Making the case for devolution & reform

Julian Cox & David Morris

19 November 2015

Agenda

• Pre-Deal evidence base• Tax & spend analysis• Cost Benefit Analysis

• Scope of GM’s ‘Devolution Deal’• Themes• Role of evaluation & monitoring

• Post-Deal evaluation thoughts to date• Existing international evidence • Local research proposals

• Q&A

Pre-Deal evidence base

GM public service expenditure, comparison 2008/09 – 2013/14

3.3 3.7 3.9

5.4 5.8 5.4

4.7 3.1 3.0

1.8 1.8 1.8

4.9 5.2 5.2

3.2 3.2 3.2

0

5

10

15

20

25

08/09 12/13 13/14

GM

exp

endi

ture

(£bn

, 201

3/14

pri

ces)

Benefits - pensions etc.* Benefits - welfare**Local authorities (non-DSG) Dedicated Schools Grant (DSG)Health Other

£23.3bn £23.0bn £22.7bn

LA public health £0.2bn

* State pension, child benefit, statutory maternity pay, maternity allowance, winter fuel payments and over-75 TV licenses** Including worklessness and disability benefits, housing benefit, tax and pension credits.

Welfare benefits24%

Health23%Fixed benefits (pensions,

child benefit)17%

Education12%

Social care5%

Transport4%

Skills3%

Police services3%

Split of Greater Manchester Revenue Spending

GM public service expenditure vs tax income

Benefits

Understanding the impact of reform:Using Cost Benefit Analysis

Costs

All additional costs needed to deliver project

Fiscal Economic Social

• GM’s economy is 10% less productive than GB average.• Lower productivity in comparison to GB average is a particularly acute issue for high value added sectors,

including:• Finance• Real estate• Professional, scientific and technical services

Understanding the potential for growth:Productivity Analysis

Total GVA gap

Lower than average GVA per capita

-£8.2bn

Demographic and participation factors

Lower employment rates, higher working age population and larger in-commuting than

average

-£1.6bn

Working age population

Higher working age population than

average

£950.3m

Employment

Lower employment rate than average

-£2.9bn

In-commuting

Higher than average in-commuting to work

£356.0m

In-work productivity factors

Concentration of employment in higher value sectors and lower sectoral GVA per job

-£6.7bn

Sectoral distribution of employment

Concentration of employment in higher

value sectors

£1.6bn

Sectoral productivity

Lower GVA per job in most sectors

-£8.2bn

Scope of GM’s Devolution Deal

‘Deal’ combines several announcements

Summer 2014 – Growth Deal• 12 transport schemes• Skills Capital funding• Business support• MHE trailblazer• Life Sciences Fund

November 2014 – Devolution Deal• Health & Social Care• Devolved transport budget• Revised Earnback model• Business Growth Service• Housing investment fund• GM Spatial Strategy• Apprenticeship Grants• GM Mayor

2015 budgets• Land Commission• Blue Light integration• Children’s Services

review• Sunday trading powers

The Deal makes reference to evaluation

• Greater Manchester will be required to put in place an extensive programme of evaluation, agreed at the outset with HM Treasury (HMT). This will include:• evaluation of the impact of the devolution agreement, including the new

governance arrangements. This could take the form of, for example, Randomised Control Trials for the different policy interventions…

Process

Impact

LongitudinalPeer

review

Causality

Post-Deal evaluation thoughts to date

International evidence base

‘Intergovernmental fiscal frameworks usually reflect fundamental societal choices and history and are not foremost geared towards achieving economic policy objectives’

Blöchliger, H. (2013), “Decentralisation and Economic Growth - Part 1: How Fiscal Federalism Affects Long-Term Development”, OECD Working Papers on Fiscal Federalism, No. 14, OECD Publishing

• OECD analysis of 36 international studies on the relationship between growth and decentralisation drew an overall mixed conclusion. 17 were positive, 7 negative and 12 ambiguous.

• No standard method. Different scales often used and little attempt to provide context.• From the literature it is virtually impossible to prove a causal link between

decentralisation and improvements in a range of policy outcomes

Devolution Deal – proposal for a process evaluation

• Has the devolving of powers and responsibilities across a number of policy areas created synergies, efficiencies, and more effective decision-making and service delivery?

• Has the Devolution Deal has resulted in better outcomes for GM’s residents and businesses?

• How effective have Government and GM been in implementing the Devolution Deal?

2015 20202016

Feasibility study Ongoing research, annual reports

How might we evaluate… Health and Social Care?

• University of Manchester researchers• Three themes of enquiry:

• Policy development• Governance and accountability• Service user impacts

• Largely qualitative methodology:• Observation techniques• Interviews

• Health economics

How might we evaluate… Work and Skills?Working Well Expansion Apprenticeship Grant for

Employers

SQW-led, linked to DWP national evaluation

New Economy-led

Quarterly PMI data 12 month research timetable

PSM control group SFA data sharing agreement in place

Case studies, best practice review, consultations

Company beneficiary survey plus consultations

Behavioural Insights Team involved with Mental Health and Employment trailblazer

Comparisons to similar activity in Sheffield, Leeds and London

How might we evaluate… Transport?

• TfGM area of expertise• Scheme outputs – patronage, journey times, CO2 etc.• Econometric modelling – labour market catchments,

housing completions

How might we evaluate… Business support, investment and trade?

Inputs:• Funding - from multiple

sources• Staffing - from multiple

agencies• Websites• Marketing materials

Activities:• Diagnostics• 1-2-1 meetings• Workshops• Web/online

contacts• Mentoring• ICT audits

Outputs:• Business action plans• Business start-ups• Workshop attendees• Mentoring relationships• ICT and digital 'upgrades'

Direct Outcomes:• more jobs/jobs safeguarded• increased turnover• improved business survival rate• investment raised• improved leadership skills• stronger digital presence

Indirect Outcomes:• increased productivity• increased GVA• reduced unemployment• higher start-up rate• larger and more diverse

business base

Methods• Beneficiary surveys• Consultations• RCTs where

possible• Using IDBR to

track and validate reported impacts

• VfM and ROI

How might we evaluate… Earnback?

• Working with West Yorkshire, Cambridge & Glasgow

Q&A

julian.cox@neweconomymanchester.com david.morris@neweconomymanchester.com

Thank you!