Nick Bowes: Give London government more power

Nick Bowes: Give London government more power

Cards on the table – I’m a passionate advocate of devolution. I believe our country is far too centralised. Whitehall and Parliament hoard power and neither exercises it well. The centre has done too much badly for too long.

I came to this conclusion long ago, but my frustrations have grown. And although my political allegiance to Labour is no secret, my gripe isn’t partisan. Both of the main parties have fallen short of effecting radical change. Labour in opposition has been talking up devolution, but it’s amazing how enthusiasm for giving up control wanes once you’ve got your hands on the levers of government.

In May 2016, I had the privilege of starting a new job under newly-elected Mayor Sadiq Khan at City Hall, home of the Greater London Authority (GLA), one of the most important devolved administrations in the country.

I learned very quickly where City Hall had genuine power as written into parliamentary legislation also how London’s Mayors draw on their electoral mandates to have enormous sway and influence. However, when it came to being able to make decisions that truly benefit the city, time and again the limitations on City Hall exposed how the balance of power favours Whitehall.

The UK compares unfavourably to so many other similar countries in Europe and North America alike. Even with the devolution of the last 25 years to Wales, Scotland and Northern Ireland and the creation of metro mayors and police and crime commissioners the UK remains one of the most centralised democracies. Layered on to this is how devolution has taken place – it’s a top-down thing, with a few crumbs spared from Whitehall’s table gifted to cities and towns, rather than being based on a strategic look at the best geographical level for taking public policy decisions.

Money is a major stumbling block. Little fiscal devolution has taken place. Local authorities and Mayors have limited fundraising freedom. The bulk of their funding comes from central government direct grants and with them the perpetual threat that, at any moment, the purse strings could be tightened. In many areas, devolution of accountability hasn’t been accompanied by devolution of an equivalent ability to fully fund statutory responsibilities.

Often, what is described as devolution is in fact delegation – responsibilities are handed over, but with strict, centrally-dictated rules about how money can be spent, leaving little wriggle room for local innovation or flexibility. Even when it gives up power, the centre never fully lets go, leaving devolved authorities in a halfway house of confused accountabilities, unclear funding streams, potential vetoes from above and Mayors resembling Whitehall delivery agents.

Policing is a classic example. The Mayor of London is the de facto police and crime commissioner for the capital and accountable to the London Assembly for the performance of the Met. Yet although Mayors have those responsibilities, they don’t appoint the person running the capital’s police. Only the Home Secretary can hire and fire a Metropolitan Police Commissioner.

Moreover, 70 per cent of the Met’s funding comes from the Home Office. The rest comes from the Mayor’s Council Tax precept, and even increases in that are limited by the government. In 2010, central government cut funding for London’s police and at the same time restricted the ability of its Mayors to raise enough locally to make up the shortfall.

Why are we where we are? Firstly, a sentimental attachment to tradition obstructs facing up to how the world has changed and how our way of running the country is no longer fit for purpose. Secondly, we have an over-powerful finance ministry – the Treasury – and a Parliament that hates giving up power.

These factors combine to thwart attempts to prise power away from the centre. And when devolution has happened in occasional spurts over decades it’s been down to a powerful cabinet member investing political capital in steamrolling through change in the face of fierce opposition from civil servants and MPs.

Two main arguments are made for devolution. One is economic, the other more democratic. The economic case is that decision-making in areas like skills, business support, innovation, infrastructure and so on are better taken at a local level: the relevant politicians are more nimble and responsive to local need; a one-size-fits-all doesn’t work in the complex patchwork of the UK and it’s time we embraced our rich and varied geography. The democratic case is that devolution brings the public closer to their politicians, which is a right and proper thing.

New Labour’s early devolutions were seen as democratic choices. Since 2010, devolution has been more closely linked to the desire for economic growth.

Back in 2016, in response to the outcome of the Brexit referendum, Mayor Khan reconvened the London Finance Commission, bringing together business groups, cross-party political leaders and civil society to agree proposals for London’s government gaining more control over the city’s affairs.

Following publication of the Commission’s report, a sub-group of its members opened a dialogue with Whitehall. I was part of this, and we were assigned a key senior official within the Treasury as our point person and the individual who would crack the whip across Whitehall departments.

We made a little bit of progress – agreement was reached on the adult skills budget being handed to City Hall and some further preliminary work was done by Transport for London on the Treasury’s behalf looking at options for land value capture to help fund transport infrastructure.

But overall it was rather depressing.  Whitehall demonstrated a lack of understanding of the GLA and of London as a whole. Officials weren’t open to the idea that anything could be done differently – let alone better – from the way things are currently done.

