Power to the People? Devolution, Metro Mayors and the North East

by Nick Dowson

30 May 2017


In 2004, voters in the North-East buried then-deputy prime minister John Prescott’s plans for regional assemblies with a 78% no vote. Fast forward to last year’s EU referendum, and it was Sunderland, the first city to declare, that gave the first sign of the leave result and sent the pound tumbling with its unexpectedly strong Brexit vote.

The North East voted for the ringing Brexit slogan, ‘Take Back Control’, yet the region has repeatedly snubbed Westminster proposals for bringing power closer to home. In 2012 Newcastle’s voters said no to a directly-elected mayor, and last autumn local councils voted against former chancellor George Osborne’s proposals for a regional ‘metro mayor’.

At first it seems the only thing connecting these votes is a desire to stick one up to the country’s establishment. This is something at which the region has pedigree. For much of Victoria’s reign the royal train had its blinds firmly drawn every time it passed through Newcastle, after the outraged queen, having dined at the station hotel, was presented with the bill (Geordies don’t take kindly to scroungers).

Beneath the apparent pig-headedness, however, lies people’s unwillingness to accept Westminster plans that offer scant real devolution or democracy. Assembly plans meant paying for more politicians with little power; mayors meant fewer politicians, with more power.

Trust is an issue, too. It is hard for people in the North-East – overwhelmingly Labour voting – to believe in Conservative schemes to give power back to the region. Once famous for exporting coal and ships to the world, it had its economy destroyed by Margaret Thatcher’s closure of the mines and decades of policies favouring the City over manufacturing.

More recently the North-East’s public services have been decimated by spending cuts: already the poorest English region, it has been targeted for some of the highest cuts to local government funding. Since 2010, local councils have lost more than £1 billion. Services are being cut to the bone; by 2020, many will have lost over 60% of their income. Newcastle has entirely scrapped its art budget, with a fund seeking philanthropic donations only partially replacing it. Unemployment is the highest in the UK, at 7%, forcing many young people like me to move away.

The North-East deal, which looks scuppered for the moment, would have brought a little funding – £30 million a year – but, yet again, few powers. And besides, far greater sums of money have been taken away from the region by the same government. This in a region where the public sector has been the major employer. If you have taken away people’s jobs and vital services, how can you then claim to offer them choice and power?

True devolution would have to begin with the cash that has been taken away from the North-East – and other regions – being returned. Instead, there are plans to make local government ‘self-sufficient’ by 2020: abolishing councils’ core grant from central government, and in its place allowing them to keep the money raised through business rates. Councils will also be allowed to cut rates – but not, in most cases, to increase them.

This is in line with the government’s Brexit threat to turn the UK into a tax haven if separation negotiations go badly – branded by Jeremy Corbyn as a plan for a ‘bargain basement’ Britain. Making local government reliant on business rates – on top of more eye-watering cuts – is a plan for letting a hundred ‘bargain basement’ councils bloom across England. Local authorities will be under pressure to slash rates to attract companies; poorer areas won’t get a look in. It will be a race to the bottom, entrenching regional inequalities, with horrific results.

Competition between local authorities won’t inspire them to better and more efficient services: it will only mean big business can play them off against each other, with the public losing out. Meanwhile, economic policy will continue to be made in Westminster.

Devolving control over taxes isn’t the answer: Britain needs redistribution. Some areas are poorer and have greater needs; more health difficulties, more social problems. Outside the capital, many of Northern Europe’s poorest areas are in the UK. Cornwall is poorer than both Hungary and Lithuania; County Durham isn’t far behind.

It isn’t an unusually high concentration of an as-yet-undiscovered lazy gene that has left these areas broke; it is structural problems stemming from national policies that have left few jobs.

In 2015, in a stark example of this, David Cameron’s government failed to intervene when the closure of a steel furnace in the Teesside town of Redcar led to 6,000 people losing their jobs. Worse, the government refused to allow an application for £5 million from an EU fund to help with the crisis.

If the British state cannot distribute funding fairly to the areas that need it most, more and more people will wonder what the point in Britain is at all.

A new devolution settlement, instead of lumping areas together in new configurations and imposing structures from above, needs to restore a proper share of national spending to councils and remove arbitrary limits on councils borrowing to build social housing.

Money must be clearly distributed to areas according to need, fairly and transparently, with a funding formula allocating money on the basis of factors such as poverty levels, levels of ill-health and old age, and environmental and infrastructure quality. And a new funding settlement for local government shouldn’t be up to governments to change on a whim by ministerial fiat. It should be for public debate, not buried in technicalities.

Over-centralised Westminster rule has hung England’s regions out to dry, leaving lives and opportunities parched. And people are rightly angry. The EU referendum result was a vote for returning power to where people can reach it. Now the government needs to put its money – our money – where its mouth is, restoring the means for local governments to serve their communities; and making sure local people can take part fully in decision-making.

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