Introduction

From the UK Government's flagship levelling-up pledges, to Labour's commitment to spread power and authority across the country, there is a renewed political focus on the places where we live. 

A glance at the data makes it easy to see why. In the UK, where we live has a significant impact on our standard of living and life chances. The UK is one of the most inter-regionally unequal countries in the industrialised world (when looking at the gap in productivity per hour between the best- and the worst-performing regions). While productivity (famously) isn’t everything, the consensus is that, in the long run, productivity growth matters deeply for improving living standards. 

In the UK, persistent differences between regions, nations and even neighbourhoods remain across many of the dimensions one might use to measure living standards, such as income, economic opportunity and life expectancy.

At the same time, localised inequality exists throughout the UK. Pockets of extreme deprivation – places that are often deemed left behind – exist even in the richest regions and local authority areas, and very prosperous areas can be next to the most deprived. 

On the distribution of power, too, the UK remains an outlier. In one sense, the UK is highly devolved. It has three governments in Belfast, Cardiff and Edinburgh, all of which hold varying degrees of legislative power for their respective countries. The UK government at Westminster has legislative competence over reserved, pan-UK issues as well as devolved issues in England. Yet, when we look at the spread of regional power across England, it is one of the world’s most centralised advanced democracies.

This is slowly changing. There is broad cross-party political consensus on the need for greater local devolution in England. Local devolution, at its core, is about giving greater power to local institutions and people to solve the economic challenges faced in those places. But progress has been limited, and there remains little clarity or consensus on how to best deliver devolution at scale.

Maybe unsurprisingly then, confidence in our political institutions across the whole of the UK is low, and engagement in local politics is weak. Although some of these trends follow the international norm, they also tell us that an important dashboard indicator on the health of the UK’s democracy is flashing orange.  

The threads of power and place run through all seven of the policy domains that we are exploring as part of UK 2040 Options. Understanding how power and place interact, and how they impact people and communities, is critical to understanding how we might make the UK a fairer place to live. 

To understand the challenges and the choices that will face both citizens and governments through to 2040, we have done two things. First, we partnered with Demos to explore the fundamentals of power and place, particularly focusing on English regional devolution. Then, through a roundtable with experts, individual interviews and desk research, we explored some of the choices that will face the next government.  

What we learnt

What powers, where and at what level?

The starting point for the current debate on power and place centres around the question of what powers should be held where, and at what level. And there is no one dominant answer – any next government will need to weave a path between a myriad of views. 

Research by Demos as part of UK 2040 Options has highlighted that there are broadly three schools of thought on how best to structure the UK’s political system so that more people are empowered to have more of a say in decisions that impact their lives. Demos has identified these as three ‘tribes’, which are constructs that illustrate the difference in thinking across where the locus of power should sit, and how power should be distributed. The three tribes – the mayoralists, federalists and communitarians – are not mutually exclusive viewpoints.  

Federalists

• Want to see power distributed through major constitutional reform
• Believe power should sit with regional government, mayors and local authorities
• Want to give control over public services, and devolve fiscal powers, to local and regional governments

Communitarians

• See power and place through the prism of local, and often hyperlocal, social and civic institutions
• Believe power should sit with citizens and community groups
• Less focussed on constitutional reform

Mayoralists

• Focussed on the transfer of power from Westminster to political leadership at the local level
• Believe power should sit with a single champion, whether a mayor or combined authority
• Less focussed on constitutional reform

Clarion calls to formalise the constitution, give greater power to communities or devolve more power, faster, to mayors have been around for decades and show no sign of abating. So, the experts we spoke to agreed that the tribes were a useful frame to highlight the complexity of the choices.

Aligning with Demos’ research, not all people we spoke to saw themselves as fitting neatly into one camp, but most agreed that the mayoral tribe represents views that are currently in the ascendancy. 

As one expert explained, the mayoral camp could be regarded as a wedge that may be able to drive change in other parts of the British political system, in a way that might achieve constitutional reform and also bring power to local communities – two outcomes that they considered critical to the long-term success of England’s devolved political system. 

Experts we spoke to also said there were broadly two structural views on where power should be held. The first is the statists: advocates of a political system in which the state has substantial centralised control over social and economic affairs (the British tradition), and the communitarians: those who favour a bottom-up approach to power. 

But again our experts told us that these two perspectives should not be seen as binary choices and that pitting them against one another is unhelpful to progress. Instead they advocated that any focus for the next Westminster government should be on closing the gap that currently exists between the two groups, and thus between formal political institutions and communities – and how to bridge it meaningfully. This could either involve stronger political institutions at community level, or greater representation for community groups within existing political institutions, or both. 

