The devolution of health spending hasn't met with the level of euphoria that Manchester City's title win did. Photo:Getty Images
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There are big questions to answer for Manchester's new mayor

Devolution to Greater Manchester was greeted with general celebration. But there are broader concerns about the role and how it develops.

A fortnight ago, Tony Lloyd became the first Mayor of Greater Manchester. There were no public debates or hustings. The electorate consisted of ten people, the leaders of the local authorities that comprise Greater Manchester. After two hours of wrangling Lloyd was appointed to the post over Wigan’s leader, Lord Smith. If you wanted the antithesis of democracy and transparency, this was it.

Lloyd – a Manchester MP for nearly three decades and currently the elected Police and Crime Commissioner (PCC) – is only an interim Mayor. In 2017 Greater Manchester’s citizens will elect their first ‘proper’ Mayor. What will Lloyd actually do? He will become the chair of the Greater Manchester Combined Authority (GMCA), which coordinates economic development, transport, and urban regeneration across the ten local authorities. Currently the role of chair is taken by one of the ten leaders. He will, however, do far more that preside over GMCA meetings.

The next two years will crucial in the implementation of ‘Devo Manc’. A range of powers covering transport, strategic planning, housing, business support, apprenticeships, and the work programme, representing more than £1 billion in public expenditure, will be devolved. And that’s not to mention the subsequent announcement that a pooled £6 billion health and social care fund will be created and placed under the control of a new Strategic Partnership Board (not the Mayor, it must be noted).

Devo Manc has arisen because of two intersecting sets of interests Local leaders want to get their hands on more money and power, ostensibly to deliver economic growth and more efficient, tailored public services. And George Osborne, Devo Manc’s Whitehall champion, is driven by a combination of political economy and party politics. He sees the deal as a key component of his ‘Northern Powerhouse’ strategy, which is as much about reviving Conservative fortunes in the North as it is about growing the North’s economy. The Chancellor insisted on a directly elected Mayor as a quid pro quo for the new powers. The speed with which the package ultimately came together over the summer of 2014 has created two significant problems that Lloyd must now grapple with.

The first problem concerns the governance arrangements. More thought needs to be given to what structures are to be put in place across Greater Manchester to receive the new powers. Local leaders will point out that their aim is not to create an unwieldy new bureaucracy at the city-region level. But, with the Mayor assuming responsibility for transport, housing and policing, it isn’t hard to imagine a degree of consolidation of existing authorities and boards, as well as a range of appointed Deputy Mayors, under the banner of an ‘Office of the Mayor’. We are told that the ten local authority leaders will each take on some Greater Manchester-wide portfolio and will collectively form the Mayor’s cabinet. But through what mechanisms will they be held accountable? The current ‘Scrutiny Pool’ arrangements for the GMCA leave much to be desired. Lloyd and his colleagues must carefully plan these, and many other, issues. But they are in some ways the easiest of the tasks ahead.

The second problem concerns democracy. On a simple level Lloyd’s selection is an affront to democracy. Despite suggestions that he will have no new powers and will ‘merely’ chair the GMCA, Lloyd will have power to shape the future governance arrangements of Greater Manchester. This will come from the soft power of his new post (it will be what he makes of it) and also the fact that, as the government’s own paper makes clear, certain powers may be transferred before 2017. Whilst those powers will technically be transferred to the GMCA, and not the interim Mayor, the potential exists for Lloyd to shape the agenda.

But there is a far bigger question about local democracy and community empowerment. Evidence shows that people want decisions to be taken at a local level, and that they trust their local councils far more than Whitehall. However, we also see increasing evidence of a desire on the part of citizens to be involved in how they are governed. This can only be done if leaders are committed to the principles of participatory democracy and local empowerment. It cannot occur by transferring powers from Whitehall to a shadowy, distant combined authority chaired by a Mayor for whom nobody voted.

Leaders across Greater Manchester are aware of their failure of engage with the public about these plans. They also share the view that one of the main jobs of the interim Mayor is to ‘sell’ Devo Manc to the public. But Lloyd must understand that his job is not that of a salesman but that of an architect. Not only must he think carefully about the governance arrangements, he must also think about how he can build an inclusive, participatory local democracy. He will begin the job with questions of legitimacy hanging over him. But the past cannot be undone. We are where we are.

How Lloyd chooses to engage from now is crucial. He should quickly launch a broad public consultation that takes its cues from strong academic research on participatory and deliberative democracy. He should make it clear that people in Greater Manchester still have a chance to talk about and shape the way in which they will be governed in the years to come. It may be the last chance to salvage something truly legitimate and democratic from this process.

 

Dr Daniel Kenealy is a Lecturer in Social Policy at the University of Edinburgh. He, and colleagues, are currently undertaking ESRC funded research on attitudes towards how the UK is governed. They are on Twitter as @Edinburgh_AoG.

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The Future of the Left: A new start requires a new economy

Creating a "sharing economy" can get the left out of its post-crunch malaise, says Stewart Lansley.

