Public Service Reform and Devolution
How Mayors and Combined Authorities can help deliver Labour's public services missions
Centralisation of public services has been a decades-long trend within England. This paper sets out the actions that the new government could take within a parliament to end this trend, building on existing institutions and supporting the delivery of Labour’s missions on growth, health, clean energy, opportunities and crime.
Getting this right will set the government up to make meaningful progress quickly, building on the legacy of the later New Labour years, and aiming for a longer-term public services agenda that will undo years of damaging over-centralisation.
Mayoral Combined Authorities (MCAs) have emerged as an increasingly important layer of governance in England. Some MCAs have been notably successful - with the government planning to roll out greater autonomy over spending decisions in these leading areas.
The main focus of all MCAs has been their economic role. Each covers a core set of important microeconomic levers including transport, housing, and adult skills. The vast majority of their funding is ring-fenced for these and other policy areas focused on economic development.
Yet, from the start, MCAs have been about more than just economics. The initial Greater Manchester Combined Authority (GMCA) plan also focused on public services and the MCA has, over the years, sought powers in health, policing and probation. Other MCAs have also taken an interest in different elements of public services. Some mayors now have police commissioner powers. The South Yorkshire Mayor chairs his local Integrated Care Partnership, a committee of the Integrated Care System (ICS) through which the NHS is now managed. The North East MCA has established its own school improvement programme.
Local action is already achieving results. Through greater join-up on probation over a decade, Greater Manchester has halved the women’s reoffending rates seen in other parts of the country. During the pandemic, we saw clearly how local health teams were able to achieve better results than services contracted out centrally. MCAs are already starting to dip their toes into these waters. GMCA is working with constituent authorities to set up ten children’s homes with a total of 24 places across the city. The MCA would provide upfront capital funding, a major barrier to setting up new homes, and authorities would jointly commission a provider to run the homes. The aim is explicitly to “disrupt” the local market.
The NHS and English school system are centralised to an unusual degree in comparison with other countries. This can mean accountability tools are blunt, and fail to acknowledge local context. The core benefit of centralisation is supposed to be consistency – avoiding a “postcode lottery” – but in practice, there is huge variation between regions.
There is also a clear link from public services to the primary role of economic growth envisaged by central government. A sick workforce is more likely to be inactive. A less well educated one will be less productive. The prevalence of crime, rough sleeping, and anti-social behaviour are critical to the economic wellbeing of urban centres and shopping areas. As has happened on economic policy, MCAs will be able to complement the public services role of their constituent Local Authorities whilst having sufficient scale to enable devolution of powers from central government.
For instance, in 2022 Barnsley Hospital and the council jointly set up a Community Diagnostic Centre in the Glass Works shopping centre. This has had a double benefit of increasing diagnostic checks by making it more convenient for people – for instance breast cancer screening has gone up from 50% to 72% of the target population – while also boosting footfall to the town centre and helping local businesses.
Building on this success, South Yorkshire MCA is working with the NHS Trust and the council to develop a health and wellbeing centre in Barnsley’s Alhambra shopping centre. Co-locating a selection of hospital outpatients services, alongside other health care and support service providers will reduce pressure on the local hospital by moving c.85,000 outpatient appointments (which equates to 31% of all outpatients appointments currently taking place at the Hospital). At the same time, it will also support public health and help the local economy.
Despite promising signs, there has not been a coherent strategy from central government to develop MCAs as a way to improve public services. The benefits of doing so could be substantial, and make a big difference to the government’s ability to deliver their reform programme. As has happened with economic policy, the role of Combined Authorities can be developed so as to complement the role of the Local Authorities that it brings together.
The following five principles set out how a Labour government could implement this in practice, to build a lasting public service reform agenda:
1. Unifying powers through mayors
Adapt the scope of mayors’ role to oversee policy and delivery, within existing structures. We have seen how this can work already through the unification of the police and crime commissioner roles for some mayors. For MCAs that have a positive track record, and are most advanced in the devolution framework, more powers could be devolved in this way, with the potential for deputy mayors to be appointed to manage day-to-day operations.
2. First refusal for delivery of new programmes
For one-off or centrally determined schemes, the default should be to consider whether they could be delivered by MCAs (or LAs where better placed). A good example would be a new school improvement programme designed by the DfE under Labour, as per current pledges. The North East MCA already has its own programme and would be keen to have the budget and support to do something more substantive. The DWP is another department that runs a lot of pilots without engaging with MCAs.
3. Devolved flexible funding
The ‘single’ or ‘integrated’ settlements which give department style budgets to leading mayoral areas are focused on economic policy areas. A public services block could be added to integrated settlements, and include all the small pots, like the ones discussed in this paper, currently coming from the likes of DWP, MoJ, DHSC and MHCLG, for this purpose. Any future programmatic work would then be added to this stream over time through the proposed operation of the framework - putting local areas at the forefront of public service reform and prevention
4. Encourage MCA-level commissioning and expertise in public sector reform
Alongside devolving the delivery of programmes to MCAs by default, central government should also support them to become centres of commissioning expertise. For childcare and social care, MCAs could become centres of commissioning excellence, helping their constituent local authorities to get better deals, and potentially develop state alternatives to private providers by pooling resources. Sitting at a more strategic level, they can also connect public service reform with their economic levers - for example by considering the connection between health and housing - delivering greater improvements than can be delivered centrally.
5. Co-terminous boundaries
The regional structure of public services should match with MCAs to enable closer working and, if desired, mergers over time. The value of doing this is clear from Greater Manchester which has a coterminous Integrated Care System, police force, and probation service. This has allowed them to make more progress on health and criminal justice than others as outlined below.
For different public service policy areas, these principles could be implemented as follows.
MCAs offer the opportunity to build regional state capacity at a tier that has never existed meaningfully before in England. They could also rectify some of the damage that has been done through decades of centralisation and destruction of local government.
It would be a mistake to keep public services on the periphery of these developments. MCAs have a critical role in boosting economic growth but can also help with longstanding policy challenges in public services. They offer an opportunity to make joined-up local services a reality; to reduce pressure on central government departments and allow them to focus more on key strategic issues; to reduce cost pressures on local authorities to free up their capacity; to offer an alternative delivery route to contracting out; to improve commissioning; and create mechanisms for more intelligent accountability, regulation and oversight.
MCAs are new and fragile institutions. Asking too much, too quickly could easily undermine devolution. They are also at different stages of development. Thus the aim must be to create greater involvement in public services as MCAs grow and develop based on the principles outlined in this paper.
