Future Local Part 2: Creative Destruction

In the second of LGiU's series on the future of local government after the EU referendum, Janet Sillett argues that we need to be much bolder for devolution to really change democratic engagement and we have to get back to first principles to make sure devolution is not just a series of disjointed deals. (Make sure you also read part 1, Sovereignty)

According to Schumpeter, the "gale of creative destruction" describes the "process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one".

Joseph Alois Schumpeter 1883 – 8 January 1950 was an Austrian-born American economist and political scientist. He briefly served as Finance Minister of Austria in 1919. One of the most influential economists of the 20th century, Schumpeter popularized the term "creative destruction" in economics.

This quotation could have been written to describe the result of the EU referendum – though presumably only by Brexit supporters. But relating it to a less cataclysmic political process – can we say that devolution in England as happening now is destroying something in order to make something new?

The principle of subsidiarity holds that social and political issues should be dealt with at the most immediate, or local, level that is consistent with their resolution.

The driver for devolution in England currently is not about this principle at all – and though the principle may be lurking in the minds of some in local government and maybe even some in central government – the process and the objectives are defined by pragmatism not idealism. So we have 'deals', bids, deadlines, conditionality. There is very little about democracy even, or challenging the establishment (of a central state) or the present concepts of sovereignty. Instead we have lists of functions, debates around structures and boundaries, proposals for what the mayor can decide or not. Of course this is all necessary if devolution is to function properly but is it enough? Hardly.

We don’t have ‘devolution by default’ which true subsidiarity would require. Functions and powers are handed down by the centre to a grateful lower authority. And it could be argued devolving functions without real fiscal freedoms could actually undermine the whole process.

We have had little or no serious debate about how devolution fits with established means of measuring how far it enhances decentralisation – is the 1985 European Charter of Local Self-Government now irrelevant?

I would argue the lack of intellectual discussion over devolution – understandable perhaps in the government's keenness to show its commitment to the Northern Powerhouse for example – has diminished the potential for strengthening local democracy. Having a deal based and ad hoc approach does tick some boxes though – it means there isn’t a central blueprint that will be imposed on everyone, however unsuitable (except the government is imposing criteria without evidence to back up why – especially that elected mayors are required to gain maximum powers). But what it also means is that there seems to be no coherent basis for devolution – no strategy or framework. Where is the underlying philosophy that ties together what should be the different strands of decentralisation – the economic, political and social changes that should occur as a result? Where are the challenges to the centre’s idea of sovereignty?

The other danger is that a devolution process which isn’t based on principle could flounder when other events take priority. The referendum result to leave the EU has created massive uncertainty and turmoil in the political universe. Will devolution remain a priority of a new Prime Minister or Chancellor? If devolution becomes more concerned with reorganisation rather than localism it is even less likely to flourish in some areas.

plus ça change, plus c'est la même chose

There is perhaps an assumption that devolving functions means inherently that they will be closer to citizens and there will be stronger engagement with them. To some extent that is true – if the key DWP functions were devolved (which it looks like they won't be) they must be more accountable to citizens and service users than they are now. How could they be less? But greater participation and heightened democracy won’t happen by accident. The devolution process up to now has shown little in the way of democratic engagement in it – largely due to the haste imposed on it by the government. There must also be concern that it isn’t just about devolving power to a more local level but that in some cases power may be pushed upwards from the true local level – how will housing strategy be dealt with in the new large combined authorities? How will residents view another layer of governance – especially those whose main objection to the EU was its remoteness and bureaucratic nature (as they perceived it).

I am not saying here that there should be an overarching prescription for how devolution should be implemented, but there doesn’t even seem to be a discussion of what the limits of devolution should be and why – or if there needs to be any at all, and there is no real debate about guiding principles. Why does the government 'allow’ certain functions to be devolved and not others? Does it matter that there is no shared understanding of the perimeters of devolution or, indeed, if there are none? Or if there are but it is only the centre that knows what they are?

Does the rather prosaic process of devolution that is happening now (though because it is being done through fragmented deals and negotiations it might appear currently more chaotic than prosaic) mean we will end up with something less than we could have done? If there was a clearer theoretical framework which acknowledged the rights of sub national government to maximum local self-determination for example, then we might see more innovation and creativity emerging as a result.

It isn’t as if local government is not capable of inventiveness – councils have been forging new roles since their conception – economic development when there was a huge loss of traditional industries, a champion of equalities when it was denigrated by many in central government and the media, sustainability when it was a fringe concept.

I have been thinking recently of citizen participation in Rwanda. The LGiU is in partnership with the Rwandan local government association (Ralga) and helping to set up a new local government institute there. Decentralisation has a specific role in Rwanda – where following the genocide the state itself pursued decentralisation as the prime way of reforming structures and powers. In Rwanda the initial motivation for decentralisation is painfully clear – rebuilding Rwanda after the 1994 genocide meant starting everything again. The decentralisation plan was, and is, seen as a crucial component of the country's reconstruction. Empowering very local communities to look at solving their own problems, building new structures to enable this to happen and building commitment and trust where a society has been so shockingly damaged. Rwanda’s national decentralisation policy has been driving better governance across the country, and ensuring closer engagement between citizens and the state. There is a direct, vertical line of accountability which starts at the Village level, then moves up to the Cell, the Sector, and finally to the District.

