Yesterday, in my capacity as Business Representative for the ICAEW (Institute of Chartered Accountants), I attended a debate on devolution in the Council Chamber at Chartered Accountants’ Hall in London.
With devolution a hot topic of debate ever since the Scottish Referendum last year and also drawing an interesting historical parallel with the 800th anniversary of the Magna Carta this year, I was excited and also privileged to be part of the discussion.
Nottingham as a Core City currently has devolution on close watch and the proposed move to a Combined Authority for Nottingham and Nottinghamshire is in part motivated by the desire to share in this anticipated catalyst to regional growth.
Our Chairman, Paul Southby spoke last year at a Core Cities debate held at Antenna and the discussion I attended yesterday served to affirm many points raised then, but also many additional questions.
Ahead of the debate a poll was taken, which revealed an equitable split between those for devolution and those against:
For – 42%
Against – 40%
Abstain – 18%
Speakers for devolution argued:
Centralisation contributes to regional disparity and those on the ground are best placed to spend monies to drive transport development, educational improvement and better living conditions. This doesn’t mean allocating more money to the regions, but better and more informed spending.
Very few countries are as centralised as the UK and to ensure we remain competitive in the world economy we need to devolve spending (USA, China and Germany were specifically mentioned).
Speakers against devolution, in contrast argued:
What’s good for business is not devolution – it’s global competitiveness.
Unless we can clearly define a measure of success, how will we know if it’s working – what is the measure?
There is little concept of governance or accountability and therefore an important question of how it might work in practice (9 out of 10 cities recently rejected the idea of elected mayors).
Additional layers of bureaucracy will generate more cost and cause more confusion, particularly when it comes to inward investment, with potential investors confused when wanting to invest in the UK.
Political devolution is very different to economic devolution – if the motivations are purely political then this could be very dangerous.
In summary:
It seems inevitable that devolution can and will happen, what’s in question is when and how it will work in practice.
To be successful, it should not create additional layers of bureaucracy and only be applied to larger regions, with the scale to take a strategic view and ensure efficiency.
Certain expenditure should always remain at the national level, including national infrastructure (e.g. HS2), industrial strategy and Corporation Tax.
Whatever else, we must ensure it makes us more competitive internationally.
To finish, a second poll was taken, which revealed not necessarily that devolution is bad, but more likely that its success relies on asking more of the right questions early on and coming up with satisfactory answers:
For – 41%
Against – 51%
Abstain – 8%
As is often the case – the ‘proof is in the pudding’ and for now we’ll have to wait to be certain whether devolution ultimately proves good or bad for business.
………
After the debate, Michael Izza, Chief Executive of the ICAEW, hosted a Parliamentary Reception on the terrace at the House of Commons.
Guest speakers included Chuka Umunna, Shadow Business Secretary who made reference to devolution being on its way, but also emphasised the need for us to maintain our international competitiveness.
The ICAEW plays a significant role in influencing matters of public policy and Michael unveiled the manifesto, which focuses attention on and recommends:
- Boosting growth through exports – export incentive to reduce set-up costs and kick-start new exporters.
- Fixing the public finances – a CFO at the Cabinet table to provide strategic financial leadership across government.
- Restoring trust in business – a set of top-line principles for company behaviour.
- Addressing the skills gap – mandatory work experience and world-class careers advice.
- Simplifying the tax system – apply a ‘red tape challenge’ to the tax code to make it much simpler.
Much will depend on what happens on 7 May, but what is certain now is that whoever resides in Downing Street post election, while the solutions may be different – the challenges remain the same.