This morning’s big Labour story is Sir Keir Starmer and Angela Rayner’s pledge to revive levelling up. They propose to do this by rolling out what the Daily Mail dubs “full-fat devolution”. Writing in the Times, the two explain:
“We will deepen devolution so combined authorities have a path to gaining powers over transport, skills, housing and planning, employment support, energy and can get a long-term integrated funding settlement in return for exemplary frameworks for managing public money. This will enable local leaders to develop powerful local growth plans that attract specialist industries and enhance their local strengths.”
Perhaps. It may well be that another tranche of municipal devolution is required to kick-start regional growth; town halls could probably not make less effective use of such powers than has central government in recent decades.
But a cynic might posit one or two other possible motivations for Labour’s new approach – not least the simple politics of punching the bruise that is the Tory leadership psychodrama and underlining how much the Party’s offer has shifted since Boris Johnson secured a landslide in part on a pledge to deliver a new, more spendthrift form of Conservatism.
Another, more substantial one is that devolution is a policy offer centred on process, not results. Giving local government the tools to deliver economic growth is another way of making the task of delivering it someone else’s problem.
Labour certainly don’t seem to have any idea how to go about it at national level. As I noted last week, Rachel Reeves’ Mais lecture mentioned “growth” 58 times but the crucial qualifier “per capita” not even once. She and Jeremy Hunt are locked in combat over a tiny sliver of policy territory, despite the Opposition’s commanding lead and widespread acknowledgement that something (although not what) has to change.
More devolution to cities and regions might be the answer. But any such programme will run headlong into the problems which have bedevilled decentralisation for decades, and which Anthony Breach of Centre for Cities elucidated on this site yesterday: the enormous political difficulty of making local authorities fiscally responsible.
This is a problem for both parties, at least so long as the Conservatives are competing for the Red Wall. As I wrote after last year’s Northern Research Group conference in Doncaster, there was a real disconnect between the demands echoing from the podium of fiscal devolution to the North and the obvious implications of that for public spending, given that every Northern region has a sizeable fiscal transfer deficit with London.
Moreover, there was a clear democratic tension in the vision of devolution pithily summarised by Dehenna Davison as “Give more cash and get out of the way”, namely that there ought to be accountability to the British taxpayer for money disbursed by the British Government. We have seen in Scotland and Wales the carnival of poor governance that attends unscrutinised transfers.
But it’s a problem for Labour too. As Breach noted yesterday:
“However, [fiscal devolution] would be much more controversial among Labour councils and mayors because it would transfer accountability for local taxation and local economies out of Whitehall and to them. Many do not want this responsibility, and are more comfortable simply receiving subsidies from central government.”
Force councils to stand on their own resources, and you risk creating sudden budget deficits in a lot of councils and postcode lotteries in local services. Keep up the funding for now and try to phase it out as they grow their local economies, and you give local politicians little incentive to take the difficult decisions that will often require.
It would also be very difficult to justify cutting off central funds to local government in those circumstances where so much of council spending is committed to centrally-imposed statutory responsibilities, especially politically-charged ones such as social care. Yet it would also be challenging to create a clear delineation, with local responsibility for funding local policy, without effectively bringing some hugely expensive obligations onto Whitehall’s books, which no government wants to do.
Finally, there remains the fact that whilst local government is underpowered in some ways, it is grossly overpowered in others, especially planning. Councillors have the worst possible incentives when it comes to delivering the sort of infrastructure which is essential to national growth, but unpopular locally.
Top of that list is housing, but it also includes the estimated 460,000 kilometres of new onshore electricity cables required to equip the National Grid for Net Zero and transitioning road transport and household heating to clean energy. To it its own self-imposed target for decarbonising the grid, Labour would need to get that installed by 2030. Relying on empowered local government would be a bold choice.