Over the last few weeks, Labour has set out a new and bold vision for real localisation. In a major speech, Ed Miliband committed to a radical reshaping of services and devolving power, explicitly recognising that the centralised state cannot diagnose and solve every local problem from Whitehall.

Labour's Policy Review co-ordinator, Jon Cruddas, reinforced this direction of travel. In a speech to New Local Government Network, he emphasised the importance of power, democracy and devolution as core elements of Labour's future agenda.

This new emphasis is significant. It is based on an understanding that the world in 2015 will look very different to the one in 2010. The financial context for our public services has changed fundamentally and there will be no going back.

But, it is still possible to protect the most vulnerable, reduce dependency and deliver high quality and cost-effective services by doing things differently. While localism is back in vogue at Westminster, the challenge will be to engineer a genuine, substantive power shift from Whitehall to communities, organising services around people and places, not departmental silos.

We have spent the last few months building a robust evidence base which demonstrates that Labour will need to take a radically different approach to meet its ambitions for a stronger, fairer society.

Our first report sets out the triple demand challenges facing public services: demographic change; reactive costs due to unmet needs; and transferred demands as a result of salami-slicing budgets without reform.

Our public services, built in the previous century, are struggling to cope with the challenges of the present. Our overriding message reflects a view many in the local government sector will recognise: carrying on ‘business as usual' is a riskier option than fundamental reform.

A new model for public services will need to avoid reinventing the wheel, but cannot be based on top-down reforms.

The starting point should be place-based initiatives that are already working; not one-size-fits-all national, input-driven programmes.

There are clear opportunities. Considerable savings of between £9.4bn and £20.6bn have already been identified from the Community Budget pilots, and evidence from a wealth of local innovations shows not only how to save money by reducing demand, but get better outcomes for service users at the same time.

The potential of these cannot be realised until the gap between investment and rewards is closed. New ways of working are building integrated service responses around people's needs, but this is happening against the flawed logic of institutional barriers.

Innovations are happening in spite, not because of, the system which constrains the ability of local areas to meet their needs.
A significant barrier to reform is that judgements about success or failure of governance tend to be framed through the prism of the centre.

Failures at the centre occur frequently: the Universal Credit roll-out and the Work Programme's poor success rates with people facing complex barriers to work are examples we highlight.

But, there is an in-built bias in the system whereby these failures are seen as particular, rather than raising questions about the capability of the centre to deal with complex challenges at scale.

Conversely, when considering localist reforms, the question ‘are local authorities capable?' is often heard.

The Taskforce will be setting out an objective strategy for public services which recognises more fully the appropriate scale to maximise the impact of investment and ensure effectiveness.

The next phase of our work will be to develop concrete recommendations for reform for public services to better anchor them to places. The status quo is not working for anyone, so radical reform will involve changes for all concerned.

The centre will need to recognise the lack of efficacy of top-down levers of control. National politicians will have to exercise power in a different, more subtle way that influences, encourages and enables.

Whitehall must better recognise the limits of its own capacity to deliver on all fronts.  Reform will also mean changes for local government. With new powers to design public service solutions for their areas must come new responsibilities. The sector will need to set high standards and create new ways of working and partnerships to demonstrate capacity.

It will also need to robustly challenge weaknesses and ensure open, strong, accountable leadership.

Cynics will say that history tells us decentralisation is over-promised and under-delivered. There will be no quick fixes, and no new funding tap to turn on. Reform will need to be realistic enough to be delivered from day one of a new government, yet radical enough to create the shift in power required to unleash innovation to meet needs on a wider scale.

Sir Richard Leese, Cllr Sharon Taylor and Mayor Jules Pipe, are co-chairs of the Local Government Innovation Taskforce, established to report to Labour's Policy Review