Last week was all about devolution. Ed Miliband and Jon Cruddas led the charge with a pair of visionary but detail-light speeches about the ways a Labour government will start to hand power down to councils and communities. Even this rhetorical shift towards localism is remarkable following the centralised control-freakery of the New Labour years. The promise is clear – better designed, more efficient services and much deeper engagement with citizens.
But while it may be a little early for hard and fast policy, Labour does need to start working through the practical issues it will face very quickly. Meaningful devolution cannot be achieved through a few tweaks here and there. If Miliband and Cruddas are serious, they will have to commit themselves to one of the largest programmes of institutional change that England has ever seen.
Real devolution will mean tackling a trifecta of challenges – making council finances sustainable, reforming the civil service and addressing the local accountability deficit. Not only are these problems big, difficult and often considered too dull for leaflets and PPBs, they are also the sort of problem that need addressing in the first six months of a new administration before ministers lose their reformist momentum and fall back. overwhelmed into the arms of the mandarins.
Local government finance is the trickiest of the three. The system as it stands is a mess. Council tax is set against property values from 1992, and so completely fails to reflect the massive relative increase in southern house values. It has effectively been capped by the coalition for the past three years, with the effect that its claim to be in any sense a local tax is slowly dying. Business rates have not risen in real terms since 1992 and is also effectively treated as a national tax.
With a double whammy of government cuts and rising demand meaning councils face a £16.5bn spending gap by 2020, Miliband will need to find a way to pass more revenue-raising power down to the local level. This means, at the very least, a council tax revaluation and new bands so the very wealthiest pay more. More likely, a whole new system for local taxation will be required.
Civil service reform is probably more achievable – it is, after all, within the direct grasp of the prime minister, who has only to appoint a reformist Cabinet Secretary and demand change. If Miliband is serious about pooling money from different services into a single 3-5 year pot and devolving this to local level, he will need to manage the budget process in a very different way.
Instead of handing separate budgets to, say, the Department of Health and the Department for Communities, and then hoping they will cobble it back together into a single budget, he will have to bypass departments entirely and pass pooled funding to local government. This will require new lines of accountability to ensure that councils are spending the money well. It may also require the new prime minister to revisit Blair-era plans for a new US-style Office of Management and Budget to take on the public spending aspects of the Treasury’s work.
Finally, Miliband must confront the very real challenges facing local democracy. It is striking that neither he nor Cruddas seem overly worried about the role of voting in a new devolved settlement. In their vision, low turnouts are managed by lots of co-production and involvement of citizens in managing and designing the services they receive.
This will not be enough. With council election turnout flatlining in the low 30s, ministers need to consider how to get the public involved in big choices about the future of their places. Radical ideas such as local proportional representation or compulsory voting should be on the table, as should mandatory use of local participatory budgets combined with jury service-style selection of participants.
Localism represents a gigantic, but necessary, reform agenda. Are Miliband and Cruddas really up for it? We must hope so, because Labour has been trying to do piecemeal, pragmatic reform of local government for a very long time, and it has not delivered. England’s governance is groaning under the weight of decades of accumulated pragmatism. If we are going to make a reality of a more devolved nation, we need a government that will make a fresh start.