Resetting the British state’s default

The final report of the City Growth Commission puts a figure on failure: £79billion. That is the missed economic opportunity of the UK’s most significant metros failing to grow at the same rate as the UK average. It is also worth considering the wealth generation that the UK has foregone over decades. This output gap is the price of political and governing failure.

The final report of the City Growth Commission puts a figure on failure: £79billion. That is the missed economic opportunity of the UK’s most significant metros failing to grow at the same rate as the UK average. It is also worth considering the wealth generation that the UK has foregone over decades. This output gap is the price of political and governing failure.

The City Growth Commission is a highly significant contribution to a battery of heavy-duty reports over the past few years on the benefits that could be secured through the greater devolution of power, resources and responsibility. Michael Heseltine’s ‘No Stone Unturned‘, Labour’s policy review (most notably the Local Government Innovation Taskforce  and the Adonis Growth Review) and now this final City Growth Commission report present a concrete analysis of the need to change. Better economic outcomes, better public services and a healthier democracy are promised. The intellectual argument has been won. The argument now moves on to the ‘how’.

Herein lies the rub. As ever the case for change when it comes to the British state gets mired in the detail. The status quo nearly always wins. This is seen as a consequence of the weakness of local administration, democracy and a regular stream of failures that easily coalesce into a ‘safety first’ response. But this commonplace analysis actually misses the point. Devolved power either simply doesn’t happen or takes place at a snail’s pace because these challenges are in many ways unanswerable- usually as a consequence of over-centralisation.

Yes, local democracy is too weak and, yes, there are enormous failures (though, curiously, multi-billion pound failures at the centre are simply overlooked in this debate – another sign of the loaded nature of the debate). Local administration has failed to evolve in many ways other than an increasing propensity to contract out local services in recent decades – it hasn’t had to as powers have generally been removed rather than aggregated (compulsory competitive tendering and best value being cases in point).

But none of this is the reason that the British state has remained extremely centralised. No, it is simpler than that. The reason is that politicians and officials at the centre have set the terms of the debate. The City Growth Commission point out that the much lauded City Deals are, yet again, on the centre’s terms. This is the banal routine of British statecraft and it’s enormously costly. If we want to change the institutional logic of this highly resilient and resistant system then the defaults have to be reset.

How should this be done? The easy answer is leadership but that doesn’t really take us very far. The leadership ethos is the critical factor. The British state will only be disaggregated if we have a style of leadership which is willing to tie its own hands. In fact, we need a double knot around political leaders’ hands. This will work in two ways: demand pull and supply push.

On the supply side, a statutory mechanism for devolution over time is needed; a commitment device for change. The model here is the Climate Change Act. An act would commit the Government of the day to a large-scale transfer of resources to institutions that are fully locally accountable. The target might be, say, five percent of all Government expenditure to be devolved within five years and ten percent within ten years. This is about the level of devolution recommended by Michael Heseltine.

This legislation would not be enough by itself. A demand pull mechanism is needed also.  This second piece of legislation would underpin the first. Local authorities, groups of local authorities and other locally accountable public bodies could be granted the right to full and flexible control of state resources expended locally subject to two light-touch safeguards. These would be top level outcome commitments (eg to increase the skills levels of the area over and above trend) and having clear local accountability measures in place. With simple arrangements for outcomes and accountability in place, there is no reason why power and resource should not be devolved. Borrowing and taxation powers would form part of this package.

Just to satisfy the ‘safety firsters’, there would be an emergency brake mechanism where a local administration was acting incompetently and irresponsibly. The current system assumes this will be the case. The new defaults outlined above, assume competent administration but provide safeguards and commitments to give scope for intervention where necessary.

These are all institutional mechanisms. They form one part of the ‘how’. The other part concerns politics. The devolution movement has hitherto been more analytical than political. That has been necessary. Analysis is a key element of the case. However, a wider political silence is deafening. There isn’t a devolution movement to speak of (beyond the UK’s nations). It is more about an elite trust-building exercise between local and national leaders.

This is problematic. Firstly, unlike the climate change movement which fuses democratic action with scientific analysis, the strength of momentum is likely to stall very easily when it comes to this agenda. This is a pragmatic point.

There is also an ethos perspective that needs articulation. The current model is likely to transfer power between two sets of elites. The Town Hall can be just as aloof as Whitehall. In fact, it is often more so. So the form of devolution matters. Following the Scottish referendum, we are contending with simultaneous issues of nationhood and constitutional change. Devolution is posed as an alternative to parliamentary reform (though the either-or nature of the way these questions are posed is false). But technocratic devolution fails to answer a fundamental challenge of democracy and identity. Devolution is one way of reconnecting people to a reformed political culture and a sense of involvement in the politics of place – but not on its present course.

We have concurrent challenges of economy, democracy and society. Devolution is one of the institutional innovations we have to hand. But it must be charged with ethos and meaning. It must be democratic and engage people; it must share power and responsibility with them. If we replace one means of acting for people rather than with them with another then we may not be much further forward. The institutional defaults of the British state need resetting. So do the democratic defaults.

Anthony Painter is the RSA’s Director of Institutional Reform. You can follow him on twitter @AnthonyPainter