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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