England Expects: The new English Deal

Introduction – the problem

For a variety of understandable and often justifiable reasons, the past century has seen British democracy become ever more centralised. In 1905 local authority spending made up 57 per cent of total public expenditure, with local spend still above that of central government as Britain entered the first world war. But the impact of two global conflicts and the desire to elevate the conditions of people across the nation saw central spending reach 56 per cent of the total by 1929 and 72 per cent by 1950.

The Beveridge Report, nationalised institutions such as the NHS, and moves towards comprehensive education in the 1960s have all had positive achievements to their name, but their collective effect has been to disempower the local to the benefit of the centre. National planning was en vogue in British political thought between Harold Macmillan’s backbench radicalism of the 1930s and his ‘Neddies’ of the 1960s, but its limitations became obvious as it, and capitalism per se, hit the rocks in the 1970s. A significant role for the centre will always be required – not least in moments of great economic crisis – but it can no longer be the only game in town.

Change could be on the horizon. Since he assumed the position in late 2011, the Shadow Secretary of State for Communities and Local Government Hilary Benn has sketched out a radical new perspective on the nature of local-central relations under a future Labour Government. Pointing to ‘powers over planning, housing, training, skills, infrastructure, transport investment and helping to find people work,’ Benn has stated that he wants ‘local authorities in all parts of England – counties as well as cities, districts as well as boroughs’ to be afforded greater ‘powers and freedoms that should come from Whitehall.’

Understandably with some time remaining before the next election, this has yet to be fleshed out in full. On planning, Labour have suggested they will give local communities greater say over where new houses should go. On skills and training they have stressed the need for buy-in from local business, but are still outlining where and how this is achievable. Though the broad direction is certainly positive, dots remain unconnected across several policy areas. And, without being churlish, the degree to which the devolving rhetoric of opposition is met with the deed of office remains to be seen. There have been false dawns before.

These essays cannot cover each and every issue of relevance to the English deal. The living wage, transport investment and public health must be part of this general conversation too. But it does enter this crucial space in two ways. Firstly, they set out how devolution may remain on the political agenda, and, secondly, suggest key powers which could be used to empower local government to drive the change needed in localities across the country.

But they also contribute something to the growing awareness of a distinctly ‘English’ political identity. According to recent polling, four in ten English voters believe England gets a raw deal at present – with Scotland viewed as receiving too much preference from the centre and England not enough. Double the amount of people perceive themselves as English over British compared to the other way around. Almost one in four voters believe that none of the major parties truly stands for English interests. There is obvious capital to be made for a party that can assuage such dissatisfaction and forge a positive pro-English platform.

This certainly has a tradition on the left. In the middle of the depression in the 1930s the then Labour leader George Lansbury wrote of his vision for My England – ‘a land of hedgerows and lanes’ where skilled ‘handicraft’ production was encouraged and the ‘money octopus’ of the City of London was controlled. He proclaimed that the English did not want Labour ‘to introduce uniformity. We do not want to make every man and woman like his neighbour, wearing the same clothes, living in the same house, and thinking the same thoughts. This, which is the produce of machine Capitalism, is abhorrent to us.’

In an age where so many perceive politics and politicians as ‘all the same,’ there is much to be gained by unleashing the potential of local leaders across England. If new Labour attempted to enshrine a ‘third way’ of public-private partnerships between the state and business, the English deal can balance the excesses of this whilst enhancing its good points. Providing local councils with greater autonomy unleashes the potential of a hitherto somewhat dormant actor for the good of the country. It reduces the need to cut disadvantageous deals with business through PFI (or its successor, PF2) whilst it adds a new competitor to markets – particularly housing and energy – which are currently imperfectly served by the private sector.

In the late 1950s the Oxford don Isaiah Berlin spoke of two concepts of liberty: ‘negative’ liberty which involved freedom from external coercion, and ‘positive’ liberty – the freedom to act. Through various central mandates, our local government has been predicated too much on the former, and not enough on the latter. By consequence, our national politics has homogenised to the point where few perceive genuine change can occur.

