Why we must empower local government

Labour's recent losses are about more than Brexit. 

NS

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It has been a long time since local government was a hotbed of political struggle. In the past several decades the British state has become ever more centralised. The UK raises just 5.8 per cent of taxes locally, making it an outlier among its more decentralised European neighbours.

The justification for the marginalisation of local government has always been reducing “postcode lotteries” between more and less wealthy parts of the country. But after decades of centralisation – interrupted only recently by a spurt of uncoordinated decentralisation to city-regions – the UK has become the most regionally unequal country in Europe, measured by output (gross value added).

Austerity has only added to these problems. Local government has had its central funding cut by almost 50 per cent since 2010. Local authority spending fell by almost 20 per cent in real terms in this period.

The partial devolution of business rates has helped some councils to fill the gap but harmed others that receive less revenue from the tax. If the government does fully devolve business rates, some councils – mostly Labour ones – will find themselves in even more of a financial mess.

Absent the power to raise any other taxes, local authorities are turning to asset sales and privatisation to raise revenue. Local authority borrowing has increased across the board. A group of MPs recently warned that local government finances are becoming unsustainable.

These cuts have come in the context of rising demand for the services local government provides. An ageing population and a strained NHS result in an increased demand for adult social care. Rising child poverty means more children being referred to services as parents struggle to provide a basic standard of care. Public health services aimed at preventing the kind of chronic conditions that place strain on the NHS have also been cut.

Local authorities are also at the sharp end of the housing crisis. They simply don’t have the power or the resources to provide adequate social housing, and central government shows no sign of investing in it either. Homelessness – another issue dealt with by local authorities – has increased rapidly, and services are at breaking point.

Cuts to local authority budgets, combined with lots of talk of devolution, have been a convenient way for central government to devolve the imposition of austerity on to local councils while claiming to ringfence services provided centrally. Concerned about the state of your community, the poor quality of local services or rising homelessness? Take it up with your local authority.

This strategy seems to have come back to haunt the Conservatives in the recent local elections as they endured historic losses of more than 1,300 councillors. A rebellion against the government’s handling of Brexit is part of the problem, but the scale and pattern of the losses cannot be chalked up to Brexit alone.

After ten years of austerity, the cuts are affecting the Conservative heartlands where this round of local elections was concentrated. When Jacob Rees-Mogg begged voters not to let Brexit put them off voting Conservative and to think about bin collection instead, he may have been doing more harm than good.

But Labour’s offer to local authorities hasn’t been much better. The party has a national economic agenda that seeks to address many of the root causes of Britain’s economic malaise but, until recently, the same offer had been absent for local authorities.

The focus on municipal socialism has gone a long way to improving outcomes in small cities such as Preston, and Labour promises to base its plan for local government on a similar logic. But without devolution and more generous funding, local authorities can only go so far.

Only by re-empowering local government can we address the UK’s regional inequalities, improve service provision and fill a democratic deficit that has left many feeling disenfranchised and distrustful. Local authorities must be empowered to raise taxes, run more services and issue bonds to invest in infrastructure locally.

These interventions must be combined with redistribution from wealthier areas, to reduce regional inequalities and move away from a neoliberal conception of place that sees regions competing for scarce investment.

The local election results should serve as a wake-up call for all political parties. Local government matters in its own right – not just as a bellwether for national politics.

Grace Blakeley is the New Statesman’s economics commentator and a research fellow at IPPR. 

This article appears in the 08 May 2019 issue of the New Statesman, Age of extremes