by Nick Small
As the next Labour leader takes office, a number of big northern English city regions will sign-off devolution deals with central government. These deals will see new powers and funding devolved from Whitehall to elected city region on transport, skills, business support, funding, inward investment, welfare to work and potentially policing, fire services and health.
The deals won’t be perfect and, yes, some cuts will undoubtedly be devolved. But it will be the biggest transfer of power away from the centre since the Scottish Parliament and Welsh Assembly were set up in 1998 with up to £60bn of funding being devolved from Whitehall. And it will start a process that could fundamentally change our great northern cities’ dependency on London for good.
Devolution and austerity are in some ways two sides of the same coin. For cities like Liverpool there are only two ways out of austerity.
The first thing we can do is to break down silos between different parts of government and move to place based funding and delivery of public services. This lets us do more with less.
The second is to boost our local economy to strengthen our tax base in a progressive way.
This is what we’ve been doing in Liverpool over the last five years. A devolution deal would allow us to build on that work and to keep more tax receipts raised locally to spend locally. It’s not an option to go back to the 1980s and the grotesque chaos of illegal budgets. Let’s not forget that those tactics failed then, they hit working people the hardest and did untold reputational damage to cities like Liverpool that lasted many, many years.
But the man most likely to be the next Labour leader doesn’t seem to get it, calling city devolution “a cruel deception” and “southern hot air.” To be fair, neither Andy Burnham nor Yvette Cooper, based on past action, are instinctive decentralisers.
This matters because Osborne’s Northern Powerhouse, regardless of its shortcomings and regardless of what Westminster Labour thinks, will set in train a process of English devolution that will be irreversible. Assuming the polls are right and Jeremy Corbyn wins the Leadership, the significance of this could be huge.
Corbyn’s Northern Future and Investment, Growth and Tax Justice campaign documents promote centralised interventions that too often failed our cities in the past – a national industrial strategy, a national education service, a national investment bank to invest in national infrastructure.
Talking about the reindustrialisation of the North and reopening coal mines is a million miles away from where the real growth potential is in our northern cities. It is low carbon technologies, advanced manufacturing, the visitor economy, creative and digital industries and life sciences that we need to be boosting.
Burnham and Cooper’s campaigns also appear too wedded to centralised interventions, albeit of a different kind. It’s probably fair to say that both are lukewarm, at best, to city devolution.
Both are still promoting what looks like a pre-crash public spending model that the last Labour government implemented between 1997 and 2008 – redistribute the proceeds of accelerated economic growth from London and the South East to the regions through central government tax and spending.
Both these economic development models are flawed. Both have failed cities like mine in the past. With both the presumption is for services to be organised and delivered centrally, unless it can be demonstrated that local is better. It really should be the other way round.
Over the next few months and years, whoever our next leader is, could do a lot worse than look to what’s happening in our big city regions and learn the lessons from this for 2020.
Nick Small is a Liverpool councillor and assistant Mayor