One particular meeting with officials from across Whitehall looked at fiscal devolution options. Each was met by sharp intakes of breath, shaking of heads and sucking on teeth. “Too complicated”, “impossible”, “unworkable” were the responses from the mandarins. The classic Treasury trump card was played. Effectively, they said: “We don’t believe you’re capable of taking it on so you’ve got to prove you can do it better than us”.

Tempted as I was to point out we couldn’t hardly do it much worse, asking us to prove a counterfactual was an impossible test, and officials knew it. One person from the Treasury frankly admitted to not believing in fiscal devolution. That was despite their job title being something like “head of tax devolution”. Pure Yes Minister.

Prime Ministers since David Cameron have shown little enthusiasm for devolution, being increasingly consumed by Brexit, political instability and Covid. Boris Johnson, once a rabid devolver, showed little inclination for giving up power once he was in 10 Downing Street. Even previously agreed decisions were unpicked, notably handing over south London’s commuter rail network to TfL. It was subsequently shown that transport secretary Chris Grayling’s U-turn on the issue had been motivated by party politics.

The outcome of the 2019 general election saw the centre of political gravity drift towards the North and Midlands of England. Knocking London became a new pastime for many politicians keen to burnish their credentials with the voters in the former “red wall” seats. The landscape then became hostile on pretty much every level. A Remain-voting, Labour-supporting capital city became a new bogeyman for the Tory government, with the Mayor firmly in its sights.

Instead of entering discussions about what more could be devolved, London had to fight to hold on to what it had. Under cover of the pandemic, Whitehall sought to claw back control while many were distracted by the national crisis. Yet the Covid crisis also starkly exposed the failings of an over-centralised country – Whitehall, already doing too much, nearly collapsed when the virus struck.

With the pandemic leading to the near-total collapse of fares income, TfL required financial support to avoid insolvency. Officials in the Treasury and Department of Transport did not understand this. They gleefully flagged the £1 billion of TfL reserves until it was pointed out that this was just enough to cover only six weeks of running costs.

Then they ran the clock down until literally minutes before TfL would have been required to formally declare itself bankrupt. Politicians rode roughshod over the Greater London Authority Act, imposing stipulations, conditions and new governance structures that encroached on TfL’s day-to-day running and accountability.

There have been similar skirmishes over planning and housing. In another example of Whitehall never fully letting go, the long and tortuous process of producing the London Plan – the statutory master blueprint for the capital’s physical development – ends with a final say for the relevant secretary of state.

In 2020, that was Robert Jenrick who, at the last minute, after over four years of work, forced substantive changes to the plan. More recently, Michael Gove did something similar by commissioning and publishing an “independent review” of the plan, although having trumpeted in advance about stripping the Mayor of his powers, it didn’t provide him with the ammunition he’d hoped for.

There was the government’s unilateral decision to change the voting system for electing the Mayor, despite few in London calling for it. The supplementary vote system, giving electors first and second preference votes, was part of the original devolution proposal put to Londoners in a referendum in 1998. They voted for it. Yet the change to first past the post went through without seeking their approval. Some suggested the change was politically motivated, giving the Conservatives a better chance of capturing City Hall. If so, we’d rightly frown on similar moves in other countries.

I’m a purist when it comes to devolution. To date, the burden of proof has been on local government and Mayors to demonstrate why more power should be given to them. The need to pass that test has meant huge struggles for only very small rewards. The whole thing needs turning on its head. The centre should have to justify why it believes key functions can only be run from Whitehall. If it can’t, responsibilities should be handed down to the most appropriate level – sometimes to regional mayors, sometimes to local authorities.

The kinds of decisions that shouldn’t be in Whitehall’s gift cover transport, housing, environment and strategic planning, accompanied by much more flexibility for levying and collecting taxes in order to fund public services and also to influence and drive private sector investment.

The crunch point is that in our democracy, Parliament is sovereign. Just as it can legislate devolved administrations into existence, it can legislate them into extinction. Mayors and councils have few constitutional protections from the majority national government of the day. And in an age when gentlemanly agreements and conventions don’t give quite the assurance they once did, major devolution – including fiscal devolution – without substantial constitutional reform to accompany it risks leaving councils and mayors very exposed. But that is a much bigger issue for another day.

Nick Bowes is Managing Director, Insight, at London Communications Agency. He was previously chief executive of  Centre for London and Sadiq Khan’s director of policy. Photo: City Hall. Support and its writers for £5 a month or £50 a year and get things for your money too. Details HERE.

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