more affordable homes and reducing the amount of housing benefit as people move into them over 20 or 30 years,’ says Mr Cox.

Control over welfare is a key issue for Ms Taylor too and, more specifically, how universal credit is administered. Among the Smith Commission’s proposals were that the Scottish parliament be able to pay the housing element of universal credit directly to landlords and that it have a degree of control over the bedroom tax, though overall control of the policy was left with Westminster. Scotland would be allowed to vary the amount, but Westminster could veto any SNP attempt to ditch it.

With the SNP replacing the Liberal Democrats as the third party in Westminster, and now so dominant in Scotland itself, there is increased hope that first minister Nicola Sturgeon will be able to prevail on this unpopular policy, which has hit housing associations badly. There is not, however, any room for complacency: ‘We’re placing confidence in politicians in Scotland to take different views that would benefit housing providers,’ says Ms Taylor. ‘But that is not guaranteed.’

Greater control

At a city level, housing providers have also leapt at the chance to take greater control of their own destiny. It’s easy to see the appeal - devolution promises to give cities a bigger say in where homes are built and the freedom to prioritise strategic projects, and the means to find their own solutions and raise funding locally. This is regarded as key to increasing supply and meeting housing needs.

The coalition has already prepared the ground with its City Deals policy, which aimed to rebalance the economy and strengthen areas outside the capital, acknowledging that cities and surrounding areas are home to 74% of England’s population and 78% of its jobs. Eight cities were given significant independence from Whitehall over how to spend certain pools of public money and a greater responsibility to support local economic growth, with 20 more set to follow.

In 2014, thinktank Localis published a report on how the value of public land could be maximised, arguing that local authorities should be given more control. The government appears to agree, notes Alex Thomson, chief executive of Localis.

‘I think that devolution for cities and other parts of England will be a key policy strand of the next five years,’ he says. ‘We found that councils are reacting to ongoing austerity by acting more like property developers. They are moving away from a mentality of simply selling buildings and land for one-off capital receipts and looking to redevelop assets to derive revenue that they can use to support public services, including new social housing. Public land is a precious resource that needs a steward, and local authorities are ideally suited to that role.’ Mr Thomson would also like to see further devolution of Homes and Communities Agency (HCA) funding and powers to combined authorities to give them ‘real place-shaping power’.

Sheffield is a good example. One of the original eight ‘core cities’, it cemented its devolution agreement last December. Local authorities in the region formed a joint assets board with the HCA to collaborate on selling land and property, intended to increase housebuilding and maximise the returns from public-sector assets. Impressed, housing organisations are calling for a much greater share of HCA funding to be devolved over the next five years. Tony Stacey is chair of Placeshapers, an alliance of 115 housing associations covering 800,000 homes, and chief executive of South Yorkshire Housing Association. He praises the Sheffield model, pointing out that ‘local experts can help guide where money should be spent on housing’.

‘The trouble with running housing centrally is that it’s decided within the M25, so really they’re sorting out London’s problems and not much else,’ he says. ‘In some cities, for example, you might have twin-speed housing markets, so I like the idea of certain tools and budgets, like capital spending, planning and full control of assets, being devolved.’ He adds that ministers are ‘up for it’, meaning they accept that delegated authorities will have a much better idea of where to build and maintain homes.

Professor Tony Travers, director of the Centre for London at the London School of Economics, says that fostering such devolution is vital as central budgets are ‘squeezed’, especially in unprotected areas such as housing. ‘Sub-national areas might have different priorities,’ he points out. ‘There are concerns that, with the government’s public spending plans and commitments, there will not be any increase in resources for housing - in fact, quite the opposite. On balance, it would be better to devolve decision-making to city regions or sub-national governments.’

Regional power

Regional devolution is furthest advanced in Greater Manchester, with the establishment of the Greater Manchester Combined Authority in 2011. This is a consortium of 10 local authorities, which have set a 10-year vision for economic development. ‘Devolving further power and resources to Greater Manchester is enjoying real support,’ says Graham Brady, the MP for Altrincham and Sale West who is also chair of the Conservatives’ powerful 1922 Committee. ‘It’s widely agreed that the Combined Authority has done a good job in unlocking resources.’

The Greater Manchester devolution agreement, signed last November, built on this success and included handing over control of a £300m fund to build 15,000 homes in the region over a 10-year period, expected to generate a total investment of £1.5bn. From 2016, the area’s £6bn NHS budget will be devolved, which will see the creation of integrated health and social care services - in January, NHS bodies and various housing groups, including the HCA and the National Housing Federation, signed an agreement to work more closely together. ‘At the moment, the fruits of devolution have yet to be fully realised,’ says Mr Cox. ‘The impact of devolution takes time. But we’re already seeing some real improvements in transport and we expect a transformation of health and social care to improve outcomes for residents and eliminate costs.’

Chancellor George Osborne made his first speech of the new parliament in Manchester, calling for other English cities to follow its lead. But will government willingness on devolution match the housing sector’s ambitions? Some want to see it go much further - for example, both Mr Stacey and Mr Hackett at the Smith Institute would like to see regions given responsibility for Right to Buy, to stem the exodus of housing stock from council balance sheets. They seem set to be disappointed, given the priority that the Conservatives placed on Right to Buy during their election campaign, with a central manifesto pledge to extend it to housing association tenants within the first 100 days of a new government.

It’s unlikely that ministers would cede control of the policy outside of Whitehall - they will be all too aware that authorities would seek to block sales rather than raise the discounts.

What authorities will do with any of their new powers is a big question - and perhaps the greatest concern in the whole devolution process. Moving decision-making from a large geography to a smaller one does not guarantee good calls will be made. Housing providers will still be reliant on the existence of suitable experts at a local and regional level who will understand how to put their extra powers and money to best use. But devolution at least gives the sector a good framework from which to start.

Mark Leftly is political correspondent at The Independent on Sunday and associate business editor for The Independent and London Evening Standard titles