The UK takes a long time to do anything. Local government watchers will know that successive administrations have been gradually handing more power to cities and sub regions. The current Labour Government is looking to speed this up with a spate of new Mayors and powers through its Devolution Bill.
I am supportive of some more strategic sway at a city level. Parliament should not govern everything.
When it comes to regional or sub-regional investment decisions – there needs to be agency at that tier to get things done. Some power needs to be pulled down and some pulled up. Big investment decisions should not sit with micro planning committees which are captured by NIMBY interests at a very local level. There is a balance to be struck.
Unfortunately, this delicate balancing act is not being achieved. Devolution transition is causing huge headaches for growth and investment. Why? Because like everything this country does, it’s not joined up.
Planning pains, not gains
Let’s take the planning system and London. The UK Government decided to introduce a new set of design requirements around the Building Safety Act for high density developments. In came, rather suddenly, second stairwells and evacuation lifts. Out went viability and even the remotest chance of delivering affordable housing through Section 106 agreements.
Rather than think through the consequences, the Government left all the trades off with the London Mayor, councils and other cities which require high density development. What it could have done was provide some levers for developers and councils to work together to solve viability. Instead, we got political stalemate.
The London Mayor and the Boroughs are not going to voluntarily accept development with low to zero affordable housing. They get nothing out of this when they spend their time campaigning for affordable housing. Hence the collapse in brownfield supply. No one foresaw the consequences.
Power and responsibility
There is limited censure for not delivering new homes in local areas, and limited rewards. Why? Because local government funding is centralized.
If you are going to devolve power, then you also have to devolve revenue raising and revenue losing. Otherwise, you push local politicians into situations like in London which are bad for UKplc’s long term health.
If they don’t feel the pain or the benefit -what happens? They will just sit out on the touch line and let major investments fall into distress. It’s not their cash at stake and the national taxpayer is the ultimate loser.
The devolution agenda gathers pace
The devolution agenda wants to offer CIL powers to the new Mayors. This patently cannot be an extra tax on top of what is already taken. Yet there seems to be little thought going into this.
Rather than being joined up, there is now a significant risk that the British state looks set to fracture into competing units taxing their bases in different ways and sometimes in conflict with each other.
Look at the disaster of Late Stage Reviews, introduced in London and now being rolled out in the NPPF. They are extinguishing tax revenues rather than creating more money and growth which would have gone to Treasury in the shape of dividend and corporate taxes.
Overall, devolution is an opportunity. But it is also a significant threat to the economy and viability of UK plc infrastructure if it’s not thought through. As ever, it comes down to tax and tax raising.
