Markets are the Measure of All Things: George Osborne’s Devolution Agenda and All-Academies Policy

An analysis of George Osborne’s devolution agenda and all-academies school policy in the budget he presented last week as a form of “market-fostering subsidiarity.”

Osborne's Devolution AgendaFour legs good, two legs bad! — was the catchy maxim which first summarised the principles of the political philosophy of Animalism in George Orwell’s allegorical novella Animal Farm. We may laugh at this seemingly inane reduction, but in truth much of day-to-day politics functions on such simple dualisms, with societies and communities split on a particular issue between which side one considers “good” and which side “bad.”

A fair amount of electronic and material ink has already been spilt over the last few years analysing the transition from Margaret Thatcher’s declaration in a 1987 interview that “there is no such thing as society” to David Cameron’s waffly rhetoric on the Big Society. Although Cameron’s buzz word appears to have been gradually relegated from the driver’s seat to the back seat and then into the body bag in the boot, the mantle of decentralisation and empowerment of those outside central government appears to have passed to Chancellor of the Exchequer George Osborne, with his recent oratory about, among other things, his “devolution revolution” and the Northern Powerhouse. The recent 2016 budget on 16th March provided an opportunity for Osborne to make key announcements about these central planks of his much-vaunted “long-term economic plan” for Britain.

At first sight, these two policies being pushed by the Exchequer appear to be in line with the Tory idea of decentralisation. The devolution revolution involves giving local authorities the power to retain their local taxes and spend them as they see fit, rather than have them be funnelled up into Whitehall before being distributed back down again. The Northern Powerhouse, a proposal to encourage growth in the North of England through investment in infrastructure, science and innovation, also involves the devolution of powers over matters such as local transport, skills and healthcare from the centralised state to major cities such as Manchester, Liverpool and Leeds. The message appears to be: intermediate levels of government good, big central state bad.

In the very same budget speech, however, Osborne announced that the government would be forcing all state schools to be converted into academies by 2022. Academies first came into being under Tony Blair’s New Labour government in 2000, the original idea being to improve schools considered poorly-performing by taking them out of local authority control and giving more powers to head teachers, who were overseen by an “academy trust.” Fast-forward to the present, and what was seen as a means, in the words of Labour Education Secretary David Blunkett, “to improve pupil performance and break the cycle of low expectations” has morphed into being the default model for state schools. The essential thing to note about this “all-academies” policy is that it effectively abolishes Local Educational Authorities (LEAs), which are the committees of local councils which have had oversight over schools since the Education Act 1902. The message here seems to be: individual educational institutions good, intermediate levels of government bad.

Thus we find that the intermediate level of government, considered “good” in the context of the Northern Powerhouse, is deemed “bad” with regards to state education. Is this a contradiction? With a slightly closer look, the incongruence seems to disappear. These policies, as described, involve taking power from a higher level and handing it over to a lower level. But an even more careful examination of what the government plans to do muddies the waters purified just a moment ago. First of all, the devolution of powers to northern cities involves the formulation of “city deals,” which require the creation of city-wide elected mayors who will work with local councils under them. Here we find the establishment of a higher level of government over what already exists at a local level. Granted, the city mayors will be receiving powers from central government, which is a form of devolution, but if decentralisation per se is the overarching goal, then why construct an additional layer over what already exists at local government level? Why not just devolve these powers to the local authorities?

In a speech in Manchester on 14th May 2015, George Osborne noted this potential objection, and justified the creation of city-wide mayors by simply saying, “there’s a reason why almost every major world city has an elected mayor. It’s a proven model that works around the globe.” This is a rather threadbare argument. There is arguably something more at work in the choices that Osborne and his fellow ministers are making to decide at which level a particular responsibility is to be devolved. We might term this hidden principle “market-fostering subsidiarity.”

Subsidiarity is a concept originally developed in Catholic Social Teaching during its foundational years in the late 19th century, but which has filtered into other spheres, not least of all European Union law. The idea of subsidiarity can be found in embryonic form in Pope Leo XIII’s circular letter Rerum Novarum, which when published in 1891 became the very first “social encyclical” in the Catholic tradition. This notion was then expounded more broadly in Quadragesimo Anno, the social encyclical of Pope Pius XI which was published in 1931.

