Six weeks after the local elections seems an odd time to announce a new settlement for local government funding. Perhaps the parties wanted to get the grubby business of democracy out of the way before discussing the more important question of how local services are funded. After all, the UK has a long tradition of separating local decision-making from local voters’ decisions. Two-thirds of local authority revenues are handed down from Whitehall with strings attached, and the announcements yesterday appear to have done nothing to change this.
The main announcement was the government’s Growth Deals, £2bn from the Local Growth Fund to support projects across the UK in 2015-16. Cameron explained that “for too long our economy has been… too centralised” and spoke of “trusting local people”, while the deputy prime minister said that “we are ending a culture of Whitehall knows best. Decisions over spending on infrastructure, business support and housing are being made at a truly local level.”
This is odd, because the initial guidance for Local Enterprise Partnerships (LEPs) – the bodies expected to make these decisions – published a year ago, states clearly that the allocation of this money depends on LEPs satisfying Whitehall’s criteria, “enabling places to make their best case, and enabling government to better understand and test the underlying capacity and commitment of partners.” We may presume the LEPs’ caps are firmly in their hands.
Much of the money is already channelled into departmental streams, and the departments are firmly in control. The Department for Transport, for example, has established criteria to judge local schemes and has ring-fenced some of the money for projects already in its programme. The £170m European Social Fund is conditional on LEPs committing to a Skills Funding Agency model. The coalition established the New Homes Bonus as unrestricted income to reward authorities that build (much-needed) homes. But within two years, it was forcing local authorities to pool £400m to support LEP growth plans. So much for “trusting local people”.
Labour published its own plans last week – a striking attempt to seize the high ground of localism by a party that spent 13 years arrogating power to Whitehall. But neither coalition nor opposition plans alter the UK’s massive centralisation of power. Despite an unprecedented reduction in funding, local authorities are still expected to deliver the same 1,335 statutory responsibilities. Real localism would let voters decide whether their council should provide “a comprehensive and efficient library service” or “have a petitions scheme”, and would free councils from seeking the secretary of state’s permission to dispose of housing assets.
If politicians are serious about devolving spending, empowering communities and strengthening local democracy, they should commit to dramatically reducing statutory responsibilities and to clearly delineating national and local competencies. The former should be fully-funded by government and the latter fully-funded by local taxation. Local government should be free to decide whether, and in what way, it delivers local competencies, how it raises the necessary revenue and in what quantity. Local electors should control local leaders.
The government’s vision of proud, independent cities, leading growth and prosperity in their regions, is indeed an inspiring one – even if its poster-child, former Birmingham mayor Joseph Chamberlain, was a champion of the kind of economic protectionism that would have destroyed UK manufacturing and impoverished not only Birmingham but every region of the UK.
During their nineteenth century heyday, Britain’s great cities expanded at a phenomenal rate: the populations of Birmingham and Manchester grew by seven times during the century. These days, even small incremental growth seems impossible. Britain’s major cities are throttled by Green Belts that are three times larger than the cities themselves. The planning system encourages nimbyism among citizens and councillors alike, and makes it too easy to stymie development: if they were proposed today, Birmingham Town Hall and Birmingham Council House would face years of planning inquiries and judicial review; Metroland would never be built.
So along with devolving revenue raising and decision-making, government needs to abolish national planning restrictions and give people control over the planning regime in their own locales. The National Planning Policy Framework was a step in the right direction, but real localism requires that planning decisions be made locally, and that both the costs and the benefits are felt locally. If the future of cities and their regions depends on their own choices over development and growth, with no restrictions and no bail-outs from Whitehall, we can be sure that they will rise to the challenge.