Despite the opportunity created by the 2008 crisis, British social democracy is today largely directionless. Post-2010 governments have filled this political void by imposing policies – from austerity to a shrinking state - that have been as economically damaging as they have been socially divisive.

Excessive freedom for markets has brought a society ever more divided between super-affluence and impoverishment, but also an increasingly fragile economy, and too often, as in housing, complete dysfunction.   Productivity is stagnating, undermined by a model of capitalism that can make big money for its owners and managers without the wealth creation essential for future economic health. The lessons of the meltdown have too often been ignored, with the balance of power – economic and political – even more entrenched in favour of a small, unaccountable and self-serving financial elite.

In response, the left should be building an alliance for a new political economy, with new goals and instruments that provide an alternative to austerity, that tackle the root causes of ever-growing inequality and poverty and strengthen a weakening productive base. Central to this strategy should be the idea of a “sharing economy”, one that disperses capital ownership, power and wealth, and ensures that the fruits of growth are more equally divided. This is not just a matter of fairness, it is an economic imperative. The evidence is clear: allowing the fruits of growth to be colonised by the few has weakened growth and made the economy much more prone to crisis.

To deliver a new sharing political economy, major shifts in direction are needed. First, with measures that tackle, directly, the over-dominance of private capital. This could best be achieved by the creation of one or more social wealth funds, collectively held financial funds, created from the pooling of existing resources and fully owned by the public. Such funds are a potentially powerful new tool in the progressive policy armoury and would ensure that a higher proportion of the national wealth is held in common and used for public benefit and not for the interests of the few.

Britain’s first social wealth fund should be created by pooling all publicly owned assets,  including land and property , estimated to be worth some £1.2 trillion, into a single ring-fenced fund to form a giant pool of commonly held wealth. This move - offering a compromise between nationalisation and privatization - would bring an end to today’s politically expedient sell-off of public assets, preserve what remains of the family silver and ensure that the revenue from the better management of such assets is used to boost essential economic and social investment.

A new book, A Sharing Economy, shows how such funds could reduce inequality, tackle austerity and, by strengthening the public asset base, rebalance the public finances.

Secondly, we need a new fail safe system of social security with a guaranteed income floor in an age of deepening economic and job insecurity. A universal basic income, a guaranteed weekly, unconditional income for all as a right of citizenship, would replace much of the existing and increasingly means-tested, punitive and authoritarian model of income support. . By restoring universality as a core principle, such a scheme would offer much greater security in what is set to become an increasingly fragile labour market. A basic income, buttressed by a social wealth fund, would be key instruments for ensuring that the potential productivity gains from the gathering automation revolution, with machines displacing jobs, are shared by all.  

Thirdly, a new political economy needs a radical shift in wider economic management. The mix of monetary expansion and fiscal contraction has proved a blunderbuss strategy that has missed its target while benefitting the rich and affluent at the expense of the poor. By failing to tackle the central problem  – a gaping deficit of demand (one inflamed by the long wage squeeze and sliding investment)  - the strategy has slowed recovery.  The mass printing of money (quantitative easing) may have helped prevent a second great depression, but has also  created new and unsustainable asset bubbles, while austerity has added to the drag on the economy. Meanwhile, record low interest rates have failed to boost private investment and productivity, but by hiking house prices, have handed a great bonanza to home owners at the expense of renters.

Building economic resilience will require a more central role for the state in boosting and steering investment programmes, in part through the creation of a state investment bank (which could be partially financed from the proposed new social wealth fund) aimed at steering more resources into the wealth creating activities private capital has failed to fund.

With too much private credit used for financial speculation and property, and too little to small companies and infrastructure, government needs to play a much more direct role in creating credit, while restricting the almost total freedom currently handed to private banks.  Tackling the next downturn, widely predicted to land within the next 2-3 years, will need a very different approach, including a more active fiscal policy. To ensure a speedier recovery from recessions, future rounds of quantitative easing should, within clear constraints, boost the economy directly by financing public investment programmes and cash handouts (‘helicopter money’).  Such a police mix – on investment, credit and stimulus - would be more effective in boosting the real economic base, and would be much less pro-rich and anti-poor in its consequences.

These core changes would greatly reform the existing Anglo-Saxon model of capitalism and provide the foundations for building support for a new direction for progressive politics. They would pioneer new tools for building a fairer, more dynamic and more stable economy. They could draw on experience elsewhere such as the Alaskan annual citizen’s dividend (financed by a sovereign wealth fund) and the pilot basic income schemes launching in the Netherlands, Finland and France.  Even mainstream economists, including Adair Turner, former chairman of the Financial Services Authority, are now talking up the principle of ‘helicopter money’. For these reasons, parts of the package are likely to prove publicly popular and command support across the political divide. Together they would contribute to a more stable economy, less inequality, and a more even balance of power and opportunity.

 

Stewart Lansley is the author of A Sharing Economy, published in March by Policy Press and of Breadline Britain, The Rise of Mass Impoverishment (with Joanna Mack).