Councillors are frustrated that Treasury rules tie them in knots and stop them from delivering the best for their community. Residents are frustrated at developments bringing noise, congestion and loss of greenery. And families worry how their children will ever afford to buy a house. All of these can be fixed by wresting more control back to local level.
New Local’s latest report, informed by interviews and discussions with dozens of local authorities across the country, suggests positive ways forward. We should give councils more powers and incentives to do the right thing, both on their own and by creating frameworks that can let locals take more responsibility and ownership. If we are to level up, we need to give places the power to level themselves up. They cannot do that with both hands tied behind their backs.
The degree of centralisation in our country is not normal. The local government of the town of Marburg in Germany may receive €300 million – more than its annual budget – because the Covid vaccine made in its BioNTech factory has had such success. Swiss local governments – and therefore indirectly their voters – receive a princely share of the additional tax revenues from allowing more housing. In England, by contrast, councils still lack the ability to harness the benefits of higher growth for their communities.
Many councils would love to improve their area. But they are often hamstrung: by rules against profit-sharing partnerships without paying the Treasury large amounts of Corporation Tax; by rules stopping them from using the sale of new housing to fund other activities; and even by rules against them using low-cost exchange traded funds instead of high-cost private managed funds to hold their reserves.
We suggest fixing all of those things, to give councils more power to do better with their own assets.
Councils and residents are often frustrated by sites that are allocated for housing in a local plan and then sit mainly undeveloped for many years. These derelict sites can cause harmful effects, creating a dead portion along a high street, or leaving an unsightly blank space of brownfield land that blights the surrounding neighbourhood.
We suggest councils should have the power to levy an annual tax on the value of the undeveloped portion of allocated sites, up to a maximum of perhaps 0.5 per cent a year. That would provide a stronger incentive to develop them, and the funds could be used for helping the community and mitigating negative effects.
Planning reform has too often used a sledgehammer when a scalpel was needed. The only two ideas have been to ram through change over the objection of local communities, or to put the brakes on completely.
Councils lack sufficient powers to delegate small questions to local communities where they want to, to enable things that would be too hard or controversial to decide at higher levels. They lack the resources to facilitate smaller communities taking things on for themselves without creating ever more work for overstretched council officers. Councils are often frustrated by arbitrary or simplistic targets or other rules imposed from above, ill-suited for local circumstances.
Residents, too, are frustrated that they are not allowed to do more with their plot – whether it is just adding another bedroom for a young and growing family squeezed into a tight space, or adding a whole new granny flat or indeed ‘granny cottage’ in an oversized back garden. Of course, many areas do not want any change. But in areas where the overwhelming majority of residents do, councils cannot easily let residents express and realize that desire.
Neighbourhood planning is time consuming, difficult and expensive unless you have a large reserve of retired professionals with the right expertise. And often neighbourhoods are too big to have a sensible conversation that doesn’t suddenly get dominated by a few who want no change at all, and scare others from raising the idea of tasteful enhancement.
There has been widespread interest recently in ‘street votes’, which would allow locals to set a design code for their street, potentially helping run-down streets to level themselves up. But it is equally important to think about wasteland – particularly dilapidated sheds lining disused back alleys, no longer big enough for modern cars. Today, they are often magnets for burglars. Many have been gated up and left to fall to ruins. They have enormous potential to become charming mews lined with cottages for the adult offspring or elderly grandparents of the houses in front. Of course, that would have to be subject to careful rules to protect greenery, the environment, and the neighbours. Still, ‘mews votes’ would allow focused discussions about such potential projects without subjecting residents to the burdens of neighbourhood planning for the entire neighbourhood area.
The report draws on research in the field of ‘common pool resources’ launched by Nobel Prize laureate Elinor Ostrom. She demonstrated how many local communities have successfully managed their own affairs, often for centuries. The contrast with the current English system could not be more stark. For too long, the Treasury has attempted to micromanage everything while destroying the incentives and powers for local communities to do it themselves.
We must get away from a one-size-fits-all, Treasury knows best approach. If councils, residents and families have more power and freedom to get the best for their area, many of their current frustrations could be fixed – by them.