Power to the places

4 Nov 19

Our cities and regions need a new constitutional settlement. One that really addresses the local democratic deficit

How times change. In early 2001, I caused a terrible row. I was a senior civil servant working in the prime minister’s policy unit, headed at that time by David Miliband. Our brief was to come up with ideas to empower local government and promote city mayors, then the government’s policy and a favourite of Tony Blair’s. The principle of “earned autonomy” was flavour of the month back then and we floated the idea that cities with mayors should be given more powers than those without, to create an incentive to adopt the mayoral model. 

The prime minister agreed with this principle, but ministers in what is now the Ministry of Housing, Communities & Local Government did not – far from it. First, they rejected the notion out of hand, and then did so at more elaborate length, bolstered by advice from their civil servants. If the words “constitutional outrage” were not used, then they were definitely implied. One could not, it was argued, give more responsibility to some leaders simply because of the means by which they came to power. The idea did not make it into the 2001 local government white paper, let alone the subsequent legislation.

Some 13 years later, the government proposed the idea of metro mayors and in 2016 the first of them were elected. With these city region mayoralties, came powers and resources not available to cities without a mayor. 

Five years after that, the Supreme Court found that our prime minister had acted unlawfully in his decision to suspend parliament. 

The moral? Our unwritten and infinitely flexible constitution can mean different things to people at different times. In all the cases cited above, there was a complex mix of noble intent and high politics. 

Does this matter to local government? It probably does. For a start, our constitutional arrangements are flexible enough that the prime minister could abolish every council in England with a majority of one in the House of Commons should they so choose. This situation, in stark contrast to the rules in many other advanced nations, must have an impact. Government decides what councils do and don’t have responsibility for, and in so doing plays a decisive role in their resource base too. 

In Germany, the roles of the regions (Länder) and several city states are a constitutional fact. Article 30 of the German Basic Law (constitution) states: “Except as otherwise provided or permitted by this Basic Law, the exercise of state powers and the discharge of state functions is a matter for the Länder”. Germany then is a federal state with both a central government and Länder, each of which have their legislative and administrative roles. Importantly these are both constitutionally derived and exercised independently. 

Some argue that Germany’s federal nature arises from its lack of a dominant city; Britain, by comparison, is heavily dominated by London and the South East. This raises the question as to whether our unwritten constitution, rather than countering London’s economic dominance, actually serves to embed it in the fabric of the nation. 
I think it does.

These are issues on which we English tend not to dwell. We have a reputation as common law pragmatists and even if our economy has become skewed over recent decades, most of us have an instinctive dislike of over-formalisation in the affairs of government. But perhaps now, with the country stuck in the middle of a Brexit process which is pushing at the boundaries of these unwritten “rules”, is a good moment to pause and reflect on whether or not the status quo really works well enough to justify such a laissez faire view. 

‘The resources they have are the fiscal equivalent of homeopathic medicines, too weak to be effective’

In the trenches
Some of us who have spent years in the trenches of devolution believe that the current process of decentralisation that began with the creation of the mayoral combined authorities in 2016 may need to be secured by a constitutional commitment if it is to fulfil its potential. The devolution we have so far is weak, not just politically (the mayors have few devolved powers and little leeway in their combined authorities) but economically too. The resources they have are the fiscal equivalent of homeopathic medicines, too weak to be effective. 

Yet these mayoralties mark a major breakthrough. First off, they exist. There are now eight metro mayors covering over a quarter of the English population outside London. That is no small achievement. Before them, we had a string of tinkering reforms, damned as “devolution-free devolution deals” by one council leader.  As we have seen over transport, homelessness and other issues, even these underpowered mayors are a force to be reckoned with.

The Labour government, which sought in 2004 to create regional government, had been divided over its importance and even its desirability (it was also in favour of mayors as discussed above and therein lay the politics). Whitehall succeeded in watering down the powers of the proposed elected North East Regional Assembly and the resulting North East England devolution referendum on its creation went against by a margin of four to one. With it went the hopes of devolution for a political generation. A conservative, Whitehall, view of devolution had won. 