Despite the varied views tabled, many agreed that it was time that England had meaningful centres of democratic power in places (cities, towns, counties) outside of London. A key choice for any future Westminster government will be how to determine a path forward that might establish them. 

Get comfortable with mess? There’s a non-linear path to completing the devolution map 

The devolution agenda is here to stay. A key choice for the next Westminster government will be how much effort and pace it applies to completing the devolution map and how much further ‘messiness’ in governance arrangements it is willing to tolerate as it does so. 

The Institute for Government’s map of existing and proposed devolution in England, as of November 2023

Power is slowly being shifted from London in England, but progress to date is slow and patchy. The main mechanism that transfers power out of the central Government is the devolution deal: a negotiated settlement between Whitehall and local leaders that devolves a specified set of powers in return for agreed governance and structural reforms at the local level. 

Since 2014, when the devolution agenda began in earnest with the Greater Manchester deal, English devolution has gradually extended. Soon, 15 million people outside London will be living under a mayor, most of them in northern England. 49% of England’s economic output is already under mayoral devolution. 

Comprehensive reform remains unlikely to be delivered by the Westminster Government’s target of 2030. As one expert put it, all “the low-hanging fruit has been picked”. Agreeing the next batch of deals is going to be a much more challenging proposition for any next government. As the Resolution Foundation sets out, the “lukewarm reaction to the latest ‘County Deals’” demonstrates some of the difficulties that lie ahead, as many of the remaining local authorities without a devolution deal appear disinterested in the proposals tabled. At the same time, the bespoke deals that have been drafted for the metro mayors have been slow to conclude, and have muddled responsibilities between them. Demos’ research has found that even in areas such as Tees Valley (which is often seen as the “poster child” of devolution), the public do not understand the role of the mayor, nor their responsibilities. This is important -– we heard from experts that when people don’t understand what leader or institution is responsible for outcomes, accountability mechanisms can begin to break down.

Experts therefore had a range of views on what course any next Westminster government should chart to drive progress. There exists a tension between, as one expert described, “letting a thousand flowers bloom” – agreeing a wide range of different governance arrangements or policy remits for different localities at the local level – or imposing a more systematic approach to devolution from the centre, which may mean slower progress. One expert pushed for a sensible middle ground, as some places have greater institutional capacity and appetite for deals to move faster — or “letting five or six flowers bloom” by agreeing on a range of options. Others expressed caution about ‘tidy’ solutions, as they were more likely to be top down and therefore less representative of communities. 

But many pushed for pace. It could be another decade before England is covered by devolved structures. Getting the governance arrangements right is important, but lack of progress has its own cost, contributing to complexities in government having legitimacy in its processes, and the distribution of its power. 

Here too, our experts had suggestions, including setting out a roadmap based on an expanded framework or menu of options for devolution deals, which would also include obliging Whitehall to respond to bids for power from localities. They suggested that this menu of options could be based on a transparent set of principles relating to capacity, local political support for the deal, the proposed governance and leadership model and the vision for how powers will be used. They also suggested negotiating with local leaders and effectively engaging the public at the same time, highlighting that the geography can be settled (a current hurdle for agreeing a deal) even if negotiations are still ongoing about political structures, powers, and budgets.  

How local can you go? A focus on neighbourhoods

Despite there being broad political agreement that more devolution in England is desirable, there is no real consensus on what the long-term goal of devolution should be. Who or what is devolution for?  

We know broadly what we want local devolution to help us to tackle: inequalities between regions and nations in the UK, as well as the even greater disparities that can exist within regions and neighbourhoods. We know regional service delivery can be patchy, and money allocated at the local authority level might not reach the most deprived neighbourhoods, which are often on the periphery of larger cities and towns. Services can also retreat from these places as communities become perceived as too hard to serve. 

As one expert put it, there is a tangible difference between “neighbourhoods where stuff is happening and neighbourhoods where it isn’t”. This deprivation, isolation and inequality is increasing polarisation and reducing social cohesion. It also means that the skills and talents of communities in these areas are increasingly under-utilised.

Some of the experts we spoke to championed the devolution of more power to the hyperlocal level to help tackle these challenges head on. We know that there is an increasing desire for more community power in the UK. This involves putting money, resources and agency directly into the hands of communities. Proponents of this view say it gives deprived communities a sense of efficacy, which improves wellbeing, as well as increases a communities’ capacity to engage with the state, critical to building back trust in government and public services. 

