DCLG must strengthen local scrutiny arrangements for City Deals, say MPs

In a report, Devolving responsibilities to cities in England: Wave 1 City Deals, the influential Public Accounts Committee expressed concern over who was accountable for public funds devolved through City Deals. This issue was particularly important for devolved healthcare spending, it said.

The MPs suggested that successful devolution through City Deals did not mean it was the best model for wider devolution, “particularly when devolving responsibility for public services”.

The committee also warned of a lack of monitoring and evaluation in the first wave of deals, and that this had made it difficult to assess their overall effectiveness.

The PAC’s conclusions and recommendations included:

• The DCLG should actively share the learning and good practice it has gained through City Deals with public bodies involved in the potential devolution of public services, such as NHS England and the Department of Health. “It should make a clear statement about how it will determine funding levels for devolved responsibilities.”
• The Department could not explain clearly and simply whether responsibility for the outcomes of individual City Deal programmes rested with local or central government. “The unelected LEPs [Local Enterprise Partnerships] play a big role in planning but the financial risk of failure lies with council tax payers locally. This disconnect between decisions and who pays is a concern.”
• The Department must agree a common approach to measuring and evaluating the outcomes of growth programmes, including job creation, with other government departments and local areas, “to ensure one geographical area is not ‘growing’ at the expense of another”.
• The committee was unconvinced that the approach the DCLG had taken to assessing whether local areas had sufficient and sustainable capacity to manage was adequately evidence-based. The Department “must develop a more evidence based approach to assessing whether local areas have sufficient and sustainable resources to deliver the City Deals in the wider context of Government funding restrictions”.
• As the number of City Deals and devolution deals increased, the capacity of the DCLG’s Cities and Local Growth Unit would come under increasing stress. The committee welcomed the Government’s reassurance that it was keeping the situation under review. The Department should maintain its approach of having a single point of contact with local places, and be responsive to local areas that have less experience in managing more devolved funding. “It must also work with other departments to ensure a step change in record keeping. Departments must maintain proper records on initial objectives and lessons learned.”

Meg Hillier MP, Chair of the PAC, said: "Devolving power and responsibilities carries the risk of weakened accountability. The fact that the Government cannot adequately explain where responsibility lies for the success or failure of City Deal programmes should therefore sound an alarm.

“It is also disappointing that there is no effective mechanism for comparing results in different cities, nor to scrutinise the knock-on effects projects in one area might have elsewhere. Taxpayers and indeed the Government are unable to assess precisely the impact of what has been delivered through the Deals so far. This becomes particularly significant if the perceived success of individual City Deal programmes is cited by Government as evidence its overall approach to devolution is working and does not require improvement."

Hillier added: “Wider devolution deals, such as that agreed with Manchester, will see cities and regions take on increasing responsibility for providing public services. There is considerable scope for tension between local government, required to deliver and maintain services within a devolved budget, and central government which provides funding.

“When things go wrong, it must be clear who will be held to account. Taxpayers must understand who is spending their money, how that money is allocated, and where responsibility lies if the system fails to deliver good value.”