Written Evidence to the Public Accounts Committee on Sustaining Local Economic Growth Inquiry

Activity: Internal positions, career professional development and otherOtherResearch


The government’s Levelling Up the United Kingdom[2] strategy to tackle regional inequality promises a “revolution in local democracy”. It seeks to do this largely through regional devolution for England – setting up more localised governments with their own mayors to give greater autonomy and power to the “left behind” regions.
But the proposed solutions do not match the scale of the challenge set out in the document and downplay the constitutional and economic reorganisation required to break away from the highly centralised Westminster model[3] of government.
Despite over two decades of ad hoc devolution across the UK’s nations and through some regional deals in England, Whitehall has relinquished few real powers. The Levelling-Up White Paper itself notes the UK remains: “one of the most centralised countries in the industrialised world”.
Local leaders in England are limited in their powers over welfare, schools and health. They lack meaningful revenue raising powers, while the centralised approach to allocating funding[4] is complex, messy and short term.
The White Paper claims to simplify existing fragmented funding arrangements based on a wide range of different schemes controlled by central government.
It can be credited for acknowledging the UK’s primary governance problem; that of hyper-centralism. But its remedy to address the scale of the issue is underwhelming and addresses only one side of the coin, that of devolved governance not central government.
Strengthening local institutions will be inadequate if regions are not given meaningful decision-making power and control of resources. Crucially, Whitehall’s direction of policy from London and the Treasury’s control of financial priorities are left untouched.
For example, the new Shared Prosperity Fund[5] “aimed at reducing inequalities between communities” calls for local investment plans to be approved by UK government. Without reform in Whitehall, this top-down culture, where central government controls key policy areas such as health and education, will continue.
The proposals to deliver real devolution lack ambition. The government has promised that any region can negotiate a devolution deal by 2030. But the problems of geography and scale are a concern – there is tension between the size of local government and accountability. Too small, and local government does not have the capacity or economic resources to make real change. Too large, and it becomes remote from local people and their concerns.
The proposed landscape is incoherent. Some areas are large economic conglomerations with clear regional identities, like Greater Manchester. Others are more fragmented, like York and North Yorkshire and Hull and East Yorkshire.
Smaller regions do not have the economic capacity to make real changes. Much of their economic activity is going to be affected by the pull of nearby, larger, economic centres.
Meanwhile, even sizeable urban centres like Birmingham, Leeds and Manchester, are not going to have the resources to integrate health, education, housing, planning and transport in ways that can overcome many decades of neglect and decline. In this sense, real devolution of financial resources really does matter when tackling regional inequalities. The current proposed scale and type of funding is inadequate.
The fundamental lesson from the past is that local economic regeneration and levelling up will not occur if priorities, funding and accountability are determined by the Treasury.
For most public services, accountability for the delivery of services will continue to flow upwards to central government, not downwards to local citizens. If health, education and other services continue to be run by Whitehall, there is little incentive at the local level to innovate in response to local needs.
The current conceptions of Ministerial Responsibility with ministers accountable for all that goes on in their domain is a real constraint on innovation and informed risk taking at the local level. If ministers respond to criticism by imposing national regulation and standardisation then the policy of diverse economic developments will be thwarted.
A meaningful system of local power and accountability requires rethinking the role and functions of government departments and ministerial responsibility. Real devolution would require representatives at the local level being responsible for policy failure or success. It would see departmental budgets properly redistributed to the localities with appropriate levels of funding for health, housing, education, transport etc. allocated to regions.
Effective local economic development requires Whitehall in general, and the Treasury in particular, to operate a strategic, not directive role. The Treasury needs to provide defragmented, bloc budgets to devolved authorities which would allow them to determine local priorities which are accountable to the local electorate.
There is also a need for local regions to be able to integrate service delivery. Currently services such as local government, policing, social services, health and transport all operate on different boundary settings. This leads to a sclerotic, un-coordinated, mix of boundaries, authority and demarcation of roles and responsibilities. Processes of coordination are unmanageable because each services involves different authorities and regions. These services need to be integrated within a single devolved authority or unit. This in turn would help partially address one of the perennial sins of UK governance – failure in joined-up government.
The proposals set out by the Secretary of State for Levelling Up,
Housing & Communities will see the continuation of a range of central government funding pots, monitoring of achievements by Whitehall and the majority of funding determined, distributed and accounted for by the Treasury.
Real devolution requires a complete change of attitude. A switch from the primacy of upwards accountability to a model of meaningful downwards-facing accountability is required. An approach that allows local governments to make mistakes and to be responsive to their voters, not to ministers and departments (not unlike the situation in the devolved administrations of Scotland, Wales and Northern Ireland).
Central to any real reform requires the Treasury relinquishing its control and veto of funding. Instead, spending would be required to be controlled through devolved authorities and not Whitehall departments. Economic development needs to reflect and respond to local needs. Local decision makers should be accountable to their voters and not to Whitehall and the Treasury.
The White Paper notes that past experiences which “devolve power without accountability and democratic legitimacy can run … out of steam”. This pattern looks set to continue given that what has been set out is only a partial approach to reforming UK governance. An approach that focuses only on devolved levels, but largely ignores central government and the current powers and responsibilities it will continue to command, is unlikely to bring about meaningful change.
Period31 Mar 2002
Held atHouse of Commons, United Kingdom


  • Levelling Up
  • Whitehall
  • Gov ernance
  • Local government
  • Treasury