One nation and the new redistribution: from the centre to the local Jessica Studdert

One nation promises to set out how we can better share rewards, create a stake for everyone and give people more control over their lives. To realise such a vision requires a radical approach that fundamentally alters the power structures in our country and redistribute it from the central to the local level. As Jon Wilson also writes in this issue of the Register, almost by definition a centre-led, uniform approach will be inadequate to the complex and interwoven economic, social and political challenges which play out differently in different areas. There is a growing stock of evidence that social justice and localism are interdependent - the former cannot be achieved without an approach that relies on the latter. Rebuilding one nation starts from the ground up. The prolonged recession has had an uneven impact across the country in areas with varying economic histories, sectors and capacities. Giving local areas more power to kick-start their economies can maximise their potential for recovery through tailored local infrastructure investment, better matching skills provision to local labour market needs and targeting support at those who need it most both businesses and jobseekers. For example research has shown devolving skills provision and work programmes has the potential to reduce youth unemployment by 20 per cent, achieve savings of 1.25 billion a year and contribute an extra 15 billion to the economy over ten years. Passing more decision-making power to local government can create a more effective, responsive state. Already the most efficient part of the public sector, local authorities who know their communities needs are better placed to know what works. Getting better outcomes for money spent requires not just local understanding but an actual local stake in getting it right which a town

hall possesses more than the desk of a distant Whitehall bureaucrat. Groups that civil servants call hard to reach are not so for councils they are just down the road. Allowing local areas the flexibility to address their priorities from their particular starting point has a much greater potential to achieve better outcomes and fairness overall. The fairness commissions being pioneered by many Labour councils are demonstrating the benefits of this: in Islington for example the council is prioritising action on breaking the cycle of poverty, community safety and promoting a London Living Wage across the borough, having implemented it for employees. There is evidence that local decision-making has greater legitimacy: in 2012 public approval ratings showed satisfaction with local government at 71 per cent, contrasting with just 24 per cent for central government, a split which has been consistent over recent years. In a climate of increasing mistrust of elites and traditional institutions, devolving more power locally can help create a more healthy democracy in which decisions are taken closer to the people they affect. Low turnouts are often cited as evidence of lack of engagement with local government, but this is symptomatic of a top-down political culture. The centralist bias of the British state not only hampers social justice but also the ability to re-engage people in democratic politics. The gravity of the task ahead requires not tinkering around the edges but a fundamental power shift from the centre to local areas: Whitehall needs not only to let go but to redistribute power and resources locally. The situation in which localities must prioritise fulfilling the objectives of the centre and complex socio-economic problems are approached from the logic of departmental silos needs to be turned on its head. In order to create true localism which makes our economy, state and democracy work for, not against the people, a set of radical reforms are required. Firstly, the autonomy of local government needs to be codified. The UK is unique in Western countries in having no legislative standing or protection for local government, which in theory could be abolished by an act of Parliament. Enshrining councils as independent and sovereign entities would ensure they are accountable to their electorate, not vulnerable to the whims of micromanagers at the centre. This new status would enable a partnership of equals between Whitehall and local government, with national agencies forced

to respond to local priorities rather than the other way around. All new legislation could be subject to a presumption in favour of localism in which decision-making about public services is passed to the lowest level practicable, closer to those who use them. Codifying this in law would mark a decisive break with the past; one that makes a statement. Secondly, rebalancing the power relationship between central and local government needs to be matched by greater financial security and independence for local areas. As Labours zero-based budget review considers public spending in the round, a key aspect of this should be the overall centrallocal balance. An independent commission on local government finance, with terms of reference agreed by local and central government, could consider both the balance of funding based on overall tax take and specifically options for local areas retaining a higher proportion of business rates they raise, whilst ensuring appropriate equalisation. It would also need to consider options for local revenue-raising: allowing councils to borrow in line with prudential rules and issue bonds, a reformed and more equitable council tax and other potential sources such as land value, tourism and green taxes could all contribute to local areas becoming more self-sufficient with a stronger link between money that is raised and spent locally. Finally, an assessment of overall public spending should consider the potential for radical reform to pool funding across public agencies to allow local government to collaboratively design services that meet their communities needs. Place-based budgeting was introduced by the Labour Government, it has never moved beyond pilot stage under the Tory-led government, and now requires political determination to become mainstream. Huge funding streams from Whitehall departments could be more effectively spent by giving local areas greater freedoms to provide services organised around needs and with a greater focus on prevention. It would enable collaborative leadership of place for the common good, moving beyond the situation in which isolated institutions work in parallel and sometimes in opposition. Analysis has shown that nationally place-based budgeting can deliver savings up to 4 billion a year or 10.3 - 22.5 billion over five years: at a time when public services are creaking under the strain of cuts and rising demand, this potential cannot be ignored.

Once local areas have more independence legally and financially both in terms of how they receive and are able to spend funding, true localism can kick-start local economies, more effectively address social problems as they exist and create a healthier local democracy. This could precipitate a culture change whereby local ownership and control becomes more ingrained in our public imagination, with more power locally encouraging wider participation in decision-making, more efficacious local democracy and a virtuous circle created. For now it is important for Labour to appreciate that redistribution not only matters on the income scale but also between the centre and the local. More equitable outcomes rely on both: one nation doesnt need to be a uniform nation, and it will be the stronger overall for this.

Jessica Studdert is political adviser to the Local Government Association (LGA) Labour Group. Political notes are published by One Nation Register. They are a monthly contribution to the debates shaping Labours political renewal. The articles published do not represent Labours policy positions. To contact political notes, email onenationregister@gmail.com