Cities and Local Government Devolution Bill [HL]

Lord Heseltine Excerpts

Monday 8th June 2015 Lords Chamber

[Lord Heseltine (Con)]

My Lords, I congratulate my noble friend Lady Williams on the very clear way in which she summarised this fascinating piece of legislation, which is immensely wide in its potential and dependent almost entirely on the detail of offers that other people are yet to make. I am sure that noble Lords will appreciate that we have heard two speeches from opposition parties that were very helpful and supportive of what the Bill intends to do. In my view, we are discussing and implementing in this Bill an historic shift.

I was particularly interested in what the noble Earl, Lord Listowel, had to say. If there is an area of this country’s administration where devolution is necessary, it is in the poorest communities, which are all fragmented into different streams of funding from central government. There is no correlation or process at local level that draws the funding together and asks fundamental questions. If you live in that sort of circumstance—and no one in this noble House does—the one thing that is missing is a ladder of aspiration. There is no machine showing you how you can change the structure. There are lots of very well-meaning people with very substantial sums of money, but there is no central point where we can try to change the assumptions of deprivation that exist on a wide scale and in many different forms. The noble Earl may well be surprised, as this process unfolds, that there is great potential for the poorest communities in particular.

I think that the whole House recognises that today we are involved in an historic shift. We all understand how this process of centralism came about. We were a pre-eminent world power in the 18th century, and the driving force and motive was that of the accumulation of wealth, which created conditions for people that were totally unacceptable. In order to ameliorate the condition of the people, it was necessary for central government increasingly over more than a century to centralise the processes that would create an equality of adequate public service. It was a very benign and necessary part of the evolution of parliamentary democracy.

However, if the intention was benign, the consequences were not quite as happy. First, because it was very largely public sector-driven, the people who had created the wealth in the first place were marginalised, and in the process of decision-making they were largely eliminated over a very long period of time. Secondly, the process of redistributing the money that had to be collected locally to provide the services that were required led to a fragmentation of function in the great spending departments of London. I can remember only one occasion in my entire political career when the subject on the agenda was a city, and it was Liverpool after the riots of 1981. Many discussions took place about housing, policing, education and whatever, but at no meeting I can remember did we sit down and ask what we should be doing about the totality of this vital community called Liverpool, Leeds, Birmingham, Manchester or whatever it may be.

So the functionalism of the central process was extremely fragmenting in the application of opportunity for those areas. Frankly, and in many ways more sadly, it created a culture of deference, because the weight of money flowing back to local people and local communities was so heavy and the systems by which it flowed back were so intrusive that the culture that developed at local level was, “Tell us what to do” and “Show us what you want”. The willingness to challenge the central machine became inbuilt into the assumptions of too many people living in our great cities.

The consequence of all this is that in this country we have devised a system of government unlike any other advanced economy. There is no economy of which I am aware—it may be that other noble Lords have a different experience—which has so concentrated power in its capital city and dictated by circular, edict, specific grant or ring-fence the precise detail in which a commonly devised formula is imposed on the whole of the economy. Noble Lords will realise that this Bill is about creating a better balance. It is not a revolution. Noble Lords who have spoken so far have talked about what has happened in the past, and there are many examples over the years. I know that the noble Lord, Lord Prescott, was very interested in this subject. The Labour Party can claim credit for creating the mayoralty of London.

I heard the noble Lord, Lord Shipley, make the proud claim that it is 40 years since he was first elected a councillor. I have to tell noble Lords that it is 45 years since as a junior Minister I entered the DCLG where I now have the honour to be a special adviser to the Secretary of State. I am glad that nobody has taken the trouble to look at the preposterous and ridiculous things I said about local government—that I created councils, destroyed councils and changed boundaries. All these things I did in the name of better governance, I said at the time. I come before your Lordships’ House today as a sinner that repenteth.

The precedent of the London mayor has been an exciting one, and no one would take it away, but there are many other mayors today. There is a Mayor of Liverpool. Nobody asked for a referendum in Liverpool. I disagree with the noble Lord, Lord Shipley, on this issue. A former Labour MP is now the Mayor of Leicester and is doing, so far as I can see—forgive the party politics—a perfectly acceptable job. Nobody suggested that there should be a referendum in Leicester. Built into the statute is endless provision for new mayors to be created within the existing framework of local government without a referendum, so why should we be preoccupied with this delaying tactic—because we know that that is what it will be?

