The recent decision by the eleven Greater Manchester Local Authorities to accept devolution of both fiscal and other powers has set the bar at a level other City Regions should follow. Although they are welcome, the powers in reality are nowhere near what is required to either rebalance the economy, or allow Cities to reach their potential.
In order to rebalance the economy we need to rebalance the spending of Government in a fair and equitable way to address the absurd over-centralised system of funding which allows Cities to only keep 5% of taxes raised within them! This compares badly to other cities across Europe and the US where they keep as much as 30%.
As a result, regardless of the success of a city, our centralised system leaves the fairness of distribution up to a handful of officials in London.
That is why I say Labour’s plans for a review of Local Government funding is essential to bring fairness back to a system that has allowed the poorest authorities to be hardest hit and as a result, the poorest in our society have suffered the most. Liverpool relies on Government for 84% of its spend. So when the Tories clobbered our City with a massive 58% cut in that funding and then offers a tiny proportion back it is seen by us for what it is – a con trick.
In practice, the devolution on offer by this Government is like having your house taken from you and then being offered a shed to live in. When City Regions accept the offer of a roof over our heads it does not signal that we are happy with the Government’s approach only that, as a matter of necessity and for the best future of our City, we must look at all the options are available.
The Labour Party is committed to a positive transformation of how our Country is governed, including a pledge to seek a fairer distribution of the Local Government Grant. This, together with the Andrew Adonis Report is a massive step in the right direction. His report, accepted by Labour, is committing to devolve £30 billion to Local government, three times the amount on offer from this Government, but even he recognises we need to go further.
The loss of funding to cities, regions and rural areas, both from direct Government initiatives/grants being cut or funding for projects from the Regional Development Agencies, has meant a reduced ability to create growth and allowed an even greater divide between the North and South. Of more concern, is that it has stifled the overall economic growth of the UK, a fact overlooked as the power brokers, the Whitehall Mandarins, and their London-centric view wins through time and time again.
The Lord Heseltine Report No Stone Unturned, made the case for £70 billion of funding to be devolved to cities. The Government has trumpeted this report as a template for growth, yet has only managed a commitment of less than £10 billion. And, as if to add insult to injury, even this money was stolen from our budgets in the first place and re-routed under the cloak of investment.
The irony is that this Government has acted like a criminal fence, doling out funding that has been stolen from the purses of cities and regions. Money which paid for the social needs of the poorest in our society has been presented back to us as if it was a progressive gift.
In the first three months of a Tory Government we lost £350 million in (BSF) Building Schools for the Future and £127 million in Housing Market Renewal funding. We are cutting thousands of care packages and lost over 2000 jobs. In short, we have been bludgeoned repeatedly by the Tories, while the Lib-Dems stood there and held their coat. What we have been given in return for the cuts is a sticking plaster, to stem the bleeding.
Only Labour has the vision, matched by a real understanding of what is needed, to allow cities to grow and prosper. As well as the £30bn devolution to cities and regions the Labour Party, through Ed Miliband, has also committed to tackling the root cause of many of these problems – the unfairness of the funding formula. Ed Miliband understands the need for change in order to unlock growth within cities and across the UK. This will also require a new style and approach to governance for all local authorities and greater partnership between national and local government. Only Labour’s plans for the future will address the needs of everyone with fairness, equality and a passion for services which make cities like Liverpool great again, while allowing our cities to play a real part in creating growth for our country.