Why Labour needs to get serious about radical devolution

Keir Starmer’s party must abandon its centralising instincts and redistribute power and wealth across England. 

 

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The simmering political tensions over Covid-19 have burst open. But what is extraordinary is the way they have finally turned England’s dramatically unequal economic geography from a widely-recognised defect into a live political issue. What’s more, with Great Manchester mayor Andy Burnham leading the charge, they have emerged not in the manner favoured by the Tories, but on territory announced by a distinctive northern voice. When George Osborne first offered metro mayors to major urban areas – promising cash-strapped councils crumbs of funding – this can surely not have been his intention. Much as it is sometimes suggested that Labour regrets Scottish devolution, so, perhaps, will the Tories come to regret giving the northern cities an independent voice for the first time in a generation.  

That voice for the north, and England outside of London, is urgently needed – not only with a Westminster government that is both incompetent and vindictive, but also as part of the long process of rebuilding our economy. This isn’t about handouts for the rest of England, as patronising talk of those “left behind”, or of “levelling up” suggests. Rather, the problem is real, and chronic, and visible to anyone who travels across the country.

The economic disparity between the richer parts of London and the major cities, and the high streets in smaller towns is painfully clear. There is a 19-year gap in life expectancy between our most prosperous and most deprived areas, while former head of the home civil service Bob Kerslake’s 2070 Commission warned that the UK’s regional inequalities “are now amongst the very worst in the industrialised world”. This is, of course, about more than the north-south divide: but it assumes an extreme form when major cities and urban areas have been ravaged by deindustrialisation, then austerity, then Covid-19 – but are still left at the mercy of decisions taken in Whitehall.

[See also: Andy Burnham spoke the language of class struggle – Labour must do the same

Hard empirical evidence of Whitehall’s skewed decision-making has been supplied in a superb paper by two economists, Diane Coyle and Marianne Sensier, which demonstrates the direct link between the methods used by the Treasury to approve investment projects, and the department’s consistent bias towards funding projects in London. The fundamental issue is that by focusing very closely on “marginal” benefits from investments, the Treasury looks for the small improvements that can be made on what already exists. But this misses the major, strategic investments that all sides agree are now needed across the country outside of London.

Nor is it just the Treasury. London-centric thinking infests Whitehall in general. Take the National Infrastructure Commission, established to provide advice to the government on major infrastructure projects. Of its top five “national priorities” for infrastructure, published first in 2017, three (Crossrail 2, more Thames crossings, and a third runway at Heathrow) are in London, and one (completing High Speed 2) is intended to provide better connections to London. 

If we want to address economic inequalities across the country, we have to also address inequalities in power. But English devolution is not always comfortable ground for Labour, and the left more generally. At least since the Second World War, all wings of the party have been attached to a vision in which a strong, central government is able to tax richer places and then redistribute across the whole country – whether directly through benefits, or indirectly through public spending. This thinking has encouraged proud Labour support for the Union, with the centralise-and-redistribute case perhaps put most forcefully in recent years by Gordon Brown, but it has also acted to weaken the party’s commitment to meaningful devolution inside England. 

New Labour established the Regional Development Associations, which undoubtedly filled a gap for co-ordinating economic development between local authorities and Westminster, but which never enjoyed a democratic legitimacy and were swiftly abolished by David Cameron’s government. Labour’s sole attempt at establishing a “Regional Assembly” in the north-east was botched: the proposed body was so constrained in its mandate, and limited in its powers, that it was hard to understand its purpose. Dominic Cummings cut his campaigning teeth fighting against it, successfully, in a 2004 regional referendum intended to confirm its introduction. 

And while under Jeremy Corbyn and John McDonnell there was a significant verbal commitment to English devolution, and a sincere recognition of England’s economic disparities, this did not necessarily translate into policy. Labour’s 2019 manifesto was a notably centralising document, proposing significant new government interventions to be led from Whitehall in traditional Labour style, leavened somewhat by the establishment of new “Regional Water Boards” and “Regional Development Banks”, the latter themselves subordinate to a new National Investment Bank.

Yet this urge to centralise was always in tension with Labour’s talk of the “Preston model”, promoting independent, community-led economic development for local authorities on the lines laid out by the pioneering Lancashire council. The “community wealth building” approach, inspired by the work of the Democracy Collaborative and US cities such as Cleveland, has become something like the new economic consensus inside the party. Strikingly, devolution, even “radical federalism”, is one of the few areas Keir Starmer’s intentionally policy-light leadership has begun to stake out a new approach.

Money matters, and to kick-start rebuilding, Westminster will need to provide the cash for much of the task. High Speed 3, linking the great northern cities from Liverpool to Newcastle via Manchester and Leeds, needs funding. So, too, does the £20bn in transport investment for our towns identified by the 2070 Commission, which would enable more than 1,000 miles of new railway track. 

But a government that was serious about ending regional inequalities would not just want to offer more money to places outside London and the north-east, but would look to create a new spatial economy for England: no longer centred on the capital, with our towns and cities orbiting London like some dark star, but strengthening the links between those places outside. As the long-term impact of Covid-19 looks set to make big city living less attractive, so, too, can the smaller towns and cities enjoy a new lease of life. Combined with fiscal devolution to address inequalities, there is an immense, emerging potential here.

Yet ultimately, the left will need to drop whatever urges it has to centralise and control. If Labour is aiming to both win the next general election, and to offer a credible plan for an economic alternative, it will have to step up to the challenges of devolution in England: supporting the new voices that have emerged in this crisis, and articulating a programme for the country in which power and wealth are dispersed.

[See also: What Westminster gets wrong about "the north"]

James Meadway is former economic advisor to shadow chancellor John McDonnell, and is currently writing a book on Corbynomics

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