Devolution is the buzzword of the day in the Conservative party and also in the Labour ranks (though some leadership contenders were late converters), but last week we saw just how shallow its meaning really is.

Several months ago, 93 borough, city and county councils of all political colours representing millions of people spanning the breadth of the country made a bid to the government under the Sustainable Communities Act to secure the power to reduce the maximum stake on fixed-odds betting terminals to £2 per ‘spin’ as opposed to the current maximum of £100.

The Sustainable Communities Act was hailed as revolutionary by the Tories when it was introduced because it gives councils the ability to request new powers from central government and the government has a duty to consider and respond to the request. The government duly considered it and decided it agrees with its friends in the betting industry, ignoring the wishes of local people and their elected representatives. Despite grand gestures and big promises, the Tories are not willing to put their power where their mouth is on devolution.

It has amazed me for quite some time just how narrow the debate on devolution has become. There is no talk in any party of giving councils controls over the levers of power in order to change the rules, only about how much local government should be responsible for delivering services and programmes largely or completely decided by national government. Local government has been so emasculated in recent decades that we are not even demanding more.

I was in New York recently where I met a member of the city council. Council members in New York (and every American city) are lawmakers. They do not just deliver services, they decide local laws on a range of issues devolved from state government. Education and schools, local taxation and fines, planning, housing, local welfare programmes, highways and transport, consumer affairs, crime, policing and prisons – all areas under the purview of the New York City legislature. Many more issues are decided at the state level below the national federal government.

Contrast this with Greater Manchester – where we are set to have the biggest package of devolution of any city region in the United Kingdom, yet I am powerless to take any action to tackle the hoards of hawkers, preachers and con artists clogging up the streets of Manchester city centre without national legislation.

We are taking steps in the right direction, but Whitehall just does not want to let go. The process to refranchise the Northern and TransPennine rail services was supposed to be determined locally, but ended up as a partnership with the Department for Transport after ministers and civil servants refused to take their hands off the wheel. Ministers are promising a similar partnership to deliver the local work programme, but will not let councils run it. We still do not have control over local taxes and, although there has been talk of fiscal autonomy, there is a long way to go to reach that goal.

Local councillors need to raise the stakes if we want to achieve really meaningful devolution at the local and regional level in the UK. We also need to accept that we have to change. In Greater Manchester, we accepted the need to have a directly elected mayor to go with our new responsibilities. With greater power must come greater accountability. Unfortunately some councils have refused to accept this and have been given lesser deals as a result.

But change is not just needed at the top. The quality of councillors has to improve and we need to reform local government. The low pay, unsociable hours and generally negative attitude of the electorate puts many good people off standing as councillors. Arcane selection procedures and branches run by small cabals of the old guard stop a few who are more determined. Those who make it through are left demoralised by the reality of the job, the lack of pastoral support and the absence of any ongoing training and development save for what the LGA can provide with scarce resources. We urgently need to look at the incentives and support available to encourage community and business leaders to come forward as elected representatives and strengthen local democracy.

This all costs money, but it does not have to cost more than the current system. Not if we look at the numbers. I have many excellent colleagues in Manchester, but we do not need 96 people to run the city. New York City has 14 times the population of Manchester and manages with 51 council members. The Electoral Commission should launch a review of councillor numbers and see whether we have the right levels. Perhaps we could reduce the number by a third and reinvest the money this will save into better training and pay.

We should go beyond councillor numbers in reforming local government. I have yet to meet anyone with anything other than a self-interested argument for why we need two tiers of authority. The public do not understand the difference and councils will often play off against each other, blaming one for problems and taking credit for anything positive. Whether we abolish districts and strengthen county councils or abolish county councils and look at merging some districts to create suitably sized unitary authorities which could come together at a county level to create powerful combined authorities is a question for someone else to answer. But at a time when local authority budgets are being squeezed to the point of no return, some councils will have no choice but to consider this anyway or they will go to the wall. It would be better as part of a considered review in consultation with councils and residents.

So let’s ask for real and meaningful devolution, but let’s also show that we are willing to earn it by making local government and elected representatives fit for purpose.

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Kevin Peel is a councillor on Manchester city council. He tweets @KevPeel

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