Jim McMahon, Labour’s shadow minister for local government and devolution, talks to PSE’s David Stevenson about the need to radically rethink how public services are funded and how the country is governed.
A national framework for English devolution should be established, which ensures that the public are part of the conversation, according to Labour’s recently appointed shadow minister for local government and devolution.
Jim McMahon, the Oldham West and Royton MP, told PSE that the devolution deals agreed so far cover a population of approximately 15 million people, “but there are large parts of the country that are just not part of that debate or aren’t in the conversation”.
“Worse still, there are people in the devolution areas that still haven’t been part of the conversation,” he said. “What I worry about is that the public are not part of the conversation.”
McMahon added that the government’s current approach of deals being made in private and “being presented to people with no real effort to really include them” needs to change.
The former leader of Oldham Council argued: “It is very difficult for the councils involved in how they navigate a system where the rules of the game have been pre-determined, where the timescale has been pre-determined and where they collectively agree it is about incremental gains.”
He added that incremental gains are important, because it is better to be making “small progress today rather than waiting 10-20 years for the big bang devolution that may never come”. However, in order to strengthen the process, McMahon has called for the development of a national framework for devolution within England.
“For English local authorities, we should be demanding that we are equal partners in the conversation and we are not an afterthought,” he said. “As far as I can see, there is an emerging framework that has been developed. Not because government has presented it, but because it has been complied together through the different devolution deals that have been agreed so far.”
Asked for his opinion on the need for directly-elected mayors as part of the process, McMahon told PSE that it should be determined locally rather than being imposed by central government.
“We currently have a local government infrastructure in England that is understood, completely democratic and held to account by the community,” he argued. “We should be using that far more than trying to create new political posts and systems.
“If areas come together and choose that the best way they want to govern is by having a directly-elected mayor or a commissioner or directly-elected leader for a combined area, then that should be for local determination.”
He added that it also shouldn’t be for a government to demand more of local areas than it demands of itself. “We don’t have a directly-elected prime minister or chancellor, but for a fraction of their power we are demanding that local areas have to go to the ballot box,” said McMahon. “There is a real danger in 2017, as it is going to be fallow year in many places, that turnout could be low. That then questions the legitimacy of the mayors that have just been elected.
“What I would like to see is a new settlement for English local authorities and communities, where, much in the way we have genuinely devolved some powers to Scotland and Wales, we look at a new settlement for England.”
He explained that rather than councils asking to take on more, there should be a fundamental review of how the country is governed, focusing on who makes decisions, where power lies and how people affect more control over their everyday lives.
If there wasn’t a need to do it after the Scottish Referendum, argued McMahon, there is absolutely a need to do it after the EU Referendum – where the clear message was that people were sick of having things done to them and feeling powerless.
“If we don’t embrace this in a positive way to redefine what the UK Parliament is there to do, to redefine the role of English MPs and to push power down to communities – not only are we going to miss a trick, I also believe we will leave a lot of people behind,” he said.
Business rates and localism
As well as wanting a governance review, McMahon noted that Labour is committed to a review of tax across the country and making sure localism is part of that agenda.
While 100% retention of business rates by local government is a reform that councils have long campaigned for, the shadow minister told PSE “what we need to do is be absolutely clear about what we mean by councils being self-efficient and having fiscal freedoms”.
He stated that it is “not good enough” to simply notionally allocate tax to a local authority if it has no control or input over the amount of money that is collected.
“In many ways it is just a paper exercise,” argued McMahon. “You are notionally attributing it rather than actually giving the freedoms that are needed.
“If you look at a town like Oldham, in our heyday we were a significant wealth contributor to the country. It was the most productive cotton spinning town in the world. But we suffer from legacy issues where governments have failed to invest in a stronger economy going forward for decent, well-paid jobs.
“I think it is wrong. Whatever has gone before doesn’t count; it is where we are now. And many places are going to struggle. That is going to be our starting point. There isn’t a wealth of employment land where you can create the added value that business rates would achieve. We also haven’t yet seen what safeguards will be in place to protect local authorities with regards to significant rates appeals.”
He added that council tax and business rates are a small proportion of the tax that is raised in any town or city, and that there are significant other duties and taxes that aren’t even part of the devolution debate.
“Stamp duty, for instance, would be an obvious way of supporting areas like Greater Manchester and Merseyside and other places,” said McMahon. “If you used stamp duty income to remediate brownfield sites it could kick-start developments in urban areas – but that isn’t currently on the table.”
Liverpool mayor Joe Anderson recently announced that local residents may be asked to vote on whether they would accept a 10% increase in council tax to help maintain the council’s social care services. Responding to this, the shadow minister said: “Council tax, at the moment, is under a great deal of strain. There is a real fear that there will be a public reaction against it. If you are a member of the public, you get your council tax bill every year and think you pay far too much for the services that you receive.
“The reason for that, of course, is because people believe they receive limited services in return for it. Universal services, like parks, lighting and refuse collection, represent a small percentage of council spend. The lion’s share of money goes on adult social care and child safeguarding, but most people don’t receive these services.”
He reflected that the 2% social care precept that was allowed by government “was a sticking plaster on a gaping wound”.
“The money just isn’t there to fund for the inherent need for those services in the community,” explained McMahon. “It wasn’t even, in many areas, enough to cover the rise in national insurance contributions to homecare providers.
“We need to think radically and differently about how public services are funded. Of course, that means as much is generated and retained locally and that is good for democracy and accountability. But we also need to make sure we have a national system of funding that takes account of need.”
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