Osborne’s devolution plans are more radical than any sugar tax

The Chancellor has long been a fan of the canny way that local authorities in Greater Manchester operate. In 2013, he started working more closely with Manchester Council – one of the more creative local authorities – on pilots to get more people off sickness benefits and into work

Osborne has handed over powers to Manchester

George Osborne tried to make his Budget as boring as possible so that it wouldn’t cause him any trouble while he has a referendum campaign to fight and a leadership bid to craft. He even tried to sweeten sour economic figures with a £520m sugar tax. Clever thinking: even if it provokes a furious row, it’s better to be having an argument about that than the state of the public finances.

But behind the sugarwork, this Budget was featured hefty reforms that will have much bigger implications than a levy on soft drinks and a freeze on beer duty. Osborne this week announced, to little commentary, that he will be handing “new powers over the criminal justice system to Greater Manchester”. This, he argued, was “the kind of progressive social policy that this Government is proud to pioneer”. Just a few lines in a 9,330 word speech – but a new devolution of powers that moves Osborne’s favourite group of local councils that little bit closer to becoming an independent city state.

The Chancellor has long been a fan of the canny way that local authorities in Greater Manchester operate. In 2013, he started working more closely with Manchester Council – one of the more creative local authorities – on pilots to get more people off sickness benefits and into work. Being exclusively Labour, Manchester’s political leaders weren’t natural Osbornites, but they realised that tribal animosity wouldn’t serve them well. Instead, working constructively with the Tories and showing a willingness to take on more powers enabled Greater Manchester to become both the centrepiece and poster child of Osborne’s now famous (or infamous, depending on your perspective) “Northern Powerhouse” project.

It also meant that the 10 local authorities in the Greater Manchester group were more than happy to throw their lot in with Osborne and sign up to a deal proffered by the Chancellor for the devolution of £6bn of health and social care spending, just months before the 2015 general election. The deal suggested that the Greater Manchester authorities either didn’t have all that much faith in Labour to offer them anything better, or that they were wise enough to guess that Labour wouldn’t get into power in May 2015 anyway.

It isn’t just striking that Osborne has developed his devolution plans – since exported around the country with a variety of strange, nightclub-esque names such as the “West Midlands Engine” – with a group of mostly Labour councils. It is also interesting that he has bothered to develop these plans while in government.

Handing over powers to local authorities is the sort of thing that political leaders usually pontificate about in opposition, only to get into office, panic about the quality of the local politicians who might be taking on those powers, and suddenly fall back in love with centralised policymaking and spending. His allies insist that Osborne is serious about the different models of devolution for different regions – and working out what works best, too. Of course, his critics argue that Osborne is merely trying to shift the blame for cuts to local government spending away from the Treasury and onto councils. It is convenient that as the cuts start to worry even rather dry Conservative MPs who are generally in favour of cutting the size of the state, local government is being asked to do more for itself.

But Osborne’s latest handover of powers is something that the Greater Manchester Combined Authority wanted. It also makes sense as a policy: the change will see the roles of police and crime commissioner (PCC) and elected mayor merged, and the combined authority will take over the commissioning of offender management services, and be given more powers over probation and education provision in prisons too. The region will also get a new prison as part of the agreement. This means that the PCC, previously only really responsible for policing, now has powers over dealing with the management of criminals in the area too.

But doesn’t it also mean that the independent city of Manchester will be helping to introduce a whole new postcode lottery on a serious policy area – so serious, in fact, that it shouldn’t be allowed to become patchy across the country?

The argument that supporters of devolution make is that giving local authorities powers to use as they see fit, based on their knowledge of their local areas, will lead to better public services than those based on the decisions of a faceless official sitting in Whitehall. Even if some regions don’t manage their services particularly well, this principle of power exercised by those who know each regions best means that, when assessed overall, the standards of those services will rise on average.

But it is worth pointing out that there remains considerable concern in Westminster about other, less well-functioning groups of local authorities, outside the North-west, taking on more powers.

Perhaps sensing this awkwardness, some in the regions are feeling left out. The Chancellor provoked the fury of the Greater Birmingham Chambers of Commerce (GBCC) this week by not mentioning the so-called West Midlands Engine in his Budget speech. The GBCC’s director of policy and strategic relationships, Henrietta Brealey, fumed that “while the Northern Powerhouse was clearly front of mind, the Midlands Engine was not mentioned a single time”.

Other Conservatives worry that, while cities like Manchester might have very effective local leaders, there will be little real local accountability in place. If the mayor of Greater Manchester ends up doing a terrible job, his local electorate is highly unlikely to boot him out and replace him with a Tory, given the party’s lack of support in the area.

As well as creating an independent state, Osborne risks reducing his own party’s influence in large areas of public service. And that is a far bolder move than taxing soft drinks.