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6 October 2015

Local government needs genuine devolution, not just austerity

The public trust local government. It's time for George Osborne to do the same.

By Steve Reed

George Osborne’s set pieces have not been kind to local government. Since 2010, central government funding has been cut by 40 per cent in real terms resulting in job losses, closure of frontline services, and funding gaps growing to unsustainable levels.

Despite the harsh cuts meted out to councils and poorer communities suffering the biggest cuts, figures from the cross-party Local Government Association show that over 70 per cent of people trust their council more than national government to take the right decisions about local services.

It is innovative Labour councils which are leading the way in rebuilding trust in politics. Oldham Council, led by Cllr Jim McMahon, has seen resident satisfaction increase threefold just four years after taking over from the Lib Dems and turning around local services; while Barking and Dagenham recently set up as a private landlord to tackle the housing shortage.

This is not just innovation for the sake of it, it is innovation because control from the centre in Whitehall is failing. Short-termism in the economy has led to weak productivity and poor growth; big-talking rhetoric hides a growing housing crisis; and overblown reforms driven from the centre such as the Tories’ NHS reorganisation are a disaster.

The opportunity for ambitious devolution has never been greater. Yet despite their rhetoric, the Conservatives’ commitment to empowering communities remains remarkably limited.

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They want to impose mayors on communities that don’t want them as a pre-condition for handing over more powers.  The recent Budget offered next to nothing for the North East, and the most deprived communities continue to be clobbered with the biggest cuts.  For the Tories, devolution seems to mean little more than trying to devolve the blame for their unfair cuts made in Whitehall.  It is still the same old politics of things done to you, not with you.

The forthcoming Spending Review is a historic opportunity for the Chancellor to put his trust in local government, and there are three key tests the Government should meet in November’s Spending Review.

First, boost the economy. Greater local control over employment schemes and putting Local Enterprise Partnerships on a long-term financial footing would help unlock the potential of our regional economies to grow and provide better jobs. The LGA has identified further areas of central government funding that could be devolved in order to boost the economy by £80bn.

Second, deliver more efficient public services. Good public services are at the heart of strong communities, but the Tories have cut budgets without extending the power to change how services are run.  Despite growing numbers of older people, adult social care spending has been cut back to 2004/05 levels. By closing the funding shortfall and allowing for integration of social care and health services, local government can deliver savings and better outcomes, but our centralising Tory Government won’t let it happen.

Third, reshape Whitehall. Devolution must be a long-term commitment beyond the spending review, but the machinery of government is not yet ready for it. Labour recently won a vote in Parliament on introducing a test to assess whether new laws are compatible with devolution, but the Chancellor can go further. Restructuring and adequately resourcing the Local Growth Fund, which currently accounts for a fraction of the funding available for local growth projects, would be a good start.

By meeting these tests – boosting the economy, delivering more efficient public services, and reshaping Whitehall – the Chancellor could show he has a commitment to real devolution rather than just talking about it. The public trusts local government to run efficient and effective services, and Labour trusts local communities and local people to have a bigger say. It’s time the Chancellor did the same.