Across England a quiet rebellion is brewing. In Rutland, locals have started a campaign to save the tiny county from abolition. Villagers in High Peak, rural Derbyshire, worry they could be bundled in with Andy Burnham’s Greater Manchester. Nottingham is expanding, Medway wants to become a city, and Surrey will have a mayor.
Flick through your local newspaper (if one still exists), or fight past the online pop-ups and chances are there will be a story about Labour’s plans for the biggest shake-up of local government since the 1970s.
Under the guise of a “devolution revolution”, championed by the deputy prime minister, Angela Rayner, work is under way to merge hundreds of English district councils with the counties above them, creating a single layer of unitary authorities.
Local leaders must submit plans by 21 March. The idea is to find efficiency savings to tackle the worst town hall financial crisis in decades, after years of austerity-driven cuts. The so-called mega councils will also underpin the creation of dozens of new, mayor-led strategic combined authorities, with powers in areas including transport and economic development.
Many people will hardly notice, particularly in London and other big cities, where unitary councils and mayors are already the norm. The national media, too, have mostly focused on the Westminster fight between Keir Starmer and Nigel Farage, after this May’s local elections were deferred for a year in some places, rather than the detail of the English devolution white paper it stemmed from.
The devolution revolution will not be televised. But make no mistake, the changes are seismic. Piece together the parochial media reports and a big national story emerges: more than a third of England’s population – about 20 million people – will be affected, in a shake-up literally redrawing the map.
For Labour, the plans are unfinished business. In 1969 Harold Wilson’s government published the Redcliffe-Maud report, whose proposals were aimed at sweeping away 1,300 councils and replacing them with 61 unitary authorities. But the unexpected loss of the 1970 election, to Edward Heath’s Tories, led to the much less ambitious 1974 local government act.
John Prescott tried again, when New Labour sought to establish elected regional assemblies through a series of referendums, only to abandon the idea after voters in the first poll, in the north-east, rejected it.
In this third attempt, Rayner is leaving little to chance. Building on the mayoral authorities created by George Osborne – including in Manchester, Liverpool, and the West Midlands – makes clear sense, and so Labour is filling in gaps on the devolution map without relying on referendums. Last year’s general election landslide is viewed as enough.
However, it is clear that Labour will expend bucket-loads of political capital in this hyper-local battle.
People in areas neighbouring bankrupt councils – including Woking in Surrey and Thurrock in Essex – are understandably worried that the changes will lead to higher council taxes and cuts to services. Ministers want the new mega councils to cover populations of at least 500,000 – bigger than Liverpool or Bristol – forcing together disparate areas.
After the low-hanging fruit of London, Manchester and other big cities, devolution elsewhere is much tougher. Further progress will require riding over local democracy, and will take years to achieve.
Still, the prize on offer is sizeable. England is one of the most centralised countries in the developed world. The hotch-potch of past devolution deals adds up to a messy, unfinished system. Fixing the financial troubles of councils will help them to stop fire-fighting and focus on delivering public services and economic growth.
Ministers highlight work by the accountancy firm PwC which estimates a reorganisation of two-tier local government would have an upfront cost of about £400m, but could save £2.9bn over five years.
Less spoken about is that scrapping hundreds of small borough planning departments – replacing them with fewer big ones – could hand Labour power to green-light housing in previously intransigent places.
However, the government could face accusations that its plans are akin to rearranging the proverbial deckchairs unless a key ingredient required to make devolution a success is forthcoming: cash.
Ministers appeared to recognise this fact earlier this month, confirming a financial settlement worth more than £69bn. Last week, bailouts for 30 councils were also approved, unlocking a combined £1.5bn in additional borrowing power. Six councils were also granted permission to raise their council tax above the usual 5% cap.
However, much more needs to be done. Rachel Reeves’s forthcoming spending review will be key. The Local Government Association says England’s councils face a collective £8bn funding black hole by 2028-29. Even if reorganisation saves money, the new councils and mayors will still need a cash injection.
A report published on Monday from the Association for Public Service Excellence and the Centre for Local Economic Strategies makes this point well. It shows that local government spending per resident in England has fallen steeply after the years of Tory austerity, from £3,628 in 2009-10 to £2,857 in 2023-24, or by 21%, after taking into account inflation.
To reverse this would not only create more than 900,000 jobs – mostly in essential roles, such as the fire service, teaching and care – it would have a positive, knock-on effect on the local economy. The report estimates that each job would enable the creation of another, and would spark a £43.6bn economic boost.
“To be fair they have given councils much more money short-term, but I think that’s more to patch over the problems than to build a solution,” says Mark Gregory, a professor at Staffordshire University and a former chief economist at the accountancy firm EY who has advised Labour politicians.
While the reorganisation of local government could help, more is needed. “Labour’s line is we need growth to invest in public services. But my take is, if you don’t invest in public services, you won’t get the growth anyway.”