Jessica Studdert is Deputy Director of the New Local Government Network.
It’s been a strange summer of speculation for localists and devolutionaries. The Westminster Bubble popped after the Brexit vote, but before deep questions about our future national constitutional settlement could be asked, everyone went on holiday. Theresa May’s name-dropping of Joseph Chamberlain in her Birmingham campaign launch created much excitement. Could she be harbouring secret municipal revivalist intentions? Or, having cast George Osborne aside, would the agenda he set his personal political stall by suffer a similar fate?
So far we have only had a few insights from speeches and past experience to go on. But how May approaches the distribution of power and governance in this country go to the heart of who she is as a leader. As she seeks to ensure her premiership is defined by more than Brexit, will her domestic agenda be characterised by cautious pragmatism or visionary radicalism?
Her pragmatic credentials are often cited. She has an impressively long tenure as Home Secretary under her belt. And the strength of her leadership candidacy was built on the solid foundation of grassroots Conservative Party support she cultivated over the years. She didn’t get to where she is today by needlessly rocking the boat.
In this light, reports of debate within No 10 about persisting with directly elected mayoral requirement might be seen as a pragmatic step to overcome the breech that was blocking devo deal progress in many areas. There may well be political calculation over the creation of new platforms for Labour big-hitters in metro areas. But it will be just as important for her new administration not to needlessly continue tension with two-tier areas, where many Conservative-led councils have been resisting the imposition of a metro model in the counties and shires. Clarity is needed, as debates over structures are a distraction from the real possibility of devolution.
If May’s bold new vision for the country does involve unleashing a new generation of Chamberlains who can actively remake local services and infrastructure fit for the 21st century, she will need to spell this out fast. Osborne had already set off a process towards full business rates retention by 2020 – soon some hard choices will need to be made about how this works in practice. Local government finance chiefs have spent the summer crunching the numbers. An unresolved question for councils is whether new flexibilities will come attached to new constraints, or whether they will have the full power and freedom to become economic powerhouses that can stimulate growth and peoples’ access to prosperity.
Both the Prime Minister and her new Chancellor have set a clear priority on closing the productivity gap between London and the rest of the country. This gap between the capital and the rest is unique in advanced Western economies, as is our centralised public finance system. Will the two continue to be treated as separate phenomena? Or will a radical new approach seek to create new fiscal incentives for local areas to drive not just low value, low wage growth, but productivity growth? NLGN has argued that devolving a share of Corporation Tax to local areas would give them a stronger stake in creating the conditions for productive business growth locally. This would be a radical step for the UK, although similar local municipal incentives to stimulate business activity are the norm in our peer countries Germany, France and the US.
May’s focus on crafting a credible industrial strategy attuned to the advantages of different areas will be an opportunity to think big about local government’s changing role in society – and how Whitehall needs to adapt too. Will the new directly elected mayors have a seat at the table of the new Industrial Strategy Committee? As Brexit is negotiated, which powers repatriated from Brussels will bypass Westminster and go straight to local government? Will the sub-regions play a greater role forging direct international trade links and actively developing the competitive advantage of places? Will cities and counties be able to set their own immigration policies determined by local labour market needs?
Of course there are lots of questions. For the future of devolution, an essential one is whether May’s cautious pragmatism or her hints at a visionary radicalism will win out. The former path might involve some micro-adjustments in tone and emphasis to her predecessor’s policy on devolution, but largely continue the path set out. The latter involves spelling out the role a revitalised, self-sustaining local government can play at the heart of her plan to govern a country that works for everyone.