Of course, the argument is that we did have a referendum, which from the point of view of those of us who believe in mayoral government was a disaster. Why was it a disaster? First, because it was completely controlled by the party machines, which were basically against anything that threatened their existence; and, secondly, because nobody bothered to vote. So on the idea that we are once again going to subject our great cities to a referendum—with perhaps the exception of Manchester, which has opted to take the leading steps towards one—I hope that when we get to Committee the House will come to the view that the opportunity, the prize and the timing are so urgent that we might be able to get on with the job and transfer power back to where we have taken it from over the past 150 years.

As I said, this is not a revolution. The last Government were, I think, extremely constructive. They worked with local enterprise partnerships, city deals, growth deals, the single pot and the northern powerhouse in pushing this agenda with determination and excitement. It is an evolution, not a revolution, but it is an evolution that is moving in a direction that will change the history of our country. There are things that will flow from it. First, there will be a massive potential saving in costs. I do not wish to trespass on the discussions about public expenditure cuts and the reviews that are coming; they would come under any Government, as we all know. But the fact is that with the local authority structure that we have today there is a massive overlay of costs, which will be challenged because the cuts that are coming will increase the pressure. They will not create it—the pressure is already there, and a whole range of dialogues are proceeding as to how local authorities can co-operate, amalgamate or whatever in order to cut not the services but the overhead costs of providing the services. That will be a benefit.

It is a huge change. Billions of pounds a year will be spent not because the functional apparatus of central London so designs but because local people say, “If we can spend it this way, we will get better results”—and that will build on the strength that exists in our communities and enhance the opportunities as local people see them.

It is a fact that it is a competitive process. There is no compulsion on any local authority or combination to come together to advance this cause, but if they do it will be by negotiation with central government, and in negotiating with central government they will want to ask basic questions about the administrative capability of the new structure to carry through the enhanced responsibilities that they will enjoy. That will mean that the new structure that emerges will have every incentive to diversify to encourage choice and to show ways in which it can do better than other competing local groupings—and that will raise standards as the more successful pioneer an enhanced form of service.

The next argument that flows from that is that if you distribute public money by competition, you get gearing. Many Members of this House will have been part of the process of the last 20 or 30 years in which we have shown increasingly that if you use money in a competitive sense—such as the urban development corporations, the City Challenge, the regional growth fund, city deals, the single pot—you get a significant enhancement of what the taxpayer can afford. The ratios are exciting; the most exciting of all, of course, was London Docklands at 10 times what the public had to pay, but the regional growth fund still returns something like five or six times what the taxpayer could afford. So although we talk of cuts—which, legitimately, members of the opposition party will want to do—the reality will be that in employment terms there will be no cuts, because the use of public money in a competitive environment, and the gearing that it will produce, will dwarf in increased employment the jobs lost in the public sector.

So there are many arguments in favour of the distribution of public money to the localities, but it is important to realise that this is not a take-it-or-leave-it, “Here’s the money; tell us how you got on” system. This is a new form of partnership and, whichever party is in power, it is entitled to see its manifesto implemented. Maybe the Government will have been elected to create more housing, or better health or higher education standards; whatever it may be, we are not in any way challenging the right of central government to have its manifesto implemented. What is different is that in the implementation of government policies the talent of the nation is involved in trying to do the best they can to implement that, as suits their own localities.

The devolution process is conducted by negotiation: by voluntary offers from the local communities in whatever form they want to combine, but then by agreement. One of the questions that they will have to answer, and rightly so, is: “What is the administrative structure that will actually carry out this new vision that you have put forward for your town, city, county or rural area?”. It follows that they may actually turn round and say, “Well, what is central government doing about the administrative way in which it deals with us?”. If one were a businessman, which of course as a politician one certainly is not, one would not accept one’s company being run in the way that central government runs its administrative relationships with local communities. So in asking local authorities and local enterprise partnerships how they would reorganise themselves to carry the responsibility now being devolved, it might well be that they will turn around and say to central government, “Will you please do something about reorganising yourselves so that we have a central point of contact with whom we can do business?”.

I hope that the good will expressed by all noble Lords who have spoken today will be carried through in the implementation of the Bill. The country, as we all know, faces an ever more competitive challenge, but the opportunities out there are equally attractive. The Bill is about encouraging people all over the country to help this nation grasp those new opportunities for themselves, their communities and local people.