Title

WHITEHALL

Centralisation is not a cosy cocoon

When Detroit went bust it seemed to prove the riskiness of local self-government, says Jessica Studdert. But Birmingham going into effective bankruptcy 'should end any naive assumptions the Whitehall model provides anything like a safety net'.

Ten years ago, the city of Detroit went bust. The combination of lost tax revenues from a declining population and rising expenses meant the city government effectively ran out of cash. A court bankruptcy was filed, triggering negotiations for adjustments in its financial obligations and state and federal support packages.

At the time, the reaction this side of the Atlantic was a combination of bewilderment and reassurance. Bewilderment at the US model of highly devolved Government, which left a big city in the position of not being able to meet its own population's needs. Reassurance that in our own highly centralised context, nothing like this could ever happen here. 

The episode seemed to prove the inherent riskiness of fiscal devolution and local self-government. Far better to be wrapped in the cosy cocoon of centralisation. What our own local authorities lack in autonomy, they gain from the security of a heavily controlled national system. 

Fast forward to 2023, and the picture doesn't look quite as rosy. The news that our second biggest city has gone bankrupt should end any naïve assumptions the Whitehall model provides anything like a safety net for local areas. Birmingham's declaration of a section 114 notice follows a string of other councils signalling similar dire financial straits. While each has its own circumstances, the wider policy discussion is slowly moving on from pathologising individual councils towards asking deeper questions about the degree of risk central Government is systematically placing on its local counterparts.

Demand pressures on services are rising – particularly in a city like Birmingham where 42%  of the population live in poverty. But councils must set balanced budgets and have little control over what resources they can access. Even Birmingham's reasonable request for a tourist tax to supplement the Commonwealth Games last year was refused by Government, let alone wider measures to generate the resources it needs.

While the US represents an extreme model of devolution, we must recognise our own highly centralised position. Both create unreasonable risks. There is a happy medium which combines sufficient funding to meet demand and the capacity to generate wider revenues. Let's keep this on the agenda. 

Jessica Studdert is deputy chief executive at New Local

X – @jesstud
 

WHITEHALL

Shaping the sector's workforce of the future

By Neel Patel | 05 March 2026

At a time of significant change for local government – headed up by the LGR agenda – Neel Patel explains how interims may become more essential than ever as ...

WHITEHALL

Turbo-charging neighbourhood health

By Nick Kemp | 04 March 2026

Cllr Nick Kemp says three fundamental shifts are needed in order to get serious about neighbourhood health in the North East.

WHITEHALL

Getting ahead of the local election results

By Ed Hammond | 04 March 2026

Prior to the publication of a new practice guide from the Centre for Governance and Scrutiny, Ed Hammond considers how council officers can prepare for a ver...

WHITEHALL

Rolling the dice on the May polls

By Jonathan Werran | 04 March 2026

Jonathan Werran considers the scenarios that could emerge from the local elections and says recent events mean Labour faces an ‘unavoidable political massacre’.

Jessica Studdert

Popular articles by Jessica Studdert