Blame Margaret Thatcher. Sorry readers. I have no wish to imitate my leftie Aunt, and hold the Iron Lady’s ghost responsible for everything from a burst water main to the extortionate price of Freddos.
Nonetheless, in the interests of truth, honesty, and irritating the Institute for Economic Affairs, one must, occasionally, give discredit where discredit is due. And I’m afraid that the not-insignificant tension that lies between ‘levelling-up’ and localism can be laid at the door of the Great Handbag.
Hold up. I’ve entered the argument in media res. I’ll back up.
Last week, in addressing the row over the Government’s ‘levelling-up’ funding round, I suggested that the arguments between various MPs, councils, and Mayors over who had received what was an inevitable consequence of the Conservatives’ failure to work out what ‘levelling-up’ actually means, or be honest about the huge cost reversing decades of regional inequality would require.
One aspect I didn’t dwell on were the comments of Andy Street, the Mayor of the West Midlands (and ConservativeHome contributor). He criticised the Government for a ‘begging bowl’ culture that forces areas to bid against each other for funds. This came as Birmingham City Council missed out on all five of its proposals for cash.
A little Kremlinology suggests Street might not have been the Treasury’s biggest fan for a while. He did back Liz Truss over Rishi Sunak last year. Father, forgive them, for they know not…and all the rest.
But Street’s complaint should not be taken as the political equivalent of a self-declared artiste’s bitterness at her Kickstarter project flopping. He argued that his region’s struggle was a perfect example of the need for more devolution – but this time of funding decisions. In his words, the “sooner we can decentralise and move to proper fiscal devolution, the better”.
Here at ConservativeHome, we have long been sympathetic to the idea that local leaders know better than central government as to what their areas require. The patchwork system of devolution created since 2010 has been a triumph for rejecting top-down uniformity. We believe an “irreversible shift in the balance of power and wealth in favour of the provinces” would be no bad thing.
The Government has clearly heard Brum’s siren call. Michael Gove announced yesterday that the Chancellor is looking to extend local Mayors’ powers over their own finances in March’s budget. One idea being floated is for the Treasury to negotiate overall financial settlements with mayoral authorities, as with government departments, and allow more freedom on how they can be spent.
This falls short of Street’s call for proportions of VAT and corporation tax revenues to be kept in the West Midlands – and even further short of Dan Hannan’s and Douglas Carswell’s proposal of having VAT rates set and charged locally.
Since councils and Mayors currently have no control over these taxes (and the election is two years away), a radical shift hardly looks likely. The Treasury will always be sceptical about any proposal that loosens its control over spending – and that might leave it on the hook for future bailouts.
Which is why we how, obliquely, we return to Thatcher. If there was a prize to be handed out for the politician most sceptical of allowing local areas to control their funds – and most keen on centralising power in Whitehall – the Iron Lady would have won it hands down.
It was not Thatcher’s fault that the United Kingdom is so uniquely overcentralised, taxing and spending far more from the capital than any comparable nation. It is one of the few legacies of the Second World War and the Attlee Government that she did not put to the sword. Indeed, by privatising industry, liberating services, and selling council homes, she did much to disempower the central state.
Yet the corollary to this greater economic freedom was a staunch opposition to shifting power out of Whitehall. Thatcher’s governments fetishized central targets and league tables; they empowered regulators just as much as they did council house owners.
Most pertinently for today’s devolution debates, Thatcher loathed local democracy. This was the high point of municipal Marxism, of Ken Livingstone hanging unemployment figures outside the Greater London Council and Derek Hatton hiring taxies to hand out redundancy packages to his own workers.
Thatcher disempowered local councils through rate capping designed to restrict spending. ‘Levelling-up’ meant stripping Merseyside and London Docklands of their power and handing it to Michael Heseltine. And when Livingstone became too irritating, the GLC was abolished.
With all this, Thatcher embedded institutional scepticism amongst Conservatives about too much local democracy. Who wants to hand over more control and cash if it means providing the Sadiq Khans of this world with even more opportunities to immiserate the lives of their constituents?
In that sense, a ‘levelling-up’ agenda designed to lessen regional inequalities by devolving power to local leaders might serve only to exacerbate them. Good local leadership can build transport infrastructure, deliver homes, and improve skills training. Bad local leadership can fail to break the cycle of decline, swapping Whitehall neglect for local incompetence.
As Thatcher showed, there are also virtues having the clunking fist of central government tackling the myriad sources of our national scleroticism. Destroying the 1947 Town and Country Planning and carpeting the South-East will not happen by shifting more power to local NIMBYs. Gove could also not flush the ‘Oxford-Cambridge Arc’ down the lavatory, whilst he is at it.
But if, as Gove put it yesterday, the “central domestic task” of this government is “to shift power, wealth, and opportunity more evenly, more equitably across the country – and in so doing provide the foundations for durable economic growth”, Street is right to say that cannot be done without the funding local leaders require.
Which confronts us with an uncomfortable prospect. Thatcher’s time in office got our economy growing again, at the cost of empowering central government. Our last thirteen years in office have done more to decentralise political control than any previous post-war government, but without addressing the fundamentals of our appalling growth.
So if, as Peter Franklin argues, this government should spend the next two years being bold and not ‘basic’, there would be little wrong with the Levelling-Up Secretary and Chancellor standing up to Thatcher’s ghost, and shifting more funding control out of the Treasury.
A little local experimentation will not be the solution to all our problems, and will likely see some leftie lunacy. But the current model has hardly covered itself in glory. And I can’t bare Britain in decline. I just can’t.