North-East Devolution

Steve Reed Excerpts

Thursday 26th November 2015 Westminster Hall

[Mr Steve Reed (Croydon North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Percy.

I start by congratulating my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) on securing this important debate about the devolution deal on offer to the north-east. It is very important that such deals are subject to scrutiny, and one of the problems in the way that they have been put together is that the Government have not appeared to be as keen as they should be on exposing them to a level of scrutiny that can maximise the benefits from the deals that are being negotiated.

That said, devolution is a Labour agenda. It is being led by Labour in local government, and I am pleased that my right hon. Friend said that he was not philosophically opposed to deals of this kind, because this is the most over-centralised country in the western industrial world, and we need to get powers out of Whitehall. Decisions taken as close as possible to the people who are affected by them will be better decisions, because those people have a vital and urgent interest in making those decisions work as well as they can for the local community that they are part of. However, what the Government are offering is not living up to the full expectations or potential of devolution if it was delivered in that way.

In my view, the Government are too cautious and too slow, and offering too little to our great cities and regions, and they are doing that because they are simply afraid to let go. We have heard examples of that from my two colleagues who have spoken in this debate—my right hon. Friend the Member for Newcastle upon Tyne East and my hon. Friend the Member for North Durham (Mr Jones). Those examples show that the Government are either failing to devolve powers that should be devolved or they are trying to devolve responsibilities without providing the resources necessary to deliver them properly, which threatens to undermine the integrity of some of these devolution deals.

The Government have no real commitment to devolution. They are offering some devolution with one hand. However, and I have made this point to the Minister before, his colleagues on the Front Bench and in the Cabinet are busily centralising, doing the polar opposite of what the Minister and the Secretary of State for Communities and Local Government are doing when they talk so eloquently and supportively about devolution.

The Housing and Planning Bill is currently going through Parliament and comes from the same departmental team as the Cities and Local Government Devolution Bill. It contains more than 30 measures that are centralising powers, taking powers away from local communities and concentrating them in the hands of Secretaries of State here in Whitehall. The same ministerial team cannot claim to support devolution while they are also promoting a Bill that actively centralises powers, taking them away from the communities that they claim they are trying to devolve powers to.

The sell-off of social housing comes at a time when millions of people across the country are desperately in need of affordable homes. The Government are forcing those localities, even if they want to provide more social and affordable houses, to sell off social housing, whether or not they want to. That is a centralised diktat to local people; it is not devolution.

[Mr Kevan Jones]

The other thing that is being centrally imposed is the rent cap of 1%. In my own constituency, that has led to two housing associations not only having to cut back their existing programme but having to question deals that they have already entered into for the building of new housing.

[Mr Reed]

I am grateful to my hon. Friend for that intervention, because the truth is that we see the same kind of thing time and time again. The rhetoric says one thing, but the action is the polar opposite. The Government are not really interested in decentralising or devolving anything that they themselves want to control, and they want to control and hold the power for themselves here at the centre.

My hon. Friend referred earlier to post-16 skills, which is another excellent example of where devolution would massively improve the efficiency and effectiveness of those services, but I am afraid that Conservative Ministers just refuse to let go.

The Work programme is another example. It was designed and constructed here in Whitehall without the involvement or engagement of local communities, local councils, or local democratically elected representatives. That is one of the reasons why it is floundering. The Government refuse to let go and things do not work.

I will use free schools as a final example of how the Government are centralising things. They are trying to set up schools from Whitehall, with no understanding of local communities, no involvement of local communities in deciding where the schools should be located, and no accountability to local communities about those schools, because the schools are all being controlled from the centre. That is one of the reasons why we are seeing some free schools fail to perform as well as they could. If the Government would only trust local communities in the way that they say they want to, they would find that that approach worked, and I wish the Minister would sometimes go and talk to his colleagues, and persuade them of the case in the way that he likes to try to persuade us of a commitment to devolution. Actually, we already share that commitment, but his party colleagues have refused again and again to understand and accept it.

My colleagues referred to unfair funding, particularly in the north-east, although it is not the only region that is affected by unfair funding. We heard some shocking examples about how the north-east is being stitched up in terms of funding. It is at a dreadful funding disadvantage relative to other, better-off parts of the country, and my right hon. Friend the Member for Newcastle upon Tyne East referred in particular to the appalling share of infrastructure spend that it receives. There is little point in the Government devolving decision making about infrastructure to a region if they are not going to allow it access to the resources that it needs to make decisions that can actually make a difference to the lives of people in that region.

Perhaps we should not be surprised by that situation, because in recent years under this Government the 10 poorest local authority areas have received cuts 18 times greater than the 10 wealthiest local authority areas. Time and time again the Government hit the poorest areas the hardest. In many of our inner urban areas, we have very poor and very deprived communities; it is not only in inner urban areas that we have such communities, but in many cases communities in inner urban areas are very poor. These are the areas that are in the lead on devolution, but my fear is that if desperately unfair funding settlements continue to be offered to those areas that are taking devolution, we will be setting them up to fail and undermining devolution. The Government are undermining devolution in the way that they are going about it.

