Labour’s plan for the economy must start in the town hall, not Whitehall

With nearly three million unemployed and rising, Labour needs an answer on the economy. The temptation will be to draw up a single national plan covering the whole country. It’s a temptation we must resist. National economic plans have been a recurring theme of the 20th century. Harold Macmillan had his National Economic Development Council. Wilson had the National Plan. More recently, we’ve seen George Osborne’s ‘long-term economic plan’ and Theresa May’s Industrial Strategy for a Britain after Brexit.

One thing all these plans had in common? They all failed. Macmillan’s council was weak and ineffectual, while Wilson struggled with widening trade deficits. Osborne’s austerity drove up poverty without bringing down the debt, and May presided over a collapse in investment. How can we face up to record levels of unemployment without turning to the grey men and women of Whitehall to take charge?

Building back local

Luckily, there is another way. In every part of the country, local councils and regional authorities – many run by Labour – stand ready to act. If only we empowered and funded them to do so. Take Liverpool – a city with an extraordinary industrial history that’s been hard hit by the pandemic. The Labour-run city council has prepared a £1.4bn recovery plan to create 45,000 new jobs. It’s been endorsed by 72 local leaders.

If backed by government, the plan would see the city push forward on new housing, leisure, cultural attractions, and science centres. It is an incredibly exciting vision that would make a massive difference to the economic recovery of the north west. Yet at the same time, the city council is so cash-strapped that it’s teetering on the edge of issuing a bankruptcy notice.

In my own area of west London, the seven councils making up the West-London Alliance are working hard on our own economic plan to tackle the 41,000 job losses we expect this year. Yet we’re facing our own extreme budget challenges, making it hard to see where the money will come from to invest. So why does it make sense to back these local economic plans rather than look to Whitehall to tell us the answer?

First, local areas have a much richer understanding of their local economies with their particular nuances and needs. In West London, we know that Ealing and Harrow are home to large commuter workforces while Hillingdon and Hounslow are more dependent on Heathrow airport for jobs. By working on a local plan, we can be much more targeted around the types of businesses we need to attract and where public investments are likely to reap the greatest return.

Second, local areas are much better placed to tie together support in a way that gets the best outcomes. For example, skills funding comes under the Department for Education while employment support is mostly sponsored by the Department for Work and Pensions. So when a jobseeker needs help with both retraining and a job search, they have to navigate two complicated systems to get support.

Local areas can tie together programmes much more effectively. That means services can more easily meet the needs of each individual, even where these cross departmental boundaries. And if issues do arise, the official responsible is sitting in the nearby town hall – not far off Whitehall.

Finally, local areas can build much richer, deeper relationships between government agencies, companies, local trade unions, the voluntary sector, and other local players. These are the relationships that get large development projects off the ground – whether launching a new science park or getting spades in the ground to build new homes.

Big projects are complicated, involve lots of parties, and often attract local opposition. Sorting through the issues requires officials to be able to knock heads together, take rapid decisions, and quickly work out what’s viable and what isn’t. None of this can be done by central government.

If Labour wants an easy headline, it will announce a big new national recovery programme involving thousands of London-based civil servants developing grand visions for projects and programmes that will either never happen, or will be woefully inefficient. But if we want a recovery that works for local people across the country, then we had better start backing local people with the plans that they make for themselves.