The UK should become a federation of states, hugely increasing the power of local compared to central government, thus allowing the individual more control over his life. Also, it would allow more differentiation across the country, meaning a variety of policies could be tested in all areas of the public sector. The most successful could then be imitated, meaning progress for the nation as a whole.
I envisage a division of the country by region, such as the South-West, the East Midlands, and so on. Wales, Northern Ireland and Scotland would each be a state, as could the Channel Islands and the Isle of Man. Territories further overseas might also become states, or they could retain their current status. States should have independence similar to Swiss cantons, with their own government and parliament.
Such a rearrangement of the country would, of course, be a huge change. But that is not an argument against it. Indeed, we could use the opportunity to at least debate some fundamental questions concerning the structure of the state: for example, the power of the monarchy, and the lack of a codified constitution. A more plausible objection is that local governments already have sufficient powers. But they have limited power over taxes - “England’s local government finance system is one of the most centralised in the world” – and laws.
Most of local governments' funding comes from central government grants, This means that councils have less incentive to spend responsibly, as they don't have to answer to the people they get most of their funding from – the nation's taxpayers. Thus, councils often spend money unnecessarily as the tax year nears its end, to ensure they don't have their budget cut for the next year. If local councillors had to face, on a daily basis, the source of most of their income, they would be more inclined to spend it wisely.
Local control over laws would be another important aspect of such a change. If the population of one region wants to legalise drugs, why should it be held back by the rest of the country? As a state, London, say, could go ahead with some drug legalisation. Then, if and when its policies proved successful, other states which had doubted drug legalisation's benefits could follow.