In place of an atmosphere of mistrust, the new English deal augurs a new politics of positivity, of open and honest collaboration between public, private and third sectors. It offers a different way of doing government – away from excessive managerialism and box-ticking, and towards partnerships grounded in local experience, traditions and know how. It can restore accountability and faith in the democratic process.

A genuine English deal can be a huge part of the offer Labour make in 2015 – but only if the electorate perceives the party will deliver on their pre-election promises when in government. The intent of these essays is to show how the party can illustrate it means business in this regard, and the wider benefits this may bring to both the economy and society.

Hardwiring the devolution of power: A National Devolution Council and beyond

Localism’s most telling structural problem is that one-time advocates of devolution suddenly lose such ardour when they are elected to power. Promises which seemed so easy to make from the dispatch box or campaign soapbox suddenly seem harder to deliver upon when confronted with the Whitehall levers of power and civil service mindset. Tony Blair promised to reverse the decline of local government under Thatcher. A decade or so later Cameron spoke the language of Phillip Blond in opposition only to draw sometime criticism from this source when introducing significant cuts to local government through the Comprehensive Spending Reviews of 2010 and 2013. Rhetoric is not always met with deed.

This could be solved by the creation of a National Devolution Council (NDC). The NDC would act in a manner similar to the Office for Budget Responsibility (OBR) which provides future forecasts for key economic indicators over a five year period, and thereby holds the government of the day to account for its spending estimates. The OBR was created in shadow form by the then Conservative opposition in December 2009 before being formally introduced in May 2010 upon the Coalition coming to office. It has an independent chair in Robert Chote, and draws its staff primarily from other civil service departments. The OBR – and certainly Robert Chote – make public interventions and produce briefings outside of their twice yearly formal role. The OBR also answers parliamentary questions and attends Select Committees. There is good reason for the NDC to follow this template.

Any NDC could be set up in similar form by the autumn of 2014 by Labour and charged with considering the nature and effects of the proposed English deal. The NDC would provide annual reports on what powers should be devolved during the current and next parliamentary session, assess progress on current devolutionary legislation in passage, and outline where the devolution agenda should be looking over the next five years. It would have a small permanent staff, be based within the cabinet office, and would pro-actively liaise with local authorities both upper and lower tier to see what powers could be devolved, and why. Its board would comprise one-third local government, one-third central government (with a mandatory requirement of a previous background in local governance), and one-third civil service representation.

This proposal builds on a suggestion by Professors George Jones and John Stewart, long time local government experts. Addressing the Political and Constitutional Reform Select Committee on any potential codified relationship between central and local government, they have argued for:

“A unit at the heart of central government—possibly the cabinet office – [which] should monitor whether the principles are being embodied in government policies and oversee whether actions taken by departments are consistent with them. Even more important is a joint committee of both Houses of Parliament to monitor the application of the principles, reporting both annually to Parliament on the relationship between central and local government and on specific proposals, judging them against the requirements of the statute. Similar proposals were put forward by the CLG Select Committee in its 2009 report on The Balance of Power: Central and Local Government.” 

We contend that an oversight, OBR type body made up of local, central and civil service figures would be a way Labour may wish to adapt this type of thinking to the concept of the new English deal.

This is not the only structural shift required. Importantly, embracing the English deal means moving away from the regionalism of the previous government. Just as George Lansbury was uncomfortable with the concept in the 1930s so too have current Labour politicians like Chuka Umunna philosophically moved away from the regional and towards the local. Jessica Studdert, adviser to the LGA Labour group, sums up the Coalition’s recent reforms in this regard and why the Labour opposition should be working with them in the recent Fabian report ‘All of our business’:

“Regional development agencies have been replaced with new sub-regional structures, local enterprise partnerships (LEPs) and combined authorities. Although the loss of regional investment vehicles was certainly felt, the old regional boundaries seemed to make more sense from the centre than in the localities themselves. New sub-regional structures are more likely to be better aligned to functional economic areas – including labour markets and journey to work areas.”

