Time for Labour to take English devolution seriously

Several years ago Giles Radice coined the phrase ‘Labour’s southern discomfort’ to describe the party’s difficult relationship with southern voters. This condition has worsened to such an extent that it could now be diagnosed as ‘Labour’s English discomfort’. Labour has been brutally routed in Scotland and is hanging on in Wales, so to find itself with such a problem with English voters risks looking terminal. As a national political party, Labour looks distinctly uneasy with England. It is wary of national identity issues and where this may lead to, particularly in relation to immigration. It has not been attentive enough to changes affecting working class communities across England. And it has been tone deaf to the clamour to ‘take control’ which the Brexit campaign targeted on Brussels, but which could easily apply to a remote Westminster.

One manifestation of this has been Labour’s hesitant response to English devolution, where the party has been caught badly off guard. At one level this is distinctly odd, as it was the Blair government in 1997 that started the process with Scottish and Welsh devolution, and the establishment of the Greater London Authority and mayor. Labour ought to have been prepared for where this was going. But the truth is that devolution was never central to ‘the project’ of New Labour. Rather, constitutional reform, including devolution, was a set of policies that New Labour inherited from the John Smith era. There was little strategic thinking about the politics of devolution because it was seen as a second order issue. The strategic priority for New Labour was economic competence and public service reform, with the objective being to create a governing majority through combining pro-business growth with full employment and generous funding of public services. Labour’s unexpectedly large majority meant that the constitutional and devolution reform outlined in its manifesto had to be implemented, but this was never regarded as a central priority. And the regional element of this in England, along with mayors for cities, was hobbled from the outset by having few new powers, and yet still requiring a positive vote in local referendums –  turning it into a local political squabble, rather than a serious plan for devolution.

Nearly 20 years later Labour is reaping the consequences of this indifference. 13 years of power in Westminster generated a culture in which too often it seemed as if the only thing that mattered in government was running Whitehall. During this time there were of course some very important achievements, but there were also some major blind spots. Labour paid insufficient regard to the material and cultural factors that continued to erode working class communities. This was a process that had begun in the wrenching upheaval of industrial restructuring in the early Thatcher years. New Labour’s mistake was to believe that all communities would ride on the coat tails of growth, meritocracy and diversity and would benefit from these trends. Instead, from the early 2000s, wage levels for too many people remained stubbornly low and working class English identity felt denigrated and under attack.

Labour’s prescription was sometimes wide of the mark, overly paternalistic and far too centralist. The unwitting message was that it was people in working class communities who were the problem and government ministers knew what needed to be done to improve people’s lives. Not surprisingly, this grew to be resented as a form of political correctness and metropolitan elitism. One major institutional victim of this centralist mindset was local government, which was progressively infantilised. Instead of being a means by which representative democracy could enable local people to run their own communities it was turned into a delivery arm of central government, held to account for its success in implementing national policy.

Moreover, having devolved power to Scotland, Wales and London, Labour nationally never gave the impression that it regarded these devolved administrations as anything more than sideshows.  We know how this has ended up in Scotland. Labour has been replaced as the progressive voice by the SNP. Outside London, Labour has been caught in a pincer movement between the SNP in Scotland and the devolution agenda in England. Labour has been ambivalent at best about city region devolution and the ‘northern powerhouse’. And, following the European referendum, Labour appears out of touch with its own voters.

In the 2015 election Labour said some of the right things, mainly because of the hard work done by Jon Cruddas to oversee a radical policy review that did put its finger on the nub of the issue. But there was little sense that the Labour leadership had grasped the significance of the shift in position that was required. Comparing the party election manifestos is instructive. Labour’s section on devolution to cities was in a chapter about democratic renewal, whereas devolution was at the heart of the Conservative’s message on the economy. This says a great deal about relative priority, for the Tories it was central to political economy, for Labour it was a democratic adornment.

Given that Labour was in opposition you would have thought that its leadership would have been close to Labour leaders in English towns and cities, seeking to learn from and build on their experience. Unfortunately not. Labour nationally gave the distinct impression of trying to block ‘Devo Manc’. One prominent Labour leader told me that he had heard by group email that Ed Miliband was campaigning in his city; no direct contact had been made to discuss with him the key local issues or to seek to share a platform with him.

Thankfully, Labour in local government has chosen to steer its own course. Labour councils have decided to engage with the government’s devolution agenda and to do everything that they can to bend it to their ends. Popular and imaginative policies have been developed that have engaged with people’s biggest issues – on wage levels, jobs and apprenticeships, debt, obesity, fuel poverty, transport accessibility and cost. And in all of these areas the emphasis has been on the creative use of local power and authority to find innovative and practical solutions.

