Last year Jon Cruddas talked of Labour’s new ‘statecraft’ where we ‘push power downwards and build a new kind of state which is based on our values of responsibility, reciprocity and relationships’. If the signs are to be believed, this week Labour could finally be on the verge of breaking the mould of conventional politics, not just by devolving more functions of government and financial powers from Whitehall to local government, but by taking the first steps to decentralising them.

If Labour takes on the big banks, ‘big energy’ and ‘big property’ the same principles need to apply to big government, or more specifically, ‘big Whitehall’ departments. At present, as the London Finance Commission shows, England is an extreme outlier on devolution compared with other countries because of our centralised structures and the dominance of Whitehall departments over town halls.

This hasn’t been manifested by historic Tory paternalism or traditional Labour statism alone, the more recent legacy of quangoisation, privatisation and light-touch regulatory regimes is also culpable. The Armitt review on public infrastructure showed that the UK is unique in that following the privatisations of the 1980s and 1990s, around 60 per cent of our key economic infrastructure is held in private hands – Australia comes next at around 30 per cent.

The consequent fragmentation of responsibilities and a blurring of accountabilities has perhaps made Whitehall more resistant to give away its remaining powers – more so with globalisation – but we have ended up with an anachronistic system where power is located very far away from the British citizens just at a time when people, though technology, are experiencing more transparency and access to information than ever before.

With the exception possible exception of public health budgets, the coalition government has conformed to type and been a centralising, rather than a decentralising government. Instead of devolving power downwards, it has effectively decentralised the pain of the cuts while only making a marginal difference to the central/local power split by deconstructing the complex web of government grants. This is a far cry from the early promise of Labour’s total place and community budgets.

Westminster politicians, not local representatives, effectively set council tax where you live these days. The coalition regularly limits councils borrowing for infrastructure by setting higher rates for the public sector works board. House-building is hampered by Treasury rules cooked up in the 1980s. The department for communities and local government now micro-manages so much it issues diktats on how councils can communicate with residents and the language councils are allowed to use. In education, Gove’s approach has established a new network of nationally-run free schools even further away from local councils than before. ‘Localism’ as a meaningful concept is dead:  the Tories killed it.

If the machinery of Whitehall isn’t still designed for empire, then its modus operadi certainly seem lodged firmly in pre-digital setting and more often than not resistant to reform. Vested interests of government departments add cost to the state and because of their competing priorities and disjointed work often impede delivery of services on the ground, especially with welfare, education and health. Future functions of central government should focus on properly repairing some of the harms of privatisation to make our utilities much more flexible and responsive to the consumer.

It is local government and not Whitehall which has forged a reputation as the most efficient part of government, transparent in what it spends, certainly procuring IT and other services better than SW1 mandarins have proven. Local government may often be parochial, that’s its job, but it is brimming with ideas to working across public services and pool resources to fund vital infrastructure improvements and meet the needs of local people.

In place of weak Coalition ‘localism’ One Nation Labour should champion decentralisation of power from Whitehall, using the opportunity that the Scottish independence debate is offering to carve out a radical new governance settlement much closer to the people.