Tuesday, 8 Feb 2022  |  Reading time:  10 mins  | Read online

Regional inequality and centralisation

Can lifting up local be centrally led?

This week’s edition of Global Local looks at addressing regional inequality, considering the role that governance structures have to play in particular.

Can lifting up local be centrally led? The balance of fiscal and decision-making powers between central and local governments can be difficult to get right.

On the one hand, overly centralised governance can lead to oversimplification of policy, missing opportunities to use local knowledge for tailored, effectively targeted interventions with long term impact. Too much bureaucracy and dependence on bidding for project funding may also reduce responsiveness to communities and stretch already limited capacity too thin. Go too far the other way, however, and there is a risk of reinforcing inequalities through differences in funding and skills/capacity between areas (postcode lotteries).

The Covid-19 pandemic dredged up long-standing questions over the effectiveness of highly centralised responses. Germany and South Korea, two of the countries that addressed Covid-19 most swiftly and efficiently, have health services run by local government using primarily central funding (Read about Germany’s health service here). In the UK, the health response was entirely centrally led and implemented – and marred by slow decision making and inefficiency.

This week, the UK published its long-awaited ‘Levelling Up’ White Paper, aiming to address regional inequality through devolution deals. While the overall goals were laudable, in practice the delivery mechanisms and funding measures did not constitute significant progress in devolution, instead asking local authorities to jump through government hoops for funding and independence. See our coverage and analysis here.

Can a series of ‘city deal’ arrangements address regional inequality? Case-by-case funding deals can provide a pathway to investment and provide a starting point for devolution and building trust. However, they typically only benefit larger metropolitan areas and focus mostly on infrastructure and economic development at the expense of broader policy goals. Making local authorities compete with each other for pots of funding from central government might work to ‘level up’ certain areas – but it can stifle collaboration and leave others behind.

So, what’s the solution? While it’s hard for local authorities to change the structure of governance in their country, lobbying for more powers, funding or flexibility is possible. Alternatively, opportunities for levelling up beyond deals with central government might include partnerships and collaboration with other organisations or councils, or alternative ideas such as community wealth building or social procurement. We’ve outlined findings from CIPFA’s paper on best practice in city-led levelling up – skip to the full article here or read on.

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This week's featured content

New Zealand’s Central-Local Relationship: Death by a Thousand Cuts

By Peter McKinlay, LGIU Associate

This briefing looks at the future for local government in New Zealand, primarily territorial local authorities (regional councils are on a different track), as the result of the reforms central government has embarked on or is considering.

Here we assess government’s intentions over time by looking at actions rather than rhetoric. As many countries consider how best to deliver public services, in New Zealand two critical questions remain: does it matter if News Zealand becomes increasingly centralised? If so, who should take ownership of the task of countering centralisation?

LGIU Global Local Highlights

 

Global Local Executive Panel: Local Government Reform – 24 March

Save the date – join LGIU and the Victorian Local Governance Association as we tackle the many-faceted subject of local government reform. We will hear from a panel of local government Chief Execs from the UK, Australia, Ireland and New Zealand, discussing their councils' experience in dealing with reform processes as well as reflecting on certain aspects of sector reform more widely. 
Booking link coming soon – click here to be reminded.

Housing in Ireland and the balance of central and local government powers

The Government’s efforts to address housing problems in Ireland present a confusing picture: extended regulatory controls over the market and a movement of decision making towards the centre. At the same time, the state relies on the private sector and housing associations to deliver social and affordable housing solutions. Within this confusing mix, the relationship between central and local government deserves greater attention. 
Read this briefing here.

Missed last week's Global Local? Click here to read how issues of central vs local control can become life and death matters when it comes to health inequalities.

Case studies: Investing in regional equality

International lessons from four cities

CIPFA’s (Chartered Institute of Public Finance and Accountancy) recent report, Investing in regional equality – lessons from four cities, studies four cities internationally to see how well they're tackling regional inequality.

We've included one case study below, but you can read the blog on our website for a full summary of the key case studies and lessons.

Cleveland, Ohio (USA)

The US federal model devolves fiscal decision-making powers to states to a large extent, and states may further devolve these to cities. As such, Cleveland does have the tools to pursue independent strategies and is primarily funded by local taxes. Challenges in the city include poverty in the core, urban sprawl with population decline, and high racial and income inequality. Despite a wealthy history and the grand architecture of its civic institutions, Cleveland was hit hard by deindustrialisation – although manufacturing remains one of its largest sectors. One of the legacies of this era, the Cleveland Foundation, remains one of the world’s largest community philanthropic foundations, and plays a large role in the city’s regeneration today.

Initiatives include:

  • Greater University Circle Initiative: a 20-30 year strategy where anchor institutions including universities and hospitals collaborate to ensure social procurement and hiring and development activities that benefit local populations.
  • Support for co-operatives: while initially funded by the Cleveland Foundation, these worker-owned, socially conscious businesses have proven financially sustainable in sectors from food production to solar panel installation.
  • Supporting an existing cluster of healthcare and bio-science research to create a ‘health tech corridor’.
  • Supporting manufacturing firms to connect with partners, training and resources to improve jobs.

Has it successfully levelled up? Cleveland’s successful policies illustrate the importance of strategic aims led by community needs, building on local assets, and the benefits of having a grant-making body with political independence to finance long-term projects. However, while success has been made in reducing regional inequality, inequality within the city persists.

Challenges: Retention of local taxes and fragmented political geography across greater Cleveland can impede cohesive decision making across the area. Job growth in geographical clusters can worsen inequality as those with poor connectivity or long commutes may be excluded.

Thanks for reading!

Next week, we'll be looking at local government sexual health services – just in time for Valentine's Day! 

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