What would radical decentralisation look like?

Much needs to be done to end the irresistible pull of London.

Much needs to be done to end the irresistible pull of London

With Labour’s Policy Review acknowledging the importance of re-distributing power away from Westminster and George Osborne announcing over £15bn of rail improvements for the north, it is worth exploring some ideas for what could be done to truly overcome the London-centric nature of our politics and economy.

Firstly, public spending is necessary but not sufficient by itself. Austerity has and will continue to increase regional disparities (as regions outside London are more dependent on public sector investment) and with Labour signing up to Tory spending plans this trend will continue. The cuts to local government are significant and are testing their ability to function as efficient and responsive organisations to the fullest.

This can only increase the centripetal pull of Whitehall.

The infrastructure spending announced by George Osborne recently – around £15bn in rail investment for the north – is nowhere near enough to close the gap. Remember, London gets 24 times as much spent on infrastructure per resident than north-east England. Central government spending is not the whole answer but it’s a crucial element.

Secondly, any serious plan has to give general power of competency for local government to run their own affairs. This means a radical, constitutional shift in power away from central government but to do this local government has to have some autonomy from central government funding. Tax raising powers for local government as part of a broader transfer of competencies are needed.

Thirdly, we need to address London’s housing market bubble and the lack of sustained infrastructure investment outside of London. This could be addressed by a land value tax and the proceeds could be channelled into a regional infrastructure fund.

This would act to redistribute wealth away from the south east where land values are disproportionately high.

The regional infrastructure fund could award low interest loans to activities that have demonstrable social, economic and environmental benefit. Importantly, these local infrastructure funding bodies would have to be more accountable and democratic than Local Enterprise Partnerships are at present.

Fourthly, finance. The big universal banks are not set up to cater for local SMEs who often need patient funding. The market won’t provide a bank that will cater for local SMEs as this is often patient work for small returns. Luckily we have RBS which could be turned into a series of regional investment banks with a mutual structure.

Alongside providing patient finance for SMEs is keeping money and investment in the local economy. Important to this is the strengthening of the credit union movement so it becomes are real nationwide option. A Community Reinvestment Act (a levee on big banks not investing in certain areas) could provide the capital needed to help credit unions grow into a substantial force.

A lot needs to be done to end the irresistible pull of London. The tide may be turning, and its important the progressives grasp the nettle.

This blog draws heavily on Stuart Speeden’s essay for Compass published in Building blocks: for a new political economy, itcan be downloaded here

Joe Cox is a research coordinator at Compass

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16 Responses to “What would radical decentralisation look like?”

  1. benjiii

    Not sure why a regional fund would be necessary or desirable.

    Under LVT, simple calculations show that regions outside London and the SE, would be paying £100bn per year less to the Treasury than at present.

    This is the result of a level playing field.

    If that doesn’t kick the economy in these regions, nothing will.

  2. Joe

    A regional fund is necessary because of the massive investment gap between London and the regions. Tax cuts alone are not enough

  3. Leon Wolfeson

    “Tax raising powers for local government as part of a broader transfer of competencies are needed.”

    This is race to the bottom stuff. More, you’re proposing handing power to places like Barnet council, where it’s promptly outsourced to Capita, and there is basically no customer service, just a stonewall whenever you try and contact them.

  4. Guest

    The flood of unemployed former Londoners would offset it quite nicely.

  5. benjiii

    Under LVT, work and enterprise is untaxed. So the only londoners who might want to move are, by definition, non-workers.

    So, yes, plenty of idle rich londoners occupying some of the most productive sites in the World, may have to re-locate. At least there will be millions more jobs in the economy for them to choose from in all regions.

  6. Guest

    The LVT’s actually suggested replace council tax. And I see, so when people are fired they get to be ejected from their communities. Great! And “want” to move…because living on the streets is brill!

    Those evil “idle” poor workers (who you’re forcing into part-time and zero-hour jobs) who you dislike so much…and those “jobs” in workfare you’ll give them…millions LESS jobs after the devastation caused…

    (Not to mention every LVT proposal I’ve seen would radically reduce housing stocks by making i.e. living above shops unaffordable, and hurt the poor by eliminating what is currently council tax subsidies!)

  7. benjiii

    LVT untaxes work and enterprise, so creates more jobs. About 4 million extra in the UK by some estimates. So I’m not sure why you think anyone would be fired.

    LVT makes housing more affordable. Four fold, as a ration of descretionary income, for the average UK household.

    Not sure how you think LVT would reduce housing stock. Everyone agrees that by ensuring land is put to it’s highest productive use, the available stock of housing increases.

    After netting off against benefits (Citizens Income), 75% of all UK households would have no LVT bill.


  8. Guest

    Yes yes, making millions homeless makes jobs. Hmm!

    LVT is highly regressive, taxing people for living. Moreover, again, the proposal is a CT replacement – your proposal to *massively* raise taxes on the poor by replacing other income..well, anyone without a job is on the street at once!

    And because it makes living above a shop, for instance, unaffordable. Moreover, in many cases the “most productive” use of land is not housing, and if it is housing, then it pushes strongly towards the upper end of the market!

    (In fact, if there’s differential charges for different sorts of land, in some cases it might be worthwhile changing the usage of, say, a housing block to a carpark..and if there is not differential charges than for example farmers are screwed….this is tricky stuff! Also, it makes things like community centres unviable, they can’t afford to pay a LVT! It also badly hurts councils, etc.)

    What you’re saying is that a citizen’s income, which you’re proposing, would see 75% of households seeing much of their CI soaked up by a LVT – which breaks the entire point of a basic income, which is that the basic income isn’t taxed!

    Council housing is also far less different from private housing under a full LVT. And don’t spam links with no context, thanks!

  9. benjiii

    The top 1% of households own 50% land by value. So to call an LVT regressive shows you haven’t a clue what you are talking about, and have no wish learn anything useful.

  10. frank

    Just let the free market work and stop interfering with everything. The North is struggling because of persistent government intervention the past 50 years

  11. tezza

    “We should provide Council housing to anyone who wants it.”

    Wake and up and face reality. Socialism fails and you need to read a basic text on economics

  12. Frank

    Yes the idea of a decentralised government is anathema to socialists like you.

    You need a strong authoritarian government to force your poisonous agenda and ideology on us. I think you should have been born in Russia under Stalin. More your sort of state structure.

  13. Leon Wolfeson

    And there you go again, spewing PC bigotry. I am not a socialist, of course, and don’t have your hard-on for talking about Stalin and he’s far too mild for you or whatever today’s excuse is.

    No, I’ll keep on rejecting your rush to the bottom, the way you’re trying to smash what little tax you still pay.

  14. Guest

    And? A LVT will be paid by the users of the land. You are trying to wave your hand and magically claim otherwise, which is simply dishonest.

    The poor will end up paying far more under a LVT.

  15. Leon Wolfeson

    Well yes – which means getting Capitalism off it’s the free market’s back!

  16. Guest

    Oh yes, your “reality” of refusing to allow the poor shelter. When the Tories enthusiastically embraced council housing in the 1950’s and 60’s, for instance.

    And why haven’t *you* read Adam Smith?

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