Variously burdened by economic sclerosis, political dysfunction and additional quandaries too global to handle alone, nation states across the West are stumbling. Mounting evidence suggests that they are no longer the most effective level at which to govern.
In some cases, supranational and intergovernmental bodies are better suited. In most, however, power needs to go down and out. Sub-national governments are closer to the people they represent, correspond more accurately to clusters of economic specialism and, more often than not, are more nimble and innovative than their national counterparts.
But the three main political parties have been frustratingly hesitant in this field. Their response to Michael Heseltine’s 2012 report No Stone Unturned is illustrative: none has come close to enacting or committing to the devolution of £49bn of state spending that the report advocates. Heseltine’s prescriptions should serve as a starting point for the decentralisation of Britain. Instead they are treated as the radical outer limit of any such programme.
But what if Heseltine were the baseline? What would come next? A tripartite agenda suggests itself.
The first pillar would be the federalisation of England, home to 53 million of Britain’s 63 million inhabitants. Scotland, Wales and Northern Ireland already have devolved administrations (likely to become more autonomous in the coming years). The English have shown no real enthusiasm for a single parliament of their own, nor for regional assemblies. Urban identities, however, are stronger. The northwest is inhabited not by north-westerners, but Liverpudlians and Mancunians, for example.
Roughly 80 per cent of England’s inhabitants dwell in the greater economic and cultural basins of its top ten cities (Birmingham, Bristol, Leeds, Liverpool, London, Manchester, Newcastle, Nottingham, Sheffield and Southampton, according to the EU’s ranking of metropolitan areas). So encourage and incentivise these ten regions to coalesce into states with parliaments comparable to that of Scotland. Align or merge the governments of these city-states with local economic partnership leaderships (in line with the proposals of Andrew Adonis’s report, ‘Mending the fractured economy’), elected police commissioners and NHS foundation trusts. In the process, and as a bare minimum, devolve to them all the domestic powers that have already been offered to Scotland.
Self-evidently, the city-states will need to finance themselves. Handouts from central government would create few incentives for budgetary discipline or pro-growth policies, and generally stymie bold leadership. The second pillar should therefore be to give city-state governments control over business and income taxes, which in turn would unlock credit for investment. A federal debt brake, like that binding Germany’s states, should limit risky borrowing. And a federal investment bank, again like that of Germany (KfW), should lever long-term capital into growth-boosting metropolitan schemes.
The third pillar would be to overhaul completely the architecture of the British state. Even under current arrangements, there are far too many Whitehall departments and ministers. A cabinet of 32 is an assembly, not an effective decision-making body. The Treasury – centralising, conservative and congenitally prone to mission creep – should be broken up as an immediate priority.
Changes would be needed in Westminster, too, turning the House of Lords into a senate of sub-national representatives (on the Swiss model); in the House of Commons constituency MPs could be supplemented by MPs elected proportionally on regional lists (yet again, as in Germany).
The above scheme may look like an outlandish thought-experiment, yet it draws purely on precedents that currently work well for our European and North American neighbours. Sceptics should answer the question: if not this, then what?