My colleagues have also said, and they were absolutely right to do so, that one of the things at the back of the Government’s mind on this issue is that they want to devolve the blame for cuts being made in Whitehall and they think devolution is a cunning ruse to shift the blame on to Labour councils that are doing their best to protect communities from the effects of an unfair set of decisions which, on the whole, are taken in No. 11 Downing Street but, sadly, are peddled by other Ministers in other departmental teams in the Government.

Just yesterday, we heard that there would be a 56% cut in the revenue support grant, and no information was given about any equalisation measures that might be introduced to accompany the localisation of the business rate. Without that information, local areas cannot plan, and we can only fear—given what we have seen during the last six years—that what has already been a desperately unfair approach to sharing out funding around the country will get significantly worse, and significantly less fair. We were promised that we would see the equalisation mechanism at the time of the autumn statement. The autumn statement was made yesterday, but we have not been given any clarity about what that mechanism might be.

My hon. Friend the Member for North Durham also referred to the Government’s decision to make devolution deals in urban areas contingent on the imposition of a Mayor, even if they do not want a Mayor. I have heard the Minister say before that the Government are not imposing Mayors because local areas do not have to accept a Mayor if they do not want the devolution deal, but that is absolutely unfair on areas that would like to take devolution, and would like to go a lot further than the Minister is prepared to go, but do not necessarily want a Mayor as part of that offer. Surely, if we believe in devolution, we should allow areas to choose the governance model that best suits them, and they should be allowed to use that model for themselves; a model should not be imposed by Ministers here in Whitehall.

Also, far too often these devolution deals are made behind closed doors. We heard calls from my colleagues this afternoon, and I have heard them from many Labour MPs and many leaders and members of communities, to be part of these deals as they are being put together. They want to be able to influence them. Businesses, community organisations, public service users—all the people living in the communities that would be affected by devolution deals want to be able to influence and shape them. However, time and time again the Government insist that the deals will be done behind closed doors and then offered to a locality only once they have been signed off by the Government themselves.

In my view, taking decisions in a more open and transparent way makes those decisions better. There is more challenge, more creativity and more sources of information and thinking about how those deals can be made to work better, but the Government appear to be afraid of the people. They need to start to learn to trust people, because devolution will not work if the Government are not prepared to trust the communities that will be affected by devolution when those powers are transferred. Labour councils have an absolute duty to get the best deal that they can from the Government of the day, whoever they are. I believe that Labour councils are doing that, but it will never be the best possible deal so long as we have a Government who, despite their fine words about devolution, from their actions appear to be afraid to let go.

--- Later in debate ---

[James Wharton]

The hon. Gentleman’s comments underline the point that I have just made in response to the intervention from the right hon. Member for Newcastle upon Tyne East. Such things are not delivered by a single individual or even a single policy or a single actor, whether national Government, local government or the private sector. It happens occasionally, but they are often delivered by collaboration and the recognition that we can put aside things on which we disagree, so that we can focus on something of broader benefit that we all want to deliver.

Devolution takes us further along the path. It gives the north-east the opportunity to hold closer to it the powers and levers that will enable it to unlock the economic potential. Devolution does not work by taking powers away from local authorities. I have been keen to stress that message during the progress of the Cities and Local Government Devolution Bill, but I am keen also to stress it with specific regard to the deal that local authorities in the north-east have made with the Government. It is not about powers going up and being taken away from local government, which has happened before, particularly when local authority mayors took powers that were held by local councillors, cabinet members and executive officers at a local level, and they moved upwards to become an elected individual.

Instead, the devolution we are proposing is about taking Government powers and moving them down. It is about empowering local decision makers to make decisions over areas of policy that they know best, because they are making those decisions closer to the communities and economies affected by them.

[Mr Steve Reed]

The hon. Gentleman says that the issue cannot be about taking decision-making powers away from localities and centralising them, but does he recognise that that is precisely what is happening in housing policy? Councils that want to provide more council housing are building it, only to have it sold off by the Government, who force them to do it whether they want to or not. That is the centralisation of decision making that should remain at the local level. It completely contradicts what he has just said.

[James Wharton]

The hon. Gentleman tempts me to shift the debate into the Housing and Planning Bill, which I do not want to do. I know his colleagues are engaged in detailed discussions about that in Committee at the moment. The Government have ambitious—but right—targets and commitments to deliver on housing. We need to ensure that we put in place the structures that enable us to do that. We need to ensure that we build the right houses in the right places for the people who need them. We need to give as many people as possible in our society the chance to own their own home, whether it is a local authority home or a privately built property.

Devolution is about transferring powers held by central Government down to local decision makers. However, within that, there is the opportunity for powers to be transferred up from local authorities, but only by consent. Local authorities might want to pool such powers and functions because they recognise the positives that can be driven by that; the opportunities for closer collaborative working; and the economic benefits that can then flow from such decision making.

No deals are being imposed. No area is compelled to have a devolution settlement. Areas have been invited to bid. We are having discussions with more than 30 of them about what the package might look like. That bespoke approach looks at the reality and recognises that different areas will need different things if they are to achieve what the policy can deliver. It recognises that what Greater Manchester needs will in some areas be different from what Tees Valley needs, which might be different from what the north-east needs, or different from what rural counties such as Cornwall might want and need from a devolution settlement. That is the right approach to ensuring that we get settlements that not only deliver on the commitments and the potential that we know they can unlock, but that stand the test of time and can actually deliver on a local area’s needs.