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25.07.16

Councils must ‘break free’ from centralised and austere devolution

The government has been accused of holding back the devolution agenda through its austerity policies and lack of truly devolved policies in a new report.

The joint report, from the Centre for Local Economic Strategies (CLES) and Sheffield Political Economy Research Institute (SPERI), said that local authorities “must be bolder and break free from the oppressive centralism and a type of devolution deal in which Whitehall holds all the aces”.

It argued that the current devolution process is “stacked in favour of the status quo” and that this has prevented it from supporting areas such as industry, social mobility and renewable energy.

Neil McInroy, chief executive of CLES, said: “It is increasingly clear that present devolution – whilst a unique opportunity – is flawed.

“Whilst the deals have started to reverse some of the problems of over-centralisation, devolution has been too constrained by the Treasury’s economic and social model, and cowed by the ongoing austerity, in which the poorest areas have suffered the most.”

The report argued that the government’s approach to devolution “exacerbates rather than alleviates regional inequalities within the UK” because it continues to prioritise the finance industry and base most of central government in London, seen in the recent decision to close the Department of Business office in Sheffield.

It said that the new approach to devolution should be coupled with a move away from austerity, which is particularly important because devolved areas will “almost certainly” face a loss of funding from the EU following the referendum result.

In addition, the report said that the referendum result “was prompted in part by a sense that people felt abandoned by central government” and shows the need to give people greater control over their communities.

Dr Craig Berry, deputy director of SPERI, said that the formation of the new government under Theresa May is a “valuable opportunity” to introduce “bold new ideas to push the parametres of devolution deals”.

The report recommended devolving a number of key powers to local authorities. These include abolishing the national Work Programme and allowing local authorities to develop their own employment programmes and devolving power over affordable housing policy, including allowing councils to decide whether they want to implement the Right to Buy policy.

It added that local authorities should be given the power to instruct public sector bodies, including the NHS, Network Rail and the Ministry of Defence, to release land for economic development.

It also said that moves towards health and social care devolution should be paused until there is an end to financial pressures on the sector – sharply contrasting with another report from late last week that called for full health devolution of all local areas.

In addition, the report said that tax receipts from environmental taxes, such as the Climate Change Levy and CRC Energy Efficiency Scheme, should be devolved to councils in order to enable them to fund areas such as renewable energy and community energy schemes.

It also recommended introducing localised banking and renationalising the rail network under a local accountability structure.

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