But there are a number of practical complexities in devolving more power to communities. This includes what institution the centre would be devolving power to, and how uniform this needs to be. We heard that without formal institutions, policy churn can mean that community devolution evolves only into short-term funding pots from the centre. So, some experts were pro a standardised approach: one institution in each hyperlocal area that power could be devolved to. Existing formal institutions at the hyperlocal level – parish councils or neighbourhood forums, for example – might fit the bill.

However, these institutions tend not to exist in urban areas (and are almost entirely absent from cities), or in many of the most deprived places, which can often lack the capacity to establish them. They also often have a narrow focus on improving the physical environment – tackling street lighting and maintaining community spaces – rather than the socio-economic issues that are so often at the forefront of this conversation. 

Others disagreed about the need for formal institutions, arguing that, in their experience, hyperlocalism works best when it is focused on outcomes rather than institutional form. The Big Local programme is a good example: local residents self-organise, determine priorities, undertake in-depth consultation and research, and develop a plan of action which has broad community support, before they have access to a budget to improve their area.

Our experts had further suggestions about how the centre could strengthen hyperlocalism. As Demos’ work for UK 2040 Options highlights, the Big Local programme has had a positive impact on the communities in which it has operated, and remains a model that policymakers could seek to replicate. Experts also raised creating and endowing a national, non-governmental institution that invests in and supports hyperlocal institutions to take on more formal powers (eg, running parts of public services, managing public assets or spaces), as an option that would show commitment to supporting hyperlocal non-formal layers of social infrastructure.  

Stepping back, experts also emphasised that the existence of community level institutions should be viewed as valuable in their own right, not just in the context of debates on devolution or service delivery. Fostering stronger relationships, within families, communities and across society, is seen by many as critical to delivering a better future – particularly in the face of growing constraints on state-originated power.  

Capacity, capability but with accountability: bolstering local authorities

Through this work we heard stories of highly successful community-designed programmes across a wide range of policy areas: smoking cessation, food insecurity, childcare, homelessness. But it was acknowledged that the hyperlocal cannot (and should not) do it all. 

Continuing to build the capability and capacity of local government is critical. In the last two decades the number of responsibilities on which local councils must deliver has changed. Central government is also strengthening and increasing the responsibility of local governments to decide policies for their communities in areas such as public health. 

But as our work has surfaced, the country faces tough challenges in the decades ahead, particularly as the UK’s demography changes; becoming older and less well, changing demand for schools and increasing demand for social care. 

Local authorities will bear the brunt of some of these changes, affecting their ability to deliver high-quality services across their myriad responsibilities and shaping the outcomes of their communities and areas accordingly.

Meanwhile, repeated budget cuts to local government have resulted in the attrition of staff, knowledge and institutional capacity at the local level (and it has also resulted in many local authorities having to sell key community infrastructure and assets to balance their books). This is causing serious risks to governance and the quality of decision-making at the local level. Highly visible bankruptcies of some of England’s largest city councils, the likelihood of more in the future, and repeated governance failures – such as the fact that only 1% of local authorities published audited accounts on time – all contribute to a centre that is hesitant to devolve too much, too soon, without appropriate accountability mechanisms in place. This has become the ultimate catch-22: the centre doesn’t trust local authorities because they lack capacity, but local authorities lack capacity because the centre doesn’t trust them with the powers or budget they need to build that capacity. 

But central government commitment to increasing the capacity and capability of local authorities is a choice and one that should be a priority for any next Westminster government that is committed to the devolution agenda. While this could mean increasing local authority budgets, there are additional options here – not all capacity needs to be held at the local level. Building capacity can include seconding government staff into local authorities to help build skill sets that might be lacking, such as in data analytics. It can also include building pooled capacity at the centre which is loaned to local authorities when needed – a more flexible approach to sharing skills and expertise. Cross-regional learning should be prioritised – we heard that much of what happens now is done on an ad-hoc basis. And should the government look to devolve greater fiscal responsibility to the local level in the future, as many are advocating for, increased capability needs to run in parallel with increased responsibility. 

Responsibility needs to sit alongside accountability. This can take many forms, such as requiring mayors to appear in front of quarterly central government select committees (as has recently been announced). Local media also needs to continue to play a role. Outside of London, local media is the main source of journalistic scrutiny for mayors and council leaders; scrutiny that becomes increasingly important as these leaders acquire more resources and power. But local media is in trouble: from 2005-22 there was a net loss of at least 271 local newspaper titles, and recent job cuts at the BBC focussed heavily (and controversially) on local radio stations. The Digital, Culture, Media and Sport Select Committee has been clear that letting local media languish is a risk to both the UK’s democracy and its local identities. 

