Cities and Local Government Devolution Bill [HL]

Baroness Hollis of Heigham Excerpts

Monday 8th June 2015 Lords Chamber

[Baroness Hollis of Heigham (Lab)]

Yes, my Lords, if they are for the people as well.

First, I thank the Minister for an admirable speech, but I would expect nothing else of a former local government leader.

Of course I support the principle of rebalancing London’s dominance in our economy by strengthening the powers, resources and sheer political clout of the great cities of the north. It is long overdue. As the noble Baroness, Lady Wheatcroft, just said, the dominance of London within the UK is unparalleled anywhere in Europe, but the global banking crisis, London’s overheated house prices and its huge and widening economies—in which a City trader can earn more in a day than a cleaner can in a year—show how problematic and unhealthy such dominance can be.

The eight preferred core metro cities share a history, they share economies and they share, for the most part, their politics. Devolution makes sense and is good news, but I join this Second Reading to ask one other question: what about the other cities of England? London is sorted; the great northern cities are soon to be sorted; and then there are the rest of us, the mid-tier cities. Our populations and contributions to the economy equal those of the metro cities. Our productivity and potential for growth probably—almost certainly—exceed them. OECD research shows that there is proportionately higher economic growth in medium-sized cities than in either the capitals of Europe or the secondary great European cities, yet we seem politically invisible. Devolution presumes that decisions made locally are best, not that decisions are better the larger you are.

I loathe the arrogance—and I know that this view is shared by many in your Lordships’ House—of “earned autonomy”. I distrust the simple-minded alpha-male obsession with size, the Treasury’s cosy preference for dealing with a few large authorities, rather than many diverse ones, the bureaucratic dislike mentioned by the right reverend Prelate the Bishop of Derby for geographical untidiness and the instinct for one-size-fits-all uniformity. I am afraid that I also have no patience with powerful, charismatic Westminster politicians, who have never been in local government, demanding that power can be safely devolved only to other powerful politicians—that is, mayors. If your Lordships will forgive the personal note, as a former leader of my council there was nothing I could not do that the proposed mayors can do, and I could do it with the consent of the majority of my council and all their financial support. I have yet to have it established to me that the situation would be different under mayors.

The devolution debate has so far been about size: bigger is better, more productive, more efficient and more effective. I challenge that. Medium-sized cities, relatively speaking, are doing the heavy lifting. Here and on the continent, mid-tier cities outperform city regions. Of course there are gains in VFM from scaled-up connectivity, but there are also significant diseconomies: congestion, pollution, labour crowding, the high cost of housing and travel-to-work times. These can affect city region productivity, just as the difficulty of integrating services horizontally—for example, between housing and social services—the added tiers of management and the logistics of travel and communication can all affect the quality of service provision. For example, after the 1974 reorganisation, which I fought as a local councillor, education, social services, highways and planning were removed from urban authorities to their shire county—bigger was better—whereupon they had promptly to be devolved back down again, either as local offices, now without any local accountability, or as agencies, with all the confusion for the public of who was responsible for what.

My own research showed that there was no right size for local government. Every service, from community centres, which are small-size, housing, which is medium-size, and highways, which are large, to secure accommodation for severely disturbed children—the very large—has a different optimum size. The education mafia used to insist that councils had to be for at least 250,000 people to run education, but academies have shown that to be a questionable assumption. With purchasing and partnership arrangements, size matters far less. What really matters, and here I agree with the noble Lord, Lord Heseltine, is identity, distinctiveness, a sense of place and, above all, political will.

The metro cities, with their balanced and self-sustaining local economies, are great but theirs is not the only model. Mid-tier cities do not especially claim self-sufficiency; rather, their strength is in their diversity and their specialisms. Sunderland, Coventry, Doncaster and Derby have strong manufacturing economies; Plymouth, Hull, Portsmouth and Southampton are ports; York, Peterborough and Milton Keynes service their regional economies; Blackpool, Bournemouth, Southend and Bath are visitor economy cities. Many are also knowledge economies, especially Oxford and Cambridge, while Brighton and Norwich support large travel-to-work areas, with thriving digital and creative industries. Their politics are diverse with Conservative, Labour and all possible NOCs in between. Many are not only county but regional centres, often surrounded by highly rural district councils. Most, but not all, are unitary authorities, but they all drive their local economies with a reach far beyond their notional boundaries and with a huge multiplier effect.

I hope that defeating Middlesbrough in the play-off final does not mean that Norwich is in the bad graces of the Secretary of State, who is from Middlesbrough. Norwich, with its universities, theatres, cathedrals, internationally renowned science park and international airport, and as the home of the eastern regions of the BBC and ITV and of Archant newspapers, not surprisingly provides half of Norfolk’s jobs. After all, Norwich’s is the largest district council in the country and larger than at least 12 other unitary authorities. It provides the shopping, culture and recreation for three counties. However, as a district council denied unitary status by Mr Pickles, it has to service the county and lead the region—1 million people look to Norwich—on the not-very-large revenues of a rural district council. We cannot do it.

Essentially, those key cities help to rebalance the national economy by closing the productivity gap between Britain’s regions, as ResPublica has argued, precisely because they are concentrated centres with a clustering of specialist firms, including advanced manufacturing and knowledge-based industries. They offer what the EU calls smart specialisation, which it favours. They can diversify their expertise into further specialised niches and offer the UK greater resilience in the face of economic shocks.

These key cities cannot embrace the false god—the fetish—of size. Most cannot become combined authorities with adjacent rural districts without diluting their focus, flexibility, entrepreneurship, distinctiveness and identity. The cities face issues of density; rural areas, issues of sparsity. We can offer services and enter specific partnerships with our neighbours, which is good, but we cannot be amalgamated and homogenised into a sort of anywhere, thinned-out, national suburbia. If we lose our sense of place or our notion of the community to which we belong, we are all losers and no longer have local government.

If mid-tier cities are to help drive economic growth while also offering much-needed services to the neighbouring authorities—their rural neighbours—then they and we need a tailored version of the finances, powers and resources offered to the core metro cities. So what do we need? Not a series of one-off deals with the Chancellor, but more general devolved powers which we could then draw down and deploy as best suits our communities. For example, instead of having the useless government work programmes—they really are useless—councils need to run education, skills and training in conjunction with schools, local business and local FE colleges. Our chambers of commerce beg us to do it, but we cannot. In that way, the community would own them.

Secondly, we need commissioning powers for a much wider range of public services, working with the private sector and other public agencies. For example, if we were responsible for transport, we could build better transport for travel to work, limit congestion and attract people off private transport with things such as Oyster card offers and the like.

We need to bring all the publicly held land within a city into a single property board to make best use of development sites. On finance, we need five-year funds to plan transport, housing, skills and training. We need more from the business rate to fund investment in local enterprise. We want more local revenues—stamp duty, perhaps VAT and, certainly, additional bands of council tax.

I hope and believe the new Secretary of State understands this agenda. I welcome him and think he is good news. In his words,

“over-centralisation has been such a disaster for urban Britain. Over-mighty and over-extended, central government has, for decades, robbed our cities of their trump card: their ability to do things differently”.

I agree with every word of that. Local government is about that difference, which is why devolution belongs to us all. We will work with him, if he will work with us, to achieve it.