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 * 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.

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 Longitudinal Peer 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? 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 ExpansionApprenticeship Grant for Employers SQW-led, linked to DWP national evaluation New Economy-led Quarterly PMI data12 month research timetable PSM control groupSFA 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 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: i ncreased 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

Thank you!