LEPs have significant potential – and the English deal can also be extended to their coming forward with offers to the centre as to how they can drive growth in a pan-authority manner across a functioning economic area. This will require something of an expanded architecture for LEPs, but employing 25 staff per LEP at £50,000 each would cost £50m per annum – or 0.0066 per cent of projected government spending for 2015/16. LEPs should be adding far more value than this across the board, but it is money that should be devolved as part of any English deal. Although such reorganisation is to be discouraged, where the spatial geography of a LEP needs realigning, they should be allowed one year to effect this prior to coming online in May 2016. Labour’s recent pamphlet on the One Nation Economy did not mention LEPs once – this needs to change.

All this would recapture something of the ‘Cabinet of Mayors’ spirit articulated by David Cameron prior to the Mayoral referenda in 2012. Had those referenda panned out more positively across the board, the prime minister pledged to hold regular meetings with City leaders to co-ordinate growth between the national and the local. There is something in this – giving local authorities a formal seat at the top table would have both symbolic and practical benefits.

The city deals agenda of the coalition government has been a positive one, and provides the forerunner to a wider conversation between all authorities and Whitehall. During the current parliament, cities have been given the opportunity to negotiate bespoke deals with Whitehall regarding the devolution of powers in a variety of areas. Greater Manchester has piloted an ‘Earn Back’ scheme, encouraging the city to invest in growth by pledging a share of the national tax take to that same city. Newcastle, Sheffield and Nottingham have used the new Tax Increment Finance powers (first floated by Labour in 2009) to borrow against future business rate income to promote new developments. And Leeds has gained much coverage for its attempt to create a ‘NEET-less’ region by drawing up local youth contracts to get young workers into jobs, a volunteering scheme, or training.

Initially the city deals involved the major seven cities in the midlands and north of England – Birmingham, Greater Manchester, Leeds, Liverpool, Newcastle, Nottingham and Sheffield – plus Bristol, but in February 2013 twenty more cities were given the go-ahead including southern locations such as Bournemouth, Greater Cambridge, Greater Norwich, and Southampton and Portsmouth. These city deals provide valuable learning opportunities for the wider English deal.

In its evidence to the London Finance Commission’s report on devolving fiscal powers, Manchester City Council noted that:

“The city deals process has underlined the importance of differential devolution, whereby packages of powers and resources can be devolved to local authorities based on the ability of those places to contribute to national priorities, as well as the capacity to demonstrate effective structures for local leadership, decision-making and accountability. One size does not fit all and devolution of powers and resources may be through different packages and to different timescales.”

These are important points. Devolution must suit the national as well as the local, and the opportunity to discuss empowering authorities does not mean that either they should request every power possible, or that Whitehall should devolve.

Many eyes are now on Alex Salmond and the Scottish referendum. But the English place in the union still needs to be rearticulated – not least become sub-national government in England (with the exception of the Mayor of London) can seem to pale by comparison to that in Wales or Scotland. Greater London comprises only about a sixth of the population of England (and an eighth of the UK), yet spending power and fiscal autonomy is drastically concentrated in a sliver of departmental buildings all within a mile of each other in central London. Even including the whole of the South East, over 68 per cent of English people live outside London and its commuter belt environs. A system so geographically concentrated can scarcely complain when people who live nowhere near the levers of power become disillusioned. The fact that London’s economic Gross Value Added grew by five times that of the East Midlands between 2007 and 2011 suggests some reform is needed.

Reducing this reliance on, and domination of, Whitehall is a pressing necessity. The English deal can make this so. And it can do this in a number of ways. We begin, next week, with the issue of housing. Issues such as skills, partnerships with business, the place of finance and energy in all of this will also be explored in what follows.

This essay is the first of a three part series  ‘England expects: The new English Deal and the politics of positivity’ by Richard Carr and Dominic Rustecki. Read the foreword by Lord Maurice Glasman here.