Where will localism lead us in 2015?

The telling moment for me as far as localism was concerned for 2014 was the dog’s breakfast the Home Office made of finding someone to lead the historic abuse inquiry who did not know some of the various people entangled in its many tentacles.

After the second resignation, I listened to an edition of the Today programme including the historian Juliet Gardiner, talking about the establishment.  It is difficult to find members of this august body who don’t move in interlocking circles, she said.

What they really need, as she put it, is a solicitor from Redditch.

This explains something about way that the UK has always been over-centralised.  It is because the establishment tends to live in London, with perhaps the occasional weekend retreat in the home counties and perhaps a summer house in Italy.

The devolution of power to Scotland and Wales has tackled that problem to some extent.  There is now a Scottish and Welsh establishment in a way that there wasn’t before.  But other countries have a class of people in each city who can stand alongside anyone in the nation in their stature, intelligence and objectivity.

In the UK, all of that talent is either sucked out of the regions or it is quietly ignored.  It is wasted.

That is the extent of the UK problem.  But really 2014 was an extraordinary year as far as solving it is concerned.

The coalition has wrestled with the problem of localism, and in three ways.

 Have the cities actually made much of a case for

taking back power, beyond somehow that they deserve it?

First, they did so rhetorically, via a concept without intellectual roots, which they called ‘the big society’.  It was a useful idea, but because the roots never developed, it withered away.

Second, they did so via legislation, with the localism act, but the eventual legislation – while it provided some important breakthroughs – did not really release the imagination and talent of communities to take more control.

Third, they did so administratively.  The national planning framework turned out to mean precisely the reverse of what was originally intended, but the Lib Dem innovation – city deals – have tried to bypass the basic problem and have laid the basis, despite great difficulty and huge effort to force these innovations through Whitehall, for more local power.

It is too early to say what will happen next, but it does seem as though the aftermath of the Scottish referendum is a gamechanger.  If Scotland is to be given considerably more decision-making power, then the legitimate demands of the cities – or groups of cities – are going to be heard as well.

Manchester, then Sheffield, have negotiated themselves extensions of their local room for manoeuvre.

Phillip Blond’s Devo-Manc report set out some political thinking.  Jim O’Neill’s City Growth Commission has done the economic spadework, and convinced the chancellor – even if he hasn’t entirely convinced the Treasury – that the UK is wasting the economic potential of the cities outside London.

All the political parties are in favour of major devolution.  The stage is set.  The year 2015 looms.  What is going to happen?

Well, who knows.  But I think we can discern something through the mist and rain.

First, there are clearly going to be political divisions over localism which have not really emerged before.  I don’t mean the vexed question of ‘English votes for English laws’ – the Ukip issue – which is difficult enough to solve.

No, the real issue is going to be about redistribution.  If Manchester makes a successful case for keeping their income tax receipts, why not give the same to London – and that drains them away from other parts of the country.

I suspect that the Labour party will find itself drifting against some kinds of localism, rather as the Democrats in the USA back the federal government against the power of the states.

Second, there is the problem of what to do with this local power.  Have the cities actually made much of a case for taking back power, beyond somehow that they deserve it?  What will they actually do with it?  Why?

The truth is that local authorities have been drained of their economists and their entrepreneurs – and they are going to need some badly.

Third, there is the bigger issue of the kind of institutions that local economic power requires.  Whatever they are, they don’t exist – we certainly need to reinvent local financial institutions.  Those which send all decisions to risk software at regional office are not going to be any use in the new dispensation.

So this is what I would like to see in 2015:

1. At least one city to run with a radical economic agenda, based on something more ambitious than skills and shopping centres.

2. A new generation of local banks, capable of looking after local deposits of lending money to small business, paid for and mentored by the big banks.

3. A new kind of local institution, based on the enterprise mentoring scheme BizFizz, that can enormously support for local entrepreneurs.

4. Major anti-trust legislation to break up the monopolies that now determine so much of our lives.

5. Well, as the British ambassador to Washington once said in answer to a similar question, perhaps a very small box of chocolates…