English city region devolution

The world is changing very rapidly and urbanisation is one of the biggest trends. When Labour came to power in 1997 the majority of the world’s population still lived in rural areas, but by 2004 rural dwellers were in the minority and by 2050 75 per cent of the world’s population will live in urban areas. Driven by this trend a new pattern of growth is taking shape led by cities, not nation states. 60 per cent of global growth comes from just 600 cities. In Britain our city centres are unrecognisable from where they were a generation ago. Pretty much all of them have transformed their physical appearance. Services and quality of life is improving. And for the first time since the second world war, population growth in cities is outstripping the national average. London was the first city to start this trend in the late 80s, early 90s, but since the early 2000s our other major cities have also grown faster than the country as a whole. And the city with the fastest population growth has been Manchester.

But this trend masks a major challenge which the EU referendum has brought centre stage. Growth in Britain is dangerously unbalanced both between and within cities. Outside London only Bristol has a growth rate in line with the English national average. All of our other cities are lagging behind. Devolution to city regions and the northern powerhouse are designed to address this by encouraging agglomeration and the benefits that accrue from economic activity clustered close together. Globally the fastest growing cities are mid-tier and mega cities with populations of 2-5 million. In that context the problem in Britain is not that London is too big but that our other cities are too small.

Two complementary initiatives are addressing this. First devolution to city regions, based on functional economic areas (ie travel to work areas). These are bigger than individual towns and cities, so the Greater Manchester one comprises 10 local authorities across a population of more than 2 million. Liverpool City Region and the North East are just under 2m and the West Midlands is much bigger still. These city regions operate at a spatial level at which policies for labour markets, skills, transport, housing and investment can best be coordinated. But in addition to this, these more autonomous city regions can then collaborate with their neighbors to form strategic alliances that can further accelerate agglomeration benefits through better transport connectivity, science, research and innovation strategies. This is what the northern powerhouse is based on. The Great Western Cities, which involves collaboration between the Cardiff Capital Region and Bristol and the west of England, is another example of this.

However, what this has so far failed to address is the second major challenge, which is the lack of inclusive growth within cities and city regions. Agglomeration on its own cannot address this; indeed left to its own devices it will exacerbate the problem. As our cities grow, driven by globalisation, the risk is that inequality within city regions and their urban hinterlands will grow more stark.

So the question for Labour is how to engage with this new world of devolution, unbalanced growth and an increasingly insecure and angry working class?

Labour needs to face up squarely to what is happening in England and to develop a distinctive position on devolution. But this will involve a challenge to its theory of power and to all of its learned behaviour about the efficacy of the state at national level. For Labour to be convincing on this it would need a Clause IV moment, only this time about the balance between national and local, as opposed to the state and markets.

If Labour is able to rise to this challenge then there are four major opportunities that devolution can offer.

Political revival – mayoral elections

Next May all those city regions that have negotiated devolution deals will have mayoral elections, barring a major U-turn from the new prime minister. These mayors will lead combined authorities with substantial new powers on investment, growth, transport, housing and public services including, in Greater Manchester, health. Labour stands a good chance of not only winning most of these elections, but also of using these as the foundations of its political revival. So far Labour has failed to grasp just how significant this opportunity could be. But you only have to look at the mayoral elections in May to get a sense of how big the prize is. The most contested mayoral elections in London and Bristol both saw record turn-outs of 45 per cent. In both cases Labour won, and we saw the election of the first ever Muslim mayor in London and the first black city mayor in Bristol.

16 million people will be eligible to vote in these mayoral elections next year. Labour’s instincts so far have been to try and close the process down by running quick and low key selection processes. But this is to miss a major opportunity; to enable local people to do what the Brexit campaign offered: ‘take back control’. These are going to be hugely important positions and they should be hotly contested. But beyond picking strong candidates through an open and engaging process the other thing Labour needs to do is to build strong local policy platforms for the mayoral elections. This should be an opportunity to develop a powerful vision of for the social and economic future of cities and how this will improve people’s lives.

