By Richard Johnstone in Manchester | 24 September 2014
The centralised UK state has become increasing ineffective in dealing with the country’s problems and there is a need for ‘devo max’ to communities, shadow Home Office minister Steve Reed has said.
Speaking at CIPFA’s ‘bar room debate’ at the Labour Party conference in Manchester, Reed, the MP for Croydon North and a former leader of the London Borough of Lambeth, said centralised decision-making meant people feel very remote from issues affecting their lives. ‘The system feels incredibly unresponsive to people’s needs,’ he said.
He highlighted areas including nationally-set welfare provision, problems faced by local areas in integrating health and social care and the decision by former education secretary Michael Gove to increase the number of academy schools funded directly from Whitehall as among the areas where people feel ‘cut off’.
‘What we need to do is find ways to change that, to give people back… the power to influence decisions on a day-to-day basis and not just every four to five years at the ballot box.
‘And what that says to me is that we need to look at a new model of the state, and that’s the opportunity that [the fallout from the independence referendum in] Scotland gives us, and a new constitution for how people participate.
With more powers going to Holyrood, a new model of governance was needed with powers pushed down as close as is possible to the people while still being strategically sensible, Reed said. This needs to include a ‘single pot’ funding deal for local areas that frees money from ringfences to allow it to be used to meet local priorities.
‘We need devo max not just for the countries of the UK, but for the cities, the regions, the communities, the neighbourhoods, the households and the individuals – devo max everywhere if we’re going to make the change that we need,’ Reed told delegates.
CIPFA chief executive Rob Whiteman told the event that a new settlement on regional devolution was needed to overcome both the fiscal challenges the next government will face and also to provide a platform for regeneration.
He also said that it was hard to see how the Barnett formula would survive moves towards greater fiscal devolution, despite the pledge from the unionist parties to maintain the mechanism.
‘After the issues of Scotland and the promise of devolution, a settlement for England now has to be on the cards.
‘I personally think it’s quite hard to think how the Barnett formula in its present form survives.’
Barnett was a mechanism that recognised there was more spending per head in different parts of the UK, but changes to the budget would be controlled by a formula while the majority of spending would remained to these differentials, he said.
‘I think that won’t survive devolved tax raising, because actually this was a system to distribute spending.
Whiteman highlighted existing anomalies in the system, which included the higher tuition fees paid to universities in England, which lead to Barnett consequentials paid in the block grants to Scotland, Wales and Northern Ireland, even though they may not have tuition fees.
‘That isn’t going to survive, in my view, a regional settlement where we have mayors or combined authorities or regional assemblies with tax-raising powers.’
The ‘vow’ that was made in the Scottish independence campaign was to make sure there was equitable resources across the United Kingdom and the continuation of the Barnett formula, he said.
‘I think those two things are mutually exclusive, and therefore determining what a regional settlement and devolution looks like for the United Kingdom, and determining what a regional settlement looks like within England, that rule has to be revisited.’
