Burnham’s rewiring of the state to push innovation funding to mayors
This morning’s devolution announcement from the Westminster government focuses on local tax-raising powers alongside transport, housing and skills.
But a separate Cabinet statement – Rewiring the State – makes it clear that the Burnham administration’s ambitions for devolution stretch even further. A white paper is expected this autumn, alongside the Budget on October 28, which will set out a new structure for government, backed up by legislation. And with innovation funding part of what is earmarked to be devolved, the consequences for both UKRI and research-business links could be profound.
The statement promises to support mayors to “foster local innovation systems” – which will be achieved by “devolving a substantially increased share of later-stage innovation funding to local leaders.” On paper this would seem to herald a shake-up of “bucket three” (itself only recently instituted), the £7.3bn share of UKRI funding over the next four years which is designed for supporting innovative companies, and which currently includes Innovate UK investment in industrial strategy sectors and elsewhere, knowledge exchange funding such as HEIF and its equivalents, and the Local Innovation Partnership Fund (LIPF).
The LIPF is currently broken down into an earmarked strand – £300m for the seven established mayoral authorities in England plus a region each in Scotland, Wales and Northern Ireland – as well as a competed strand which other regions can bid into.
The renewed push for further and faster devolution sees the immediate conferring of “established” status on four other mayoralties – Cambridgeshire and Peterborough, East Midlands, West of England, and York and North Yorkshire – with an ambition that all regions will be covered by strategic authorities by the end of 2028 (though the Cabinet statement recognises that some may opt against elected mayors).
It remains to be seen what devolving a substantially increased share of later-stage innovation funding to local leaders will look like in practice. The current LIPF is scheduled to pass to mayoral control in the next spending review period, but other elements of bucket three remain centrally controlled and heavily tied to industrial strategy priorities. UKRI’s strategy commits to introducing a “tailored, concierge-style” approach to growth sector support – the new Burnham government appears to believe that this kind of programme would be better off run locally.
Much of the Rewiring the State statement focuses on how central government departments and their arm’s length bodies work with devolved governments. A new “devolving by default” operating principle will mean that where new policies are being designed, Secretaries of State will need to “justify holding them at the level of central government.”
The government will also take a “serious look” at whether individual arm’s length body responsibilities and funding should be transferred to local leaders, or returned to ministerial departments. In tandem with this, the new devolution push will seek to reduce the number of duplicative policy, communications, and strategy teams in arm’s length bodies.