Mark Whitehead 16 May 2019

Healing the divisions through local economic power

Healing the divisions through local economic power image

There have been many reports in the last few years saying power should be devolved to councils, local government expert Tony Travers reminded the gathering at the launch of yet another such report.

But could this one, by the think tank Localis, be different? With a huge shake up in powers being repatriated from the EU after Brexit, could it be a time for local government to come into its own at last? 'We live in revolutionary times,' said Localis CEO Jonathan Werran, unveiling proposals for a fundamental change in the way economic power is exercised throughout the UK.

The Localis report, Hitting Reset, A Case for Local Leadership, paints a disturbing picture of the UK's recent history. The last ten years, it says, has been a 'lost decade for the UK economy', marked by 'stagnating growth, flatlining wages and dwindling standards of living', culminating in a 'profound and emphatic rejection of business-as-usual politics' in the form of the Brexit vote.

This is the economic and political environment Localis believes must now be dramatically shaken up, by means of a new and radical change in the way state institutions function and the way they relate to business and the communities they serve. This, it proposes, will be achieved through the exercise of strong local leadership, acting through a network of state functions co-ordinated by democratically-accountable local authorities.

It's a bold vision, backed up by concrete proposals. Chief among these is a proposal for a British Investment Bank to replace the current EU equivalent, making loans for projects to LEPs and local authorities working in tandem.

A Royal Commission, no less, should determine the criteria for a ten-year spending review in line with proposals made by the Independent Local Government Finance Review in 2015. A variety of levies, income sales road or corporation taxes would replace most central government funding and councillors should be elected all at the same time once every five years.

But how to achieve it? It's no good, as veteran commentator Simon Jenkins told the gathering in Central London, just saying 'we want more power'. Indeed, as others said, battles over who should have which powers are often the obstacle standing in the way of change. Central government doesn't want to hand over power to local organisations, and they in turn resist giving up some of their power to smaller, even more local councils and parishes.

This is the reality, but the idea repeated at this gathering as it has been over the years, is that local decision-making can be far more effective than policies handed down by bureaucrats in Whitehall – or Brussels.

The Localis report surveys a wide range of functions which could benefit from the kind of radical reforms it suggests. In health services, for example, it finds that the current system, an array of institutions including clinical commissioning groups, strategic transformation partnerships and integrated care systems, is marred by 'institutional imbalances and misalignment between various forms of leadership'. This could be solved by local authorities becoming a 'convenor and source of democratic legitimacy'.

Similarly welfare provision is held back by 'an ever-increasing failure to hone the potential of the local welfare system and what it can do for people in each community.' The controversial Universal Credit system is 'pseudo-local at best': a claimant's 'exposure to the system occurs at the local level yet the overall policy is directed from the centre'. A new settlement is needed which recognises 'the crucial role local actors play in personalising welfare delivery to the needs of all people'.

In skills and training, a certain amount of devolution has already taken place, especially in the further education sector, yet 'competition and distrust have become the norm for FE colleges across the country, whose focus has increasingly been on financial survival'. For local leadership to become central in skills provision, Localis says, employers should be able to pool their apprenticeship levy contributions with upper-tier strategic authorities working with consortia of FE providers.

The response to reduced EU migration post-Brexit calls for an agile response, Localis says, not just in terms of national initiatives on immigration but also through local policies to influence labour markets. Training and retraining must be seen as essential and lifelong activities.

Taken all together, the proposals form an ambitious vision for the future of the UK after Brexit. Local government, it suggests, can play a vital role in reducing a dangerously escalating sense of division and disconnect.

As political leaders vie for position in the continuing battle over the nation's future, they would do well to consider what Localis is saying about the roots of division in an alienated society – and its ideas for how to start healing the divisions by using devolved power to generate a sense of belonging, economic wellbeing, and hope for the future.

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