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Let’s turn Brexit’s poison into medicine

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A guest briefing from Localis chief executive Jonathan Werran on his organisation’s major new report urging a reset on the Brexit era.

Those fortunate to have been invited to participate in the Japan Local Government Centre study tours always note, upon return, that they have a different, and in many cases better, way of doing things there.

A system of national, prefectural and local government characterised by mutual respect and acknowledgment of joint working for the sake of higher and shared goals is what characterises the Japanese system.

As an example of how the Japanese constitution maintains respectful continuity, witness how recently the well-choreographed abdication of the emperor Akhito ushered in the smooth transition from his Heisei era to the new Reiwa era of his eldest son Naruhito. However, in past times of crisis, such as widespread famine, natural disasters such as earthquakes or the prospect of foreign invasion, these eras can be drawn to a hurried close and swiftly renamed in the hope that good fortune will follow.

If only we had the ability to strike an immediate line under the Brexit era. But we don’t. So instead Localis’s new report Hitting Reset – a case for local leadership is, we hope, a bold and timely call for pragmatic localism at a time of national crisis. A possible route for local prosperity leading ultimately to national renewal.

Admittedly we are launching it at a glaringly inauspicious time for national and local government – sandwiched as it is between the high drama of the recent local polls and a week before the unwanted and divisive elections to the European Parliament.

Hitting Reset lays out a roadmap to a decentralised UK, where democratically-elected local leaders have the power to govern, and the capacity of councils to bring together private and public actors to achieve local development is maximised.

In our report we have re-stated and updated the case for decentralisation, leading to two vital follow-on questions.

Chiefly, what reforms can make the strong local leadership of a cohesive state, vital for economic development, possible?

In firstly making the decentralisation case, we see leaving the European Investment Bank provides an opportunity to develop a system that moves us away from very targeted initiatives, where investment centres on the improvement of transport links to London, or a never-ending succession of bidding for cash pots.

We advocate a British replacement, which has the potential to be far more valuable than a Shared Prosperity Fund that simply swaps Brussels for Whitehall in a ‘handouts’ system. After Brexit, however, the opportunity to reform should not be missed. To move forwards, a British Investment Bank should be established, with local enterprise partnerships able to formulate applications for major infrastructure loans alongside local government.

Firstly, to achieve the kind of development and diversification needed for national renewal and local economic rebalancing, places need leadership. Central to the ability to govern effectively is the ability to tax and spend, sorely lacking in local government, which has increasingly become a mere delivery arm for the central state.

Democratically-elected local leaders need the power to tax and spend, as well as the security to strategise long-term. Locking local government finance settlements into broader, 10-year cycles would account for the latter, with a transition towards fiscal devolution achieving the former. This would amount to the devolution of not only roles but also responsibilities, moving local government away from delivery and towards governance.

Secondly, we must extend local civic capacity. Local government has the potential to be a vital convener of civil society – bringing together public and private actors to coordinate action and promote local goals. We look at reforms necessary to bring democratic local leadership to the fore in health and social care, welfare and skills.

The report shows that new bureaucracy is not needed, merely better alignment of what is already there – the clinical commissioning group and the local authority in health; the Jobcentre Plus, Citizens Advice Bureau and local authority in welfare; and the Skills Advisory Panel in skills training. Lining up and integrating these functions under local leadership is crucial to achieving sustainable economic development.

This time there is more than a simple big prize at stake. If we can reconfigure our political economy to give our localities the resources, powers and funding required to achieve their full potential, the last three years of Brexit water torture may not have been in vain.

In their wisdom the Japanese have a phrase for this too, hendoku iyaku – which translates as “turning poison into medicine”. Isn’t it time we tried a similar remedy?

Jonathan Werran, chief executive, Localis

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