Since Theresa May took office as prime minister of the UK in July there has beena great deal of speculationabout howif at allpowers over tax rates and local spending will be devolved to local authorities, as promised by the countrys former chancellor George Osborne.Osborne presented devolution as a way for local authorities to break free from the shackles of central government and forge their own approaches to economic development.Yet despite his grand visions for a Northern Powerhouse and the Midlands Engine, Osbornes legacy is arguably one of centralisation rather than decentralisation. Thecity dealshe ushered through suffer from serious limitationsand they carry many risks and challenges for local authorities.Now, May is in a powerful positionshe has the opportunity to do away withthe weaker aspects of Osbornes devolution revolutionand come up with progressive city deals that will revive struggling regional economies. The question iswill she take it'Not enough powerSo far, the deals have focused too much on devolving responsibility for delivering national policies, rather than giving local governments the power to make decisions about how best to support their local economies. For instance, councilshave been permittedto raise council tax (which islargely regressive anyway)but only if they intend to spend the proceeds on replenishing squeezed adult social care budgets.Similarly, the government has outlined plans to allow councils toretain all revenue from business ratesraised in their area. But councils will have very little freedom to redesign the tax to suit local purposeseven though this revenue is intended to replace grants from central government over the coming years.The result will inevitably be greater inequality between areas with a highly developed private sector and those looking to build one. And theres no suggestion of extending more borrowing powers to councils with weaker local economies, which could languish without support.Flawed thoughtA generous interpretation is that the deals devolve power over micro-economic policy in lay terms to city regions, while leaving macro-economic policy to the central government.As such, local authorities might be able to take control of things such as vocational training, but not the regulation over or investment in the industries that might create jobs in the future.So far, the devolution agenda has been shaped bythe Treasury view the notion that the budget deficit should always be reduced and that cuts to public spending will not harm economic growth. In practice, this means that deals are being made based onan economic philosophywhich insists that markets will look after themselves, and implores government (at all levels) to simply get out of the way.Local authorities and city regions have little means to shift the terms of the deals, because the Treasuryinsofar as it controls all public expenditurealways holds the strongest hand. Yet city regions desperately need to unshackle themselves from the Treasurys programme of austerity. Over the past six years, local public services have been cut to the bone. Devolving power over depleted budgets to local authorities would do nothing to fix this.Opportunity knocksFor all these flaws, the devolution deals are still a great opportunity. Brexit has underlined the British peoples desire to take back controlanddevolution is a chance to give it to themwhere it matters most: at a local level. But if its to succeed, devolution needs to become a progressive agenda. It must empower the most disadvantaged groups and give every local economy an equal chance to prosper.So far, Maysonly significant announcementhas been to signal a focus on all parts of England, rather than simply the Northern Powerhouse. This isnt saying much: David Cameron and George Osbornes approach already had an England-wide focus, with devolution deals marked out for Cornwall and various part of the Midlands and the east of England.May would be moving backwards if she closed down the possibility of improving central government, at the same time as were reforming the local level. As it stands, the door is wide open for her to reset the devolution agenda in a more progressive direction.The real dealI explore what this new, progressive devolution agenda might look like in a new report The Real Deal co-authored with colleagues at theSheffield Political Economy Research Instituteand theCentre for Local Economic Strategies.All too often, the devolution agenda is framed by the question: what should be devolved'. A progressive approach to devolution would instead ask: where should power reside'. Lets rethink the powers that central government has, rather than simply gobbling up the ones it is willing to give awayand let this be the basis for a new constitutional settlement on what relations between central and local government should look like.For one thing, proper consideration must be given to the crucial role which central government can play in growing regional economies. We need a meaningful industrial strategy something May has promised to deliver. As part of this strategy, the nations resources would be mobilized to support strategically important industries, such as high-value manufacturing. Effective industrial policy cannot managed at a local level; rather, it must be informed by the local, but led by the centre.Its also important to build on the progress which has already been made, to take advantage of the political momentum around devolution. It is possible to go with the grain of existing devolution deals, while broadening out their scope.Councils should be given more powersincluding over taxto shape how local land is used. Veto powers over planning should be supplemented by the ability to shape local housing markets. Local authorities should be empowered to deploy employment support programmes strategically to support local economies, rather than forcing individuals into any old job.Above all, devolution must genuinely bring democracy closer to the people. For the process to succeed over the long term, we need to see much higher levels of citizen engagement in local politics. City deals with strings attached should be suspended while residents are consulted in a meaningful way. Unless individuals, communities and local authorities are empowered by devolution in a meaningful way, the entire process will backfire.Join the conversation about this storyNOW WATCH: This all-black superyacht is the dream of billionaires around the world
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