So although the impetus came from the centre the implementation has been through starting at the very local level. Listening to Rwandans from the Rwandan Association of Local Government Authorities, the University of Rwanda, from the senior civil servant in the Local Government Ministry, and the Mayor of the next large district to Kigali, what struck me was the mix of the practical, the theoretical and the visionary. Local government is seen ideally both as a means of strengthening local economies and also increasing local participation, of improving services and implementing anti poverty programmes, but also crucially as a, or even the, key player in ensuring that what happened in 1994 can’t be repeated. Local government in Rwanda is not at all autonomous so of course this isn’t perfect. Where is it perfect?

Decentralisation is a common theme across continents and in rich and poor countries alike. The drivers for decentralisation vary enormously. The impetus can come from sub national government, from cities, for example, wanting greater fiscal autonomy or from smaller nations or major regions seeking independence, or as in Rwanda, from the state itself. The motives behind It takes many forms – in Rwanda it was the genocide, in other countries it may be corruption in the system, or moving from a totalitarian to a democratic regime.

Despite decentralisation being seen as a key means of strengthening democracy and participation (especially in developing countries) studies into decentralisation often focus on the same kinds of outcomes – on decentralisation’s effects on outputs such as economic activity or improved health. There is less emphasis on governance and accountability. In somewhere like Rwanda obviously achieving social and economic gaols is absolutely critical and we certainly discussed local governments role in this and how local government itself can build capacity and skills. But equally, given the context, the effects of reform on the quality of governance and democracy, from the village up to the main cities, is of primary concern.

I think we can learn lessons in the UK from seeing the challenges and opportunities of Rwanda. We talked with the Mayor about the energy felt within all levels of local government to do well (certainly not lacking in the UK but it feels fiercely so in Rwanda?). Decentralisation in England is being steered largely by the concerns around local growth and more effective service delivery – just as it is in Rwanda, even if the background is hardly the same. But we need to remember that decentralisation is more than about efficiency and delivery – it is driven, or should be partly driven, by a vision of better governance – which was essential in Rwanda to stabilise the country and promote cohesion and integration. In England, ironically, we have largely top down devolution, even though the initial impetus stemmed from the work of Greater Manchester authorities. 

credit photo Jennigan

The Centre for Public Scrutiny in their report Cards on the Table suggests that local areas should establish a "governance framework" to help them to clarify fundamental issues around decision-making:

“We think that at its most basic such a framework might cover policy development, decision-making and the monitoring of performance. Crucially, such a framework would also highlight the steps that decision-makers would take to involve and engage the wider public in each of these issues. Bringing the public in to the devolution debate earlier on in the process means that agreeing clear and open systems for engagement and involvement becomes much easier”.

Do we need some kind of 'destructive innovation' so something new and exciting can emerge? 

Well – perhaps not. Councils have to deliver effectively for their communities every day – they can’t just throw everything up in the air and start from scratch. But perhaps we do need an element of risk, of exploration and of creativity. It is extremely hard for local government to think in this way – given the major financial pressures and the (necessary) scrutiny from residents and the media. The uncertainties over Brexit will only confound the caution over creativity. Ironically, though, perhaps Brexit will force local government to think more innovatively – to champion local places as engines of growth and to develop new ways of injecting investment into more deprived communities if structural funds are withdrawn and local economies take a hit.

The devolution process as it is now is not providing the best context – councils are having to bid for powers and functions in a subservient way and keep to some kind of formula imposed from the centre. There is no sense of democratic renewal – with citizens actively engaged forging a new kind of local democracy. Yet this is maybe even more urgent now following the referendum campaign and result – with the country and communities so divided by it – an invigorated local democracy has to be a key part of the solution to bringing us together.

The deal based approach is limited – it doesn't necessarily reshape
democratic engagement and is still controlled from the centre. We need a
narrative around democratic renewal and a set of guiding principles. So as well as genuine fiscal devolution and a much more open approach to devolution across all government departments, perhaps what councils also need is more confidence – to explore new ideas for decentralisation, to take some risks, within a framework which encourages creativity and doesn't stifle it.

'It could be said that efficiency or effectiveness is not the crucial matter; rather, the very fact that something can be done further away from the centre means that it should be done there. On this view, it could be said, to paraphrase an alleged Maoist slogan, "Better a decentralised train that is sometimes a little late than a centralised train that always runs on time."'

Lee Soo, Birkbeck School of Law blog Critical Legal Thinking

Yet, of course, we demand it all – innovation and creativity, efficiency and effectiveness. What I am trying to say here though is that there is bound to be some risk with more radical decentralisation and localism, but what is the greater risk – standing still and hoping it will all be ok or embracing some form of 'creative destruction'. To take on the massive challenges local and sub national government faces – well, really – there isn't much of a choice.