James Alexander: Scots show us the case for handing power to regions

Today, the people of Scotland will go to the polls to vote on whether or not they wish to become an independent state. Whatever the outcome of this referendum, Scotland will gain even more powers than it has already enjoyed since the devolution settlement post-1997. I cannot help but see that devolution to Scotland, Wales and London has been matched only by greater centralisation in the rest of England.

Shadow Secretary of State for Local Government Hilary Benn MP described England to me as the last bastion of the British Empire ruled from London. What other western country would have a Government dictating to councils about how often bins should be emptied?

Yorkshire and the Humber is one of 12 recognised UK regions of the European Union. Our region has a population comparable with Scotland and an economy double that of Wales. Our population and economy is larger than many European states. We have a region that is brimful of economic potential, with ambitious businesses employing a talented and diverse population.

There are 22 local authorities in Yorkshire and Humber: one county council, five unitary authorities, seven districts and nine metropolitan boroughs. According to the Local Government Association, the coalition Government will have cut funding to councils to run local services by 40 per cent by the end of this Parliament. The situation is unsustainable – price inflation and growth in demand for services mean that in real terms the cuts are much deeper than the Government contends. In York we collect £66m a year in council tax but we spend £77m a year gross on elderly care.

Disappointingly, we are not seeing the Government modernise and cut costs at the same pace – the Conservative Party chairman, Grant Shapps, has said that if the whole of Government had to deliver the funding reductions councils had made, the national deficit would be erased. I am really concerned that If we have localities effectively going bankrupt, it will have a negative impact on inward investment, just as it has for Detroit in the United States. This will have a disastrous effect on the fragile recovery.

Government is therefore faced with two choices: increase funding to local government or reduce the cost. There are only two ways of reducing the cost: take away from councils the legal requirement to deliver certain services, such as elderly care, or begin rationalising public services.

There can be a better approach. By this, I mean finding a way to live within a reducing budget envelope. I think the answer lies in a merger of councils and other public services.

In Yorkshire and the Humber, there are 22 council chief executives and almost 100 senior managers. There are four police forces, four fire and rescue services and a plethora of NHS Clinical Commissioning Groups. It is about time we rationalised public services into regional or sub-regional structures.

This could reduce management costs, get better value for money through commissioning and procurement, harmonise fair pay and conditions and reduce the number of politicians. More importantly, we could use the larger geography to develop a stronger economic base.

I think that this could also be the start to Yorkshire and the Humber achieving Scottish-style devolution. Devolved parliaments and assemblies have given Scotland, Wales and London an even greater voice. In London, the taxpayer spend on transport is £2,731 per head. In Yorkshire and the Humber, it is £201.

Last year the Government decided to cut this region’s European regeneration funding by 56 per cent to divert tens of millions of pounds away from the region and into Scotland and Wales. Government needs to be fair. Councils, such as the one I lead, contribute £40m extra a year in business rates to London than they receive back. Leeds contributes £60m. Why can’t the region that staged the Tour de France reduce business rates to become more competitive? Why can’t we create bonds to pay for transport infrastructure? Why can’t we decide if we would like free prescriptions? Or to have no tuition fees?

The post-1997 settlement has left a democratic deficit in England and I believe the time has come for devolution and fairer funding to Yorkshire.

The Deputy Prime Minster, Nick Clegg, has advocated directly elected “metro mayors”. Directly-elected mayors have only recently been rejected by a number of the big cities. However, if “metro mayors” were concurrent with a convergence of public services across an area with devolved fair powers and fair funding, I, for one, am open to a conversation.

The UK will never be the same again after the Scottish referendum – the devolution genie is out of the bottle.

• James Alexander is the Labour leader of City of York Council. He is writing in a personal capacity.