By contrast, a political generation on, there were no referenda for the metro mayors. They were voluntarily entered into by some places and not others. But of the relatively few powers and budgets devolved to them by what is now the Department of Business, Energy & Industrial Strategy, most had been abolished in the period between announcement and implementation. This always struck me as cynical, all the more so as I’ve watched HS2, Brexit and all the other contortions of our state. Central government has all the power and still finds it hard to chart an effective way to use it consistently.

Perhaps the most remarkable thing about devolution in that period is the fact that the decisive leadership came, not from the cities, but from the then chancellor, George Osborne. He and his team pushed the agenda and overcame the resistance of government departments to make it happen. The problem is that two years after starting the process, he left government and none of his successors has had the appetite or power to continue what he started.

Work in progress
Devolution is a work in progress and needs completing. That is not to say that everywhere should have exactly the same model; it is worth sacrificing uniformity for effectiveness up to a point. But it would help all concerned if the government had a plan and stuck to it. That doesn’t mean the recreation of a 1972-style blueprint. There is nothing wrong with devolution deals, but they need to be pursued with real intent. The best way to do that might be, for the first time, to set government, our cities and towns, and the mayoralties that serve them, a meaningful but achievable goal; perhaps the one spoken of recently by the prime minister, of levelling up growth, over the medium term. That, after all, is why we are having this debate in the first place.

Devolution so far is a story of initiative, personal whim and fudge rather than strong governance. There is a great deal of clear blue water between this and the dirigisme of Francois Mitterrand’s grand regionalisation in France. We may or may not benefit from that approach. But we need to do something. The status quo isn’t working, and needs to change to give our cities and regions the power and access to the resources needed to grow and tackle their social problems. 

‘We could, and should, consider a quasi-constitutional role for city regions and counties’

We could, and should, consider a quasi-constitutional role for city regions and counties. If not, the government and local places need to start being even bolder with their policy proposals to show they are serious about this. 

There is another, equally important, debate we need to have, about the role of local government as an anchor institution. Our economic focus on mayoralties based on natural economic geographies is at least as reasonable as successive governments’ amalgamations of local authorities, and the creation of larger and more efficient unitary local authorities. But what if, in the process of creating larger unitary councils, we unwittingly undermine the institutional strength of places and the power of local leadership in towns and cities?

Recent research by German academics on the fiscal and political implications of amalgamating larger local authorities in Germany and Austria found that reorganisation didn’t reduce costs or staff numbers. They did find that voter turnout in these places fell consistently and support for rightwing populists increased. The evidence on the cost savings of amalgamation in England may be more robust, but the democratic and political considerations involved have never featured much in our debate. 

We certainly could have given more serious thought to the howls of indignation – and indeed to the quiet acquiescence – as town halls closed in many towns and parts of cities. It may just be that we have inadvertently weakened the link between people and government. If so, it’s another reason for looking at local government through a more constitutional lens.

One solution to the sense of local disempowerment, and an essential part of the devolution process, is the delegation of powers. We haven’t heard enough about the famous “licensed exceptions”, whether through city deals or mayoral combined authorities, promised by Greg Clark when he was cities minister. That’s because the government hasn’t let it happen.

Finally there is the issue of money. Devolved city regions don’t have their own adequate financial base and need to bid for too much of what they do have. The councils that make up a mayoral combined authority have a financial system that is underpowered and increasingly unfit for purpose too. So more stable and long-term funding is needed to enable councils and combined authorities to do their jobs. 

And, as I have argued to everyone who has worked on local government finance in central government since the distant days when I did, we will not adequately reform local government finance through the machinery of government. It is too big an issue and needs a cross-party process to deliver a consensus. We need a 21st-century, fit for purpose, royal commission on sub-national funding.

If we get all that right, which is no mean feat, we’ll have moved on from the game where we are too focused on the boundaries of power and not enough on what to do with it. Perhaps the real victim of our constitutional system is that the rituals of the relationship rather than its purpose have dominated. 

If the government can bring itself to extend a constitutionally secure position to councils, combined authorities (and their local enterprise partnerships), giving them real responsibility, then we’ll have moved on. If places really use those powers to address the big economic and social issues they face, we’ll have cities and regions up to the job of tackling the serious challenge of levelling up growth and inclusion in our country. 

Mike Emmerich is the founding director of Metro Dynamics, and a former No 10 policy adviser

  • Mike Emmerich

    Mike Emmerich is the founding director of Metro Dynamics, and a former No 10 policy adviser

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