Our experts proposed investing in local media, potentially through grants to local press and the BBC, as a no-brainer. Experts also raised aligning BBC geographies with political geographies as a sensible step, suggesting it would better embed place-based identity into local media and enable more effective scrutiny of local and combined authorities. 

Enhanced capacity and capability alongside sufficient scrutiny will enable greater transparency and it may help us to head off future local government crises. 

Doing democracy better

Trust in government is critical. But while the trust British people have in their neighbours and the people around them is experiencing a quiet boom, this has not been reflected in our institutions and political systems: public confidence and engagement in our political systems is low.

Research is clear that material circumstance, alongside a sense of powerlessness, is contributing to this lack of trust. And we heard from experts that many communities feel that the government, and the public sector more generally, has neglected them. Many feel that policy is not making a difference for them, their families or their communities. This creates a crisis of legitimacy and places us in a democratic deficit: and we need our government to have a strong social licence to operate. 

But devolution alone will not be the cure for declining trust in the UK’s political institutions. Nor is it likely to alone repair our social fabric or restore pride to left-behind places. Globally, democracies that are more federalised and localised than the UK are also experiencing declining levels of trust. And so far, Britain’s brand of local devolution has not included a rethink of how communities interact with elected officials on an ongoing basis. This means that the completion of the devolution map may simply bake in the status quo, risking the creation of mini Whitehalls across the country. Devolution needs to be accompanied by a different form of democracy if it is to better bolster trust in institutions. 

Whether, and how, to ramp up or support the use of deliberative and participatory democracy methods is a choice for any next government. Methods such as citizen’s assemblies, or even events like Ask Andy (which is a regular opportunity to quiz Andy Street, the Mayor of West Midlands) are powerful tools that can help enhance community power, increase recognition of political figures and their remit and drive democratic participation. Already being used more frequently throughout the UK, there is evidence of success in using such methods to navigate complex socio economic challenges like the transition to net zero, to get public consensus for more radical policy and to strengthen legitimacy of decision-making.

However, as recent research by Nesta’s Centre for Collective Intelligence Design has highlighted in the context of net zero policy, while a majority of people feel it is important they are given a say, few felt that the government does a good job of involving citizens in decision-making. And few institutions in local or central government are set up to work strategically on citizen engagement. Any next government looking to increase trust in institutions, and enhance the social licence it will need for more radical policy, will need to consider how to grow civic participation. 

At the heart of all of this work, the challenge remains how politicians and policymakers can best create a political system that engenders the social cohesion that is necessary for democracy to thrive, for power to be fairly distributed, and for people and communities to feel heard and supported. 

Power in place? The options ahead 

The UK is not yet set up to ensure that all places and people within it can thrive. This can often feel like an intractable problem, with the scale of the challenge daunting. While devolution presents an opportunity to help rebalance opportunity and prosperity throughout the country, it is only one part of this highly complex policy puzzle. And while the experts we heard from disagreed on the role and place of institutions, and on the need and extent of structural reform, all zeroed-in on the tangible change that’s needed to help ensure that there are more communities throughout the UK where ‘stuff’ is happening.  

To do this meaningfully requires a focus on institutional, structural, political and community reform. Knitting these elements together will be the trick to engendering real change throughout the country, that people can see and feel in their neighbourhoods, schools, churches and community centres. As this work has highlighted, there are choices here that can make a real difference to people in the places that they live: as Demos’ work shows us, “there are plenty of options to share power across places by 2040”. 

Through the UK 2040 Options project, we will be tackling some of these choices and debates, and considering policy options in more depth, in the next phases of our work.

Roundtable participants

We sincerely thank our workshop participants for their time and contributions. Please note that not all participants will have agreed with all the discussion points above.

• Adam Hawksbee - Onward    
• Akash Paun - Institute for Government  
• Andrew O’Brien - Demos 
• Dr Jack Newman - the Productivity Institute/ University of Manchester 
• Jack Larkham - Pro Bono Economics 
• Margaret Bolton - Local Trust 
• Marnie Freeman - Neighbourly Lab 
• Matt Leach - Local Trust
• Mike Emmerich - Metro Dynamics 
• Polly Curtis - Demos (Chair)
• Tony McArdle - independent