Labour must be bolder than the Tories on devolution

The launch last week of the new Centre for Cities report Cities Outlook 2016 brought another stark reminder that most cities in the North and Midlands are continuing to punch below their weight economically – with wages in most places north of the Watford Gap falling below the national average, while welfare spending is higher.

In Hull, for example, average weekly wages amount to just £376, compared to £539 in Milton Keynes, and £591 in Reading. Even in Manchester – which has seen an impressive economic rebirth in the past two decades, and had the second fastest growing city centre in Britain from 1998-2008 – weekly wages are around £50 lower than the British average of £504 per week, demonstrating that there is still some way to go for the city to fulfil its economic potential.

For the Labour Party, it would be easy to use these findings to attack the Government, and to claim that its much-trumpeted Northern Powerhouse and devolution agenda are failing to have an impact. It’s certainly easy to find examples of how the Government has so far failed to deliver on many of its promises, such as the recent own goal of appearing to close the Northern Powerhouse office in Sheffield and move the jobs to London.

However, to do so would be short-sighted and complacent, as the reality is that the Conservatives have seized the initiative when it comes to policies to rebalance the economy and decentralise power. While the implementation of the Northern Powerhouse so far may leave a lot to be desired, it’s nonetheless a good idea in principle, which could make a big difference to Northern cities if realised properly.

Moreover, the Conservative Party has completely outflanked Labour with its devolution agenda since George Osborne signed the first devolution deal with Greater Manchester in 2014, giving the city control over skills, transport, housing, and economic development in return for introducing a metro-mayor. In the 14 months since, the Government has continued to extend its devolution programme – handing Manchester additional powers over health and social care, and agreed substantial deals with other places including Sheffield, Liverpool, the North East and the West Midlands.

Over the next 18 months, these places will take on significant new powers over the issues which matter most to their local economies, which will make a big difference to the lives of local people. Given that they are led by Labour-controlled councils, and the Party’s record of having introduced Scottish and Welsh devolution (as well as London’s mayor and assembly), the Labour leadership should back these plans. If nothing else, local government is where Labour can hope to exert most influence over the next few years.

Recent announcements by Jon Trickett and Steve Reed have reasserted Labour’s devolutionary principles, suggesting that the Party’s front-bench is starting to embrace city-devolution. But this is a fast-moving, live issue: in the past week alone, the Cities and Local Government Bill (which legislates for city devolution deals) passed into law, while the first city-mayor elections were announced for May 2017. Labour cannot afford to be left behind – we must be bold in putting forward policies that go further than the Tories to empower our cities and their surrounding areas.

That means, for example, giving local leaders more powers over employment and skills schemes, and greater control over their own finances, to enable local leaders to address skills-gaps and make spending decisions that better meet the needs of their communities. Taxes like council tax should be completely devolved to the new mayors, so the number of bands and thresholds – rather than just the rates – are determined locally. And there must also be corresponding reform at the centre: Parliament must have the means to scrutinise whether the Government is keeping to it’s side of the agreements too. For my area, I’m interested in whether the Greater Manchester MPs should form our own Grand Committee within in the Commons, just like our Scottish, Welsh and Northern Irish colleagues do to oversee devolution in their areas.

There is undoubtedly much more to do to ensure UK cities have the powers and tools they need to strengthen their economies, and to compete with their counterparts across the globe. For the Labour leadership, this should be seen as an opportunity – to work closely with our local government leaders in shaping radical policies for devolution that will help our cities fulfil their economic potential.

Jonathan Reynolds MP is the Labour and Cooperative MP for Stalybridge and Hyde in Tameside, Greater Manchester.