The Duel: Is the government's city devolution agenda really a cover for cuts?

I have always believed that devolving power and budgets leads to better decisions on priorities, enhanced value for the spending of public money, higher quality in the services provided and, most importantly, strengthened democracy as people secure greater control over the decisions that affect their lives and their communities. I want more devolution.

However the government’s actions fail to match what is required for a real city devolution agenda. New duties—not many new powers—are being transferred to city mayors alongside continuing vicious cuts in central government support for services. Transferring duties with inadequate funding to local bodies is not devolution.

In the five years to 2015/16 central government funding for local authorities fell by 37 per cent; further substantial cuts are coming. With new responsibilities for integrating health and social care, administering housing capital investment and running further education, the elected mayors, not the government, will be blamed for failures to deliver. Risk and blame is shifted while the real accountability for government failures is disguised.

This government is delegating the delivery of decisions that it takes, not devolving those decisions. For instance, mayors will still be forced to build new homes for sale or offer at market rents; they will not be able to build council homes at affordable rents. They cannot raise local taxes to fund local priorities; the extra money from council tax increases must go to social care. They cannot even choose whether they want an elected mayor. They will only get the new devolution deal if they agree to have one. Devolution deals are not designed by local communities or elected councillors; they are determined by ministers. This is not devolution.

 

We can all accept your criticism of the present state of city devolution. But I have lost count of the MPs advocating devolution but doing nothing to bring it about—except criticise every move in its direction. My disagreement is over how it is to be achieved.

I want a constitutional devolution, on the German or American pattern. Short of that, we must move in stages. George Osborne’s Manchester experiment, now being extended, was sincere, albeit rooted in his faith in the city’s chief executive, Howard Bernstein. The delegation was chiefly in transport, health and social care and housing and training. No extra resources were allocated, but in the case of health and welfare Bernstein told me he needed none, such was the scale of waste in the existing structure. Yes, his budgets were cut, but it was control he wanted.

Half-hearted, perhaps, but more than anything attempted since the centralisation under Thatcher in the 1980s. No party made the slightest effort to reverse it. New Labour eroded the local tax base to the point where it is the lowest of any western democracy.

Osborne rightly saw elected mayors as key to freeing depressed cities from decayed party leadership and fought for this through an antagonistic Whitehall. Departments such as transport and employment, grown fat on centralism, fiercely defended their territory.

As you say, the degree of fiscal devolution in this desperately hesitant cities programme is pathetic. It is a direct legacy of Westminster’s suspicion of any localism. But shifting “the burden of blame” to local leaders should make them demand more tax discretion in general. Local people must win back the freedom to spend more on the services they want.

 

It didn’t take long for you to start blaming Labour, Simon. But at least get your history right! It was the Labour government that responded to what citizens wanted and didn’t—as you allege—“do nothing.” Have you forgotten the creation of a Scottish parliament, a Welsh assembly and a London mayor with an elected assembly? That was real devolution, creating elected bodies, supported by local communities, with genuine powers and adequate funding. We didn’t establish regional assemblies because local people rejected the idea in a referendum in the north east. You seem to want to impose regional bodies on unwilling citizens. What sort of devolution is that?

Contrast Labour’s record with a deal behind closed doors in Manchester between two white, middle-aged men. No consultation, no discussions with elected councillors, cuts in funding and no real powers. Remember that this government has engineered the greatest centralisation in years, taking education out of local government, creating unaccountable academy trusts and centralising control over schools. Is that the “sincere” devolution you want? This is the government that has taken £1.1bn away from the Sheffield City Region, far exceeding the £900m they promise in devolution deals. That just sets the new bodies up to fail and take the blame.

You are right to say local areas should be able to raise more of their own taxes. But that will only work with a fair way of equalising resources between areas. The government is silent on this. Simply returning business rates to local authorities without this will deepen the inequalities and further hit the poor.