In a passage which chimes with theorists of political pluralism such as J. N. Figgis and G. D. H. Cole, Pope Pius laments the “overthrow and near extinction of that rich social life which was once highly developed through associations of various kinds,” which has led to situation where we have “virtually only individuals and the State” (para. 78). Although he accepts that in the modern age “many things which were done by small associations in former times cannot be done now save by large associations,” nevertheless “it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do” (para. 79). Therefore, “[t]he supreme authority of the State ought… to let subordinate groups handle matters and concerns of lesser importance, which would otherwise dissipate its efforts greatly. … [T]he more perfectly a graduated order is kept among the various associations, in observance of the principle of ‘subsidiary function,’ the stronger social authority and effectiveness will be the happier and more prosperous the condition of the State” (para. 80, italics added).

Subsidiarity is generally understood as a principle that favours decentralisation, but only when it is advantageous to distribute power away from the centre. The problem, of course, is determining what exactly the measure of advantage or effectiveness which would allow us decide at what level a particular activity or responsibility should be carried out. Pope Pius’ encyclical is particularly intriguing on this question, because far from setting out a benchmark, all he writes is that it is unjust for a larger association to take on what a smaller association “can do.” Unlike subsequent writers on Catholic Social Teaching, he does not add the words, “…as well,” and so it could be said that efficiency or effectiveness is not the crucial matter; rather, the very fact that something can be done further away from the centre means that it should be done there. On this view, it could be said, to paraphrase an alleged Maoist slogan, “Better a decentralised train that is sometimes a little late than a centralised train that always runs on time.” After all, in Pope Pius’ words, through the practice of subsidiarity “the State will more freely, powerfully, and effectively do all those things that belong to it alone because it alone can do them: directing, watching, urging, restraining, as occasion requires and necessity demands” (para. 80). Here there is a perhaps unexpected resonance with the economist John Maynard Keynes, who argued in his 1926 essay, “The End of Laissez-Faire, that “the important thing for Government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.”

Osborne’s policies, however, do not evince such an approach. What we may call his practice of subsidiarity is in fact grounded on a particular yardstick, namely how effective a particular level of governance would be to promote competition and foster a market (or something approximating a market). We could term this “market-fostering subsidiarity.” Once we recognise this, the incongruences mentioned above fall away. For example, although there has been some rhetoric about how the development of high-speed rail would allow northern cities to function as an economic unit, in reality what is more likely to come about from the Northern Powerhouse’s “city deals” is increased competition between these cities to attract capital, from financial to human and beyond. Meanwhile, with the privilege of retaining local taxes comes the power for local councils to lower business rates, leading to a race to the bottom in order to attract “enterprise and economic activity.” When questioned after Osborne’s Conservative Party conference speech which set out this “devolution revolution” whether the point was for local areas to steal businesses from one another, one of his aides replied bluntly, “Yes.”

Likewise, the very same local councils who are given the power to compete with one another by slashing business rates are deprived of their responsibilities over state education simply because LEAs do not function on the basis of competition. Academy chains, on the other hand, are firmly in the business of elbowing each other out of the way in order to add more schools to their ranks. Once again, Osborne’s principle of subsidiary function aims to foster market or market-like mechanisms.

Therefore, we should abandon any attempt to understand Osborne’s long-term economic plan by positing a consistent approach to the question of decentralisation, for there is in fact no such consistency. The maxim of his market-fostering subsidiarity, at the end of the day, is a repetition – damaging, if boring and cliché – of the most fundamental market capitalist dynamic: competition good, non-competition bad. And if creating or sustaining higher levels of governance will aid competitive mechanisms, then in such cases the sub-principle is decentralisation good, centralisation better. Contrary to the first line of the Bob Dylan song, we’re still workin’ on Maggie (Thatcher)’s farm.

Lee Soo Tian is a PhD candidate at the Birkbeck School of Law. He lives on the Cowley Road in East Oxford, ambiguously described by one estate agent to a friend as “the multicultural area.”

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