Our regions need a deep devolution of power, not just a “quick injection of cash”

The government’s offer of investment money to constituencies of Labour MPs in former industrial areas, in return for their support for Theresa May’s Brexit deal, attracted scathing criticism. And not just from within the Labour Party itself. It seemed to represent a particularly malign form of transactional politics, echoing the “pork barrel” bungs regularly traded in US politics. There was outcry over the possibility that, for a decision as significant as the terms on which we leave the EU, parliamentary support could be bought at the last minute.

But the problem lies deeper than that. Undoubtedly there are many areas that have felt prolonged economic hardship over the decades since the decline of local industry. The reality is that a quick injection of cash will not fix what is a more fundamental systemic issue, however. Such an approach has failed to date – many of these areas were recipients of EU regional aid, but voted to Leave anyway, clearly seeing no meaningful pay-off from investment in jobs and infrastructure already made.

Unless and until a government proposes a much more ambitious package of devolved powers, the concerns of areas considered by the majority in Westminster to be “on the periphery” will always be left behind. What is required is not an isolated policy initiative or a new ring-fenced funding stream, but deeper reform of the way governance and decision-making works in this country, so that it is more capable of responding to the needs of different areas.

That means not just central government funding, but new local revenue-raising power – both the ability to raise taxes directly and a share of existing taxes that currently go straight to the Exchequer, like VAT and income tax. This would build local resilience over time and end reliance on the whims of government. It also means not just a single new infrastructure project, but devolved control over the full range of skills, employment support, business start-up and scale-up, transport and housing. This would give local areas genuine levers to shape responsive local economic strategies that take advantage of their own particular opportunities without waiting for permission or sign-off from a Whitehall department.

The limits of a “sticking plaster” approach are well-understood in the field of international development. The well-intentioned Band Aid movement of the 1980s quickly reached the limits of an approach based on handouts to alleviate poverty. The focus of international development strategies is now much more on investment in long-term capabilities and strengthening local governance. But for some reason, this lesson – now well-recognised with regard to the developing world – is not applied to policy concerning our own regions. All too often, policymakers in Whitehall reach for a new “investment pot” as a solution, rather than a more intelligent approach to building local resilience over time.

Within devolved and local government, the need for strategies that seek not just economic development but to actively ensure people locally reap the benefits of progress is understood: from the West Yorkshire Combined Authority’s priority on inclusive growth to Barking and Dagenham council’s plan that no-one is left behind. But the powers and levers available to local decision-makers are currently limited.

It is undoubtedly the case that those inside the Westminster bubble, haggling over the EU exit deal and our future trading relationship with the continent, will be preoccupied for the foreseeable future. While those who voted to “take back control” await a meaningful response when it comes to domestic policy, the time is surely ripe for serious devolution, capable of restoring prosperity and pride to places that have for too long been off the radar of the centre.  

This piece was commissioned by Labour Together, which is guest editing LabourList this week.