 

I had not thought this a party political exchange. When one side must abuse the other on grounds of colour, age and gender, I rather think the case is lost. I concede to you devolution to Scotland and Wales and the London mayoralty, for the last of which Tony Blair gave credit to my 1995 Commission for Local Democracy. But the few elected mayors were given no new devolved powers. John Prescott’s abortive devolution to English regions was a blind alley. Cities and counties should have been given power.

The centralist academy programme and the nationalising of school testing took off under Blair and his schools minister, Andrew Adonis. Prescott’s 2004 Planning and Compulsory Purchase Act was the most anti-localist on the statute book. Nothing so crushed local freedom as Blair’s 500 national targets. Osborne’s Manchester package was steered through local council leaders in the north west with full consultation by Manchester’s Richard Leese. Almost all were elected Labour members. A London politician insulting them as secretive, stale white males rather explains Ukip’s surge in the region.

But this issue is about the future. The present devolution package is limited, but more extensive than any in recent history. It is being extended to other cities with so-called enterprise resources tied to it.

Though cuts are savage, some tax-raising powers, critical to the future of local democracy, will be introduced. You are right that transferring business rates without equalisation is not fair. Nor is the present sudden jump in valuations. But we got nowhere with such reform under Labour.

This merely emphasises the need for a full re-assessment of local government finance, preferably to remove it from the party political to the constitutional realm. If every time a local electorate votes itself better—or worse—services, everyone howls “postcode lottery,” we may as well wind up local elections altogether. Britain has Europe’s most centralist administration. Even today’s stagger towards the light is welcome.

 

We both believe that devolving power is a good thing. It helps strengthen democracy, achieve better value for money and will likely lead to higher quality public services. I accept that we are a centralised country, especially in the way we raise public monies. I agree that we should enable localities to raise more of their own money but we both agree that any move in that direction also needs a proper system for equalising resources between communities.

You also accept that the present government’s school reforms involve centralising rather than devolving powers, showing an inconsistency at the heart of the government’s approach. You say Labour was just as bad and I leave others to judge that.

You also accept that the cuts to local authorities are savage. The key difference between us is that I believe that those cuts mean that the devolution will inevitably fail and that the new mayors will simply take the blame for cuts without being able to demonstrate the benefits of devolution. You think this is a “stagger” in the right direction. I fear that any failure would simply take genuine devolution backwards, not forwards. And finally, I mentioned Prescott’s attempt to introduce regional government because it was the closest the UK got to the German and American pattern of devolution you admire. People voted against it—and you can’t ignore democracy!

 

It does not matter which party did what. All I know is that Osborne’s Manchester devolution, however half-hearted, was the first attempt to devolve power to English local government for half a century. Labour did all in its power to kill it. What are now serious cuts in local spending and resources, at least a third in almost a decade, are worsening the quality of local services. Even the devolution of health and social care, with some discretion to raise council tax, is a desperately meagre response. This should not impede devolution.

Westminster is near silent on this, nitpicking at the margins and complaining about postcode lotteries, talisman for opposing local diversity and experiment. The reality is that MPs rather enjoy being de facto local mayors, showing they can get things done better through Whitehall than local councils. They have no interest in seeing power pass from Westminster to town and county halls.

The Prescott referendum in the north east was a classic example of this. He wished to set up an elected chamber to back up his regional outposts of central government. It was this version of top-down localism that the people of the north east rejected. Had he offered enhanced powers to Durham or Northumberland or Tyneside, he would have had overwhelming support.

British central government is dire, from its running of the NHS, to defence procurement, the prison service, farm payments, railway planning, tax collection and overseas aid. Everywhere in Europe the evidence is that local is better administered than central. Britain still rejects this. Central government is scared of local government and seeks always to cut it down to size. It sees it as an alternative seat of political power, and therefore disruptive.

Local devolution held the key to rebuilding a new Germany after the war, and holds the key to the separatist pressures building up in states across modern Europe. It was a rejection of localism that began the break-up of the UK, first with Ireland and now with Scotland. The David Cameron government’s devolution proposals were a first glimmer of light in this gloom. They are under threat and need all the support they can get.