Steve Richards: The contradictions of Tory localism

Osborne wants to cap local government pay whilst saying he wants to give power away

One of the most fashionable terms in politics is "localism". The word trips off the tongues of political leaders with the same regularity as "modernise" and "change". All three terms are conveniently vague and yet convey a sense of forward-looking radicalism that is often a substitute for clarity. Although still a poor navigator towards detailed policy, "localism" is the most precise of the three terms. At least it points in a specific direction. There is no getting away from it. An advocate must support a transfer of powers from the centre to local bodies.

The Conservatives have made much of this theme under the leadership of David Cameron. In theory they want to make "big government" much smaller and allow "localism" to flourish in various forms. In some ways it is their defining idea. Aides of Cameron and George Osborne enthuse about a variety of local initiatives from the election of mayors to making councils more transparent, not least through the use of the internet. Robust local councils, held to account by voters, are not the party's only route towards "localism", but they are a tangible one. As I wrote last week I am less clear what the other agencies would be to bind together "society" in the face of Cameron's increasingly explicit hostility towards the state.

The problem with localism is that governments like to keep hold of the levers even if in theory they want to let go. As an added twist quite often the case for holding on to a lever or two is compelling. A section in George Osborne's speech to the Conservative conference captured unintentionally the conflicting strands in the current thinking of the Conservative leadership. During one of the most powerful passages the Shadow Chancellor declared in relation to the public sector:

"The excessive salaries at the top have to go. In the current climate, anyone who wishes to pay a public servant more than the Prime Minister will have to put it before the Chancellor. I am not expecting a long queue."

By declaring that he was not anticipating a long queue of affluent figures outside his door Osborne announced in effect a voluntary incomes policy for high earners in the public sector. Harold Wilson tried the occasional voluntary pay policy and it soon became statutory. Similarly I suspect Osborne will have to act if he wants the excessive salaries addressed. There will be few volunteering to halve their salaries or more to earn the same as the Prime Minister.

But the wider significance is in the dynamic he envisaged. He did not say that in these straitened times it is up to local authorities to justify the high pay of their executives to their local electorates. Instead he made clear that they need to satisfy Osborne if he is in the Treasury and if they do not he will act. Such a move would be an act of centralisation, undermining localism, as was Osborne's proposal a year before to freeze council tax.

In my view Osborne's proposal on pay is laudable, but I am an expedient localist and not an evangelical. Should it be up to him to decide whether or not a council should act in specific ways if the Conservatives' big idea is to give power away? Does his pay policy mean the so-called "free schools" the Conservatives plan to introduce will not be free to appoint a dynamic head for half-a-million if they wanted to do so?

I am sure David Cameron agrees fully with Osborne that the Treasury must keep a grip on pay across the board. I am equally certain Osborne agrees wholeheartedly with Cameron's reform agenda in which the centre gives power away. It is very much his agenda too. But in that small, seemingly straightforward passage in Osborne's speech, there is the scope for a thousand rows between the two of them and messy policy outcomes.

Contrary to mythology the raging disputes between Tony Blair and Gordon Brown were not all about personal ambition, although that played a big part. Nor were the tensions entirely the result of ideological differences. Quite a lot of it came down to Blair's desire to give some power away from the centre and Brown's wariness from his Treasury perspective about how this experiment would be paid for and who was keeping track of where the money was being spent. Somehow this was perceived widely as "reform" versus "anti reform" but it was a lot more complicated than that.

When he was Chancellor, Brown told me at the height of the internal battles that he was not against "choice". He joked that he once saw a poster of a candidate in a US election with the slogan "Choose Freedom", as if anyone would stand as a candidate against "freedom". He felt the same about "choice". It was an easy slogan, but he worried about how the surplus of places in schools and hospitals to make choice real would be financed and whether voters would tolerate half-empty wards and classrooms that a surplus implied. He was also concerned about the consequences of giving a hospital the powers to go bust at a point when he was putting up taxes to pay supposedly for improvements in the NHS.

From the comfort of opposition Cameron and Osborne are genuinely united in their contradictory tunes. But it is in the thorny area of how a government gives powers away that they will have disputes, simply because there are no easy answers. Probably they will have disputes with themselves as well as with each other. How does central government give away powers when it is responsible for raising most of the money spent by local providers?

Local government was decimated in the 1980s and has not fully recovered. It would be a big risk especially in the midst of spending cuts to increase their powers when they are unused to exerting them. Before very long there would be examples of reckless waste. When the voluntary sector is asked to do more it will want additional money from government, but will the Treasury be entirely relaxed about handing it out with few strings attached?

As far as the Conservative leadership is concerned the questions are resolved in favour of the parents, the local authorities, the voluntary sector and the rest. But they are resolved in theory and never will be in the complex reality as Osborne demonstrates by summoning overpaid executives from around the land to his door in order to cut their pay.

s.richards@independent.co.uk