The recent report by Labour’s local government innovation taskforce articulates an eloquent case for decentralising the delivery of public services in England. Labour’s policy review coordinator, Jon Cruddas, deserves credit in pushing this agenda of radical devolution given the party’s preference historically for centralised and mechanical methods of social reform – a tendency as strong in Tony Blair’s government in the 2000s as it was in Clement Attlee’s in the 1940s. The logic of the taskforce report, as such, is impeccable. The public sector needs to achieve significant savings given the UK’s precarious fiscal position which is likely to prevail into the early 2020s.

The report’s argument is that this is best achieved by rationalising delivery, merging services and encouraging much greater joined-up working between organisations locally in social care, housing, early years services, and so on. The intention is to reconfigure services around ‘people and places’ rather than vertical ‘institutional silos’. That approach cannot be mandated by the centre in Whitehall – instead it has to be driven from the bottom up. The strategy builds on the ‘Total Place’ agenda of the post-1997 Labour government which sought to coordinate budgets more effectively at the local level. But the motivation for change is not a purely financial calculus: there is recognition of the growing appetite among citizens for greater control over how services are organised and delivered, a shift which is explicitly acknowledged in the report.

The issue Labour now has to address is where it really stands on the debate about devolving political and financial power to localities. England is suffering from a major power vacuum after the devolution reforms of the 1990s. Scotland, Wales and Northern Ireland have their own distinctive political institutions to give citizens a voice; England, predominantly, does not. England remains one of the most centralised states in the industrialised world. Local government has been emasculated since the 1980s, when the Thatcher governments imposed unprecedented financial controls on local authorities. Labour came to power in 1997 promising to reverse the wave of centralisation, but preferred a regime of managerial targets and ‘earned autonomy’ in return for more spending on public services. The ‘big society’ mission of the current government has floundered; in some respects, this government has been one of the most centralising ever. A series of half-baked localism initiatives often designed to bypass local councils has coincided with huge financial centralisation.

The question for the next Labour administration is whether it is willing to promote radical political decentralisation, revitalising local government by ‘letting go’ from the centre. Today, local councils are generally responsive and representative political institutions which deserve greater power and discretion, including the ability to set and collect their own taxes. Eighty-five per cent of revenue spent locally in England is raised nationally. But revenue-raising and service delivery should be a matter of local democratic choice and deliberation. Localities ought to be able to decide for themselves whether, for example, to invest greater resources in infrastructure projects, additional public services, enhanced entitlements in areas such as child and elderly care, and so on.

There will always be objections to this approach, not least the threat of widening ‘postcode lotteries’. Of course, these deserve to be thoroughly debated – although they can be addressed through a system of robust national standards, guarantees and democratic safeguards. What cannot be tolerated is the default option of ongoing political centralisation that continues to undermine the vitality of our democracy.

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Patrick Diamond is lecturer in Public Policy at Queen Mary University of London and vice-chair of Policy Network. He tweets @patrickdiamond1