Theresa May must give local governments more power to improve the lot of millions of people in the UK, according to a report, which says that Brexit happened partly because many believed the central govenment had abandoned them.
The report by the Sheffield Political Economy Research Institute and the Centre for Local Economic Strategies called for devolution policies that go beyond Osborne's limited deal-making plans, supplying local areas with real investment to change people's fortunes.
"There is little doubt that the Brexit vote was prompted in part by a sense that people felt abandoned by central government," the report said.
"The message from the voters is not simply that the UK parliament must reclaim power from Brussels, but also that we must strive to create a more inclusive state within our country, which genuinely enables people to exercise control within their own communities."
Dr Craig Berry, deputy director of SPERI, said the referendum result should set alarm bells ringing for politicians in Whitehall.
"The referendum result is a wake-up call to urgently reconsider the UK’s governance structures at all levels and we need to establish a central bedrock of decentralisation. Bold new ideas to push the parameters of devolution deals are needed and we want this report to be taken up by mayors and combined authorities, new Ministers and the public," Berry said.
They call for:
1. Employment policies to be set by local authorities
That means abolishing the national Work Programme in favour of policy geared towards people.
This should include partnerships with local businesses, proper training in skills useful to the local community and providing alternatives for those who do not fit one model of training and employment.
2. Housing crisis solutions at a local level
Local government needs the power to kill off right-to-buy if it wants to, or to use the proceeds from selling off public property to build replacement homes.
The Government need to lift the cap on how much local councils can spending on housing, which was put in place to stop councils from contributing to the UK public debt. This would allow councils to borrow money and build more social housing, addressing shortages in the area.
3. Land and property powers for authorities
If local authorities had power over all public land in their jurisdiction, housing could be build when and where it is needed, rather than the land being privately hoarded.
4. Better integrated health care
Manchester has already been given control of its £6 billion healthcare budget, but that has not addressed the £2 billion shortfall to properly meet healthcare needs in the city.
Instead, austerity policies should be stopped and healthcare given proper funding. Devolution should mean that local authorities can redirect health services towards the poorest and most in need, as well as getting local businesses involved in providing services.
5. Climate change to be tackled from the bottom up
The UN estimates that globally up to 90 per cent of climate change adaptation measures are undertaken by local government. Theresa May could facilitate this by allowing local authorities to invest in low carbon schemes, creating new jobs. She could let local government keep receipts from environmental taxes to fund this.
6. Local control over transport
Renationalisation of the railways would create greater accountability over transport management in the regions, improving services for local communities.
7. More beneficial relationships with big employers
Hospitals and airports that employ lots of people locally should look at buying services and goods in the local area. For example, hospitals should use local laundry and food services so that the money goes back into the economy.
8. Local banks
Central government has in recent years introduced several initiatives to increase access to finance for small and medium sized companies, including the British Business Bank, Funding for Lending and the National Loan Guarantee Scheme.
All have failed.
But a system of community banks with a mandate to support local businesses over profits could help build a better environment for businesses to flourish and help regenerate local areas from the bottom up.
9. Stronger local ties with universities
Brexit is going to have a big impact on university funding, as many UK institutions rely on EU funding for research and on international students to boost numbers.
Central government should take this opportunity to give local governments authority over tuition fees and research funding, currently looked after at a national level. The creation of local innovation councils, with university members as stakeholders, could encourage businesses to local areas.
6 ways Britain leaving the EU will affect you
6 ways Britain leaving the EU will affect you
1/6 More expensive foreign holidays
The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more
2/6 No immediate change in immigration status
The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay
3/6 Higher inflation
A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum
4/6 Interest rates might rise
The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output
5/6 Did somebody say recession?
Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018
6/6 And we wouldn’t even get our money back
All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget
10. A new mechanism for distributing National Lottery funding
Instead of the undemocratic national system, funding should be placed by regionally-based boards, who could lobby the Big Lottery body for extra funding and make sure deprived areas get their fair share.
11. Government to breathe new life into democracy
Bregret, the phenomenon of Leave voters who regret their decision, showed that many people feel their voice does not count. Local governments should be given the power to change voting systems, introduce online or weekend voting and amend registration rules to improve engagement and voter turnout.
A full copy of the report is available to read online.Reuse content