Policy renewal – inclusive growth

At the heart of Labour’s response to devolution should be a renewed focus on how to develop more inclusive growth, so that economic prosperity is more fairly shared across urban England.  Even a cursory review of the voting data from the referendum shows that the communities in the north and midlands who voted to leave, are very often those who have least benefitted from globalisation.  We have seen significant growth not only in London, but also in some of the major metropolitan hubs of our major city regions. But too little of this has spread to towns and communities on the periphery. The big city regions have negotiated devolution investment funds which could offer the prospect of starting to tackle some of the endemic challenges facing underperforming areas. But if this opportunity is to be seized then it will require new thinking. Local economic strategies have tended to oscillate between three approaches: orthodox models of value maximizing investment, physical and place based regeneration, and human capital development policies linked to skills and education. A creative challenge for Labour would be to explore ways in which these could be integrated at local level into one strategy.

Labour’s flirtation with ‘predistribution’ was based on good policy instincts and bad politics. The language was wrong and the policies vague and too nationally focused. The actual problem of inequality and the externalities of globalisation, plays out as an experience in the divided and damaged labour markets of the places where people live. They urgently need to be addressed both through local and national policy. It is fortunate and timely that the cities have come together to support the RSA in running the Inclusive Growth Commission, the successor to the highly influential City Growth Commission, that paved the way for city region devolution.

What is needed now are some big and imaginative ideas, allied to innovative local practice that can make a breakthrough on inclusive growth and re-connect Labour with the communities it no longer has a relationship with. This will involve a combination of refocused local economic strategy, public service reform and re-energised social policy. The ideas may take a number of forms, some will be straight forward and interventionist. These will include ensuring that the huge pipeline of infrastructure projects across Britain is matched with the creation of training and then construction jobs for local people. This cannot be simply left to a market that has failed to make this most basic connection, and will require determined and focused local public action, led by city leaders.

Similarly, public procurement should be used as a lever to create more local jobs and apprenticeships – one positive side effect of the referendum is that the trope that EU rules prohibit this can no longer be used as an excuse for inertia. The aim of these measures must be to put a higher floor of decency and basic wage levels into work, so that there is dignity and value in local employment. The living wage is an important trigger for this, but it needs to be linked to industry and sectoral strategy designed to grow the value of local businesses and the skills they can utilize.

There will also need to be longer term interventions designed to deal with some of the more fundamental roots of inequality in skills and education – such as large and concentrated local initiatives in early years education and in targeted support for children who are struggling at school. There is a strong argument for categorising these prevention programmes, as forms of investment, which could then be subject to rules more like those that apply to capital programmes. The pay back for this should be measured over the long term and not just in terms of savings elsewhere in the system, but also in productivity growth and net economic impact. What’s needed is investment in social infrastructure on a similar scale to that which is planned for our physicail infrastructure.

Completing English devolution

It’s also clear that devolution in England is unfinished business. Whilst millions of voters will be covered by devolution arrangements, that still leaves half the country who don’t yet have similar local power. Labour should lead the charge on completing the task. Some very big and important urban areas have not yet got full devolution arrangements and it may be no co-incidence that these cover parts of England that voted heavily in favour of Brexit. West Yorkshire and Nottingham and Derby are the most striking examples of this. And then there are smaller cities that don’t fit easily into the city region pattern, such as Hull, Plymouth, and Southampton. And there is a wider question about the applicability of city region models for county areas, which is a particular issue in the south of England. Labour has the opportunity to champion a form of devolution that extends to most of England, bringing social and economic policy together at local level to improve jobs, skills and opportunities for local people. One way of demonstrating its intent would be signal that it wants to go further than the Government by extending devolution to Whitehall departments such as DWP and DfE that have so far resisted the process.

Making England and Britain whole again

This in turn feeds into a wider constitutional question about how to put the broken pieces of what’s left of Britain back together again. It is clear that there will need to be a constitutional settlement based on something like a federal model, with mayors represented in the second chamber and possibly some of them sitting in the cabinet, as happens in France. In the interim, Labour should back the call of cities for city leaders to be included in the Brexit negotiating team, as city regions stand to lose significant EU funding as a result of the referendum outcome. Labour will also need to get its own organizational structures in order, including establishing an English Labour party, alongside the Welsh Labour party and the Scottish Labour party.

Conclusion

Labour needs to learn the lessons of its recent past. Searching for neat constitutional and governance geometry, that seeks to answer all problems in one go, is one habit Labour needs to drop. This has too often been a recipe for inaction.  Instead, Labour needs some emotional intelligence, to show that it understands English working class voters and their desire for respect and dignity. This is about valuing work, family, cultural identity and social institutions, and working out how these can be supported and strengthened. It requires local and national leaders who are authoritative and representative of their communities and who can credibly provide economic and social leadership. Labour needs to once again become a player in the debate about the future of England and that means embracing devolution.