Rick Muir: People power could be a winner for Miliband and the North

This is important because whoever wins the next election will have to find ways of doing more with less. Even with stronger economic growth and even if Labour were to shift more of the burden of deficit reduction onto tax increases, there will still be big spending cuts if the deficit is to be eliminated during the next Parliament.

These cuts will be even more painful if there is no strategy for delivering services differently.

Ed Miliband rightly argues that reforming the state means giving away power. England is one of the most centralised countries in Europe. This prevents us from taking holistic approaches to complex problems. There is a growing range of complex problems such as long term unemployment, chronic disease and anti-social behaviour that have multiple causes that cut across the usual departmental silos.

Take, for example, the failure of the Work Programme to help the long-term unemployed who are sick or disabled into work. This programme contracts out employment services to private companies who are paid for getting claimants into jobs.

However, those providers have no control over the things which prevent many people getting work, such as low skill levels, mental health problems and so forth. To tackle these complex cases, employment support needs to be integrated with other services locally. This requires a devolution of these budgets out of Whitehall and towards England’s towns and cities.

Devolution also enables more creative solutions to the problem of shrinking budgets. Rather than salami slicing departmental budgets at the centre, the next spending review should push service budgets down to city regional and local authority level.

These budgets can then be pooled together and, combined with longer five year financial settlements, funding can be brought forward to invest in preventing problems from occurring in the first place.

So, for example, by bringing together health and social care budgets, local areas can invest in supporting older people to stay safe in their homes, rather than paying for avoidable and expensive hospital visits.

But empowerment means more than just taking power from Whitehall and handing it to town halls. Local authorities, schools and NHS trusts can also be unresponsive to citizens, meaning that service users themselves need greater direct control.

Sometimes this can be at the individual level, such as with personal care budgets which have unquestionably enhanced the autonomy of many elderly and disabled people in receipt of care. These should be expanded, where patients want them, to include personal health budgets for those living with long-term care needs.

But individual choice is just one form of empowerment. There also need to be opportunities for citizens to collectively challenge poor provision: taking your child out of a school, where they have developed close friendships and which may be closest to home, is hard to do.

Parents need to be empowered to challenge poor standards together: parents should also be able to petition new school commissioners, at city regional level, to intervene to raise standards.

These reforms will not be easy. For one thing, they require a break with our highly centralised political culture and day-to-day ministerial interventionism. Sceptics will point out that opposition parties have promised “localism” before, only for it to disappear once politicians are ensconced in ministerial office.

However, what is new is the unprecedented nature of the financial pressure on government departments: this means that across Whitehall and across all the political parties, people are looking seriously at the more creative possibilities that devolution creates.

Significant devolution to England’s towns and cities will also require a strengthening of our layers of local governance.  Ever since John Prescott’s failed attempt to bring in regional assemblies, England’s regional and local governance has been fragmented.

There are however promising signs: in the North East and Greater Manchester local authorities are coming together to create Combined Authorities, that at a bigger scale can credibly be devolving budgets in areas like transport, housing, welfare to work and skills.

None of this will be easy: politicians and mandarins will have to give up power, and more personalised services will require citizens to play a greater role. But we have little choice if we are to find more creative ways of dealing with austerity.

Rick Muir is associate director for public service reform at the Institute for Public Policy Research. IPPR’s new report ‘Many to Many: How the relational state will transform public services’ was published this month.