‘Lord make us decentralised – but not yet’ seems to be the government’s general approach to devolution of power within England over many decades. IPPR tackles the issue head-on in its new report Decentralisation Decade setting out the case for, and blueprint for delivery of decentralisation in the next parliament.
There is no doubt that England is one of the most centralised parts of the European Union, and arguably the world. In the United States, the media capital is Los Angeles, political capital is Washington, and financial capital is New York. Similarly in Germany, Frankfurt’s financial hub, contrasts with the political capital of Berlin and the regional capital of Munich. In England all power concentrates in London. The report powerfully argues that this is both politically counterproductive and economically wasteful.
‘Westminster elite’ has become a term of political abuse, and there is no doubt that London does seem a different country from most of the north or south-west of England. The remoteness of London means that policy solutions that enjoy currency in government sometimes fall flat when planted in the regions. The most obvious is the failure of the current government to understand that the housing market failed in parts of the north and West Midlands – they looked at houses that would be popular and valuable in London and abolished the Housing Market Renewal Initiative, refusing to believe in intervention in these areas.
The sense of remote rule has fed into increased political alienation, low local election turnouts, and has given space for the rise of the populist right in Ukip and left in the Greens. The anti-politics mood corrodes wider civic engagement and the roots of our democracy.
Concentration of power incentivises the best political brains to try and get into parliament, rather than their local council. The devolution of power and responsibility downwards would be healthy for our democratic institutions, and make the best use of our political talent.
The report argues the economic case for decentralisation is also powerful. All but one of the English core cities performed below the national average growth rate in England. Contrast decentralised Germany between 2000-2007 where the eight largest cities outperformed Berlin, and all 14 second cities had better productivity growth rates.
Overheated London burns bright, but house prices become unaffordable, and transport arteries clogged. The English assets of homes, land and resources elsewhere are underused. No business would use its assets in this wasteful way, and government needs to change the status quo.
Treasury investment evaluation grades a pound spent in the capital as delivering better ‘return’ because the capital already has more economic activity. Consequently transport and other infrastructure spending is sucked towards the capital – the regions unable to bid on a level playing field.
The solution mapped out by the IPPR is to build on the successful combined authority model championed in Greater Manchester. The ‘metro’ areas or city regions already have a distinct economic footprint. Liverpool, Leeds and Newcastle work as city regions along with their neighbouring authorities, both reflecting Local Enterprise Partnerships and the way economies work in practice. County councils, in combination or alone, have a similar outlook. The report wishes to see devolution of powers to these combined authorities or large counties.
The report advocates a simpler funding formula and combined with financial freedoms. Greater financial and borrowing autonomy is recommended, and a five year funding promise given to councils so they can plan ahead. Transport decisions should also be prioritised locally using devolved funding – avoiding the London funding centrifuge. Business rates should be fully localised, and council tax capping removed. In my view, more consideration needs to be given to the concerns of financial redistribution within England, and the concern that richer areas may be able to afford to cut business taxes and increase their competitive advantage. However, the thrust of greater trust to local decision makers is to be greatly welcomed.
The report also advocates increased powers for health and wellbeing boards and new schools commissioners to re-devolve some responsibility for free schools and academies.
Most welcomed is the call for devolution of the skills and training budgets – and maybe welfare, where competence demonstrated. Locally crafted solutions to employment problems, particularly working with local business and to craft packages to attract new employers will enable innovative responses to entrenched cycles of low skills and low employment rates.
The report rather heroically calls for cross-party support for greater devolution, but with Labour and the Liberal Democrats likely to endorse much of the thrust of the report, this is not impossible. Many Tory councils are thoroughly disillusioned with Eric Pickles ‘localism’ deceit, and the Local Government Association might be able to build the consensus hoped for.
Devolving power within England will, the report argues, strengthen democracy, boost the economies outside London, encourage cooperation between councils and foster innovation. Some ask, ‘what is Labour for in a time of austerity?’ This report powerfully advocates some of the answers.
Paul Brant is a former deputy leader of Liverpool city council and member of the Progress Stategy Board
Photo: Stuart Bryant
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