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Devolution cat is out of the bag, but Sir Humphrey won’t like it

Devolution cat is out of the bag, but Sir Humphrey won’t like it

🕔30.Sep 2014

Even the most enthusiastic supporters of devolving powers and budgets from Westminster to cities and regions believe the road to decentralisation will be difficult, and many fear that the shift may not happen at all.

A panel of experts and the audience attending an Empowering Cities fringe meeting at the Tory conference in Birmingham was asked after an hour’s intense debate to raise their hands if they thought devolution would start to happen after the 2015 General Election.

Only two people in the room indicated yes. One from the panel and one from the audience.

The meeting, organised by Greater Birmingham Chambers of Commerce, Think Cities and Squire Patton Boggs, discussed how greater financial powers for cities could benefit the UK in the light of the Government’s post-Scottish referendum pledge to spread devolution throughout England and Wales.

While most people at the meeting, and everyone on the panel, thought tackling the UK’s centralisation around London and Westminster was essential to improve economic growth, the obstacles standing in the way of change were formidable while the question ‘exactly what type of devolution do we want’ remains unanswered.

Waheed Saleem, chair of the Lunar Society, spoke for many when he questioned whether  the Government, of whatever political colour, would be able to bypass the conservative instincts of Whitehall mandarins and bring about real change.

The Sir Humphreys of this world, Saleem reckoned, would do anything to keep hold of the reins of power. It would be a “long hard slog” to get Whitehall to loosen the purse strings.

Discussion ranged around the true definition of devolution. Should power transfer to regional bodies, to city and county councils, or should local authorities be by-passed altogether in favour of devolving powers to run basic services like refuse collection and street cleaning to neighbourhood groups?

Andrew Carter, deputy chief executive at Centre for Cities, made the point that if British cities and city regions didn’t perform well then the UK economy as a whole would not perform well. All the evidence showed that UK cities generally under-performed their European counterparts, where regional and city government is commonplace.

Typically in Europe, just over half of the income enjoyed by cities is generated locally. In the UK the figure is a paltry 17 per cent.

Mr Carter said: “We live in a very centralised country where decisions are taken for you directly and indirectly by Whitehall. The status quo is clearly not working.”

He urged the Government to devolve powers to set and collect business rates to local authorities and to re-band council tax. But calls for local income taxes should be resisted.

Dr Steven McCabe from Birmingham City University Business School, warned of the danger of being “swept along by emotion” following the Scottish referendum and the swell of support for devolution.

It was “quite horrific” that 80 per cent of all net new jobs in the UK over the past five years were created in London, but the reality was that MPs became “seduced” by power once they got to Westminster and were reluctant to pursue devolution.

Core Cities chief executive Chris Murray claimed that the eight major English cities, including Birmingham, could generate 1.1 million new jobs and £22 billion GVA if given devolved powers. This would be equivalent to adding the economy of Denmark to the UK.

The devolution cat was out of the bag following Scotland’s rejection of independence, but he did not believe an English parliament would lead to any realistic decentralisation of power.

The template for devolution had to be bottom-up and not top-down and led by the Government. The worst outcome would be for Westminster to impose a one size fits all answer.

Lunar Society chair Waheed Saleem called for local authorities to be able to keep the money saved from reduced welfare benefit payments when new jobs were created and for councils to be able to set business rates.

He also wanted city regions under metro mayors to be able to raise taxes to pay for specific local projects.

Birmingham Chamber of Commerce President Tim Pile reminded the audience that the UK was the most centralised country in the western world, beaten only by Albania.

More than 90 per cent of taxes raised locally in Britain “is spent by central government”.

Mr Pile added: “It is time to reverse that flow. Cities need to be in charge of their own destinies because they are the driving forces of economic growth.

The Scottish referendum had led to an “unstoppable momentum” for devolution and the main political parties were falling over themselves to offer decentralisation.

He favoured devolution to Local Enterprise Partnerships, but proper methods of scrutinising decision making by the LEPs were needed.

Mr Pile added: “It’s a question of how rather than whether devolution is a good idea. But the first thing that needs to be in place is a real political will.

“It’s about taking a real long term view. The sort of stuff we should be talking about is around 30 year plans thinking about infrastructure, skills and housing as a long term vision.”

Empowering Cities was staged by the Greater Birmingham Chambers of Commerce, kindly hosted by Squires Patton Boggs and is part of a series of events that forms the ThinkBirmingham campaign, backed by the Chamberlain Files and our publisher RJF Public Affairs. 

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