Cities don’t reflect the national economy – they are the national economy. If they perform badly, then rural areas and the rest of country are likely to underperform as well.
Cuts to services are rightly grabbing the headlines, but it’s the overall trajectory of the shift of funding from urban to rural which should worry us most. For once I agree with Michael Heseltine, who last year in Birmingham challenged us all to start a ‘peasants’ revolt’.
In France, Italy and Germany the majority of their cities operate above the national GDP. They pull the country up. In England, apart from Bristol the core cities perform below national GDP. This can’t be right.
At a recent Westminster Hall debate MPs from Birmingham, Sheffield, Newcastle and Liverpool came up with illustrations of just how unsustainable the current structure has become. In Birmingham we will have to find savings of a magnitude which mean that some services will simply no longer be delivered. The minister suggested that we look at cutting costs in our ‘backroom operations’. Even if we were to stop doing any of the administrative support and IT we wouldn’t be able to find the £120m cuts we have to make in 2014-15.
It’s a pity that local authorities will have seen a 33 per cent but by the end of this parliament, while Whitehall only took a 12 per cent cut.
What is to be done? Raising funds through council tax will only help the more affluent areas. Council tax has effectively been capped by the referendum lock and, combined with the outdated banding system, it won’t help our cities. The government acknowledges the problem, but the actions so far don’t go far enough. City deals and varies pilots are a start, but no more than a start.
Things won’t change until Whitehall gives tax-raising powers to England’s largest cities. They must also gain control of the revenues from all property taxes, such as stamp duty, council tax, land tax and business rates. This should be combined with lifting the cap on local government borrowing.
That is a big ask, and our cities must be prepared to show that they are ready to take responsibility for their own future. That includes accepting the consequences of their decisions and be prepared to be held to account. There was a reason why central government, particularly in the 1980s, took away powers from local authorities. In granting those freedoms to cities, Whitehall will have to spell out what would happen if a city were to stop providing statutory services.
This leads to the missing element. Having the powerful leader of a council elected by only a small cabal of councillors is simply no longer right. We need more directly elected executive mayors. They will make different decisions from those in Whitehall, but I suspect they will be better decisions. And maybe we should start putting our executive mayors into the House of Lords. This might not suit the current mayor of London, but the second chamber would benefit.
More power to our cities, more accountability to our voters.
Gisela Stuart is member of parliament for Birmingham Edgbaston. She tweets @GiselaStuart
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