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Can we tackle poverty locally?

SMF-Nida-Broughton-Chief-EconomistEnglish local areas are getting more powers from central government. Under the government’s plans for a ‘devolution revolution’, local leaders are to be given ‘radical new powers to take responsibility for driving local growth’.

Much of the rationale for devolution has been framed around control and local economic growth. In contrast, there has been little specific discussion about what increasing devolution means for policies to tackle poverty. The Social Market Foundation’s new paper, Devolution and Poverty, supported by the Barrow Cadbury Trust, examines whether and how we can tackle poverty locally, building on two roundtables events with local leaders and policymakers.

There are a number of reasons why giving local areas more control could help tackle poverty. Unlike central government, local government is likely to have much more detailed knowledge and understanding of the causes and consequences of poverty in their areas. That means that they are often better placed to know where money should be best spent, and how to coordinate local services – such as skills, employment and childcare support – to help those in need.

‘Government needs to explicitly set out where responsibilities

for tackling poverty lie when it devolves powers’

Localising power provides huge opportunities to try out new ways of delivering services to people. And finally, there could well be a political advantage too, in that building a political narrative around the case for tackling poverty may be easier at local, rather than national, level.

However, while there are advantages to taking a local approach to tackling poverty, this does not mean that it is always easier or more effective to do so at local rather than national level. Some local areas simply do not have the same capacity to generate prosperity as others – at least in the short to medium term. Some areas have an existing stock of high quality infrastructure, jobs and skills, whereas others will not. Often these trends are highly entrenched and take a long time to shift. That also means that some types of devolution – such as allowing local areas to keep more of the tax revenues they generate – can leave poorer areas worse off, unless measures are in place to limit those losses.

Further, much of the devolution of powers so far has been focussed on encouraging local leaders to take measures to boost local economic growth. But even if they are capable of doing so, a focus on growth will not automatically result in policies that effectively tackle poverty.

Previous studies have found that it is not uncommon for poverty rates to either increase or stay static even in cities that are seeing economic growth, with London a prime example. A key worry in our roundtable events was that often local residents did not have the skills and experience to make the most of new jobs that were being created.

Finally, if local policy is to be driven by local needs, strong local democracy and accountability is vital. Local policymakers at our roundtable events worried that there was insufficient awareness of and involvement in the negotiation of devolution deals among local people.

In our paper, we argue that government should think carefully about the pros and cons of devolution, and whether localisation of powers is always the best way to achieve particular goals. Government needs to explicitly set out where responsibilities for tackling poverty lie when it devolves powers: we examined nine devolution deals and found no explicit references to tackling poverty in them.

It should focus on devolving powers for types of policy where local knowledge can be especially helpful – in the commissioning of employment services, for example. But it should be careful in how it devolves powers over tax and welfare, where the dangers of some areas falling further behind are strongest.

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