The Localism Agenda, Privatisation, and the Emergence of Hyper-plural Local Governance

1. The Localism Agenda, Privatisation, and the Emergence of Hyper-plural Local Governance Mike Raco Bartlett School of Planning University College London

2. Introduction • What does the Coalition ‘see’, what remains ‘invisible’ and what explains its selective visions? • Barriers to localism and the changing nature of the ‘state’ • Not too much government but too much governance • The key role of asset ownership • Implications for (local) democracy and the future of the democratic state • The politics of ‘perpetual crisis’ or the ‘end times’ (Ẑiẑek, 2011) • What has been left for the state to do?

3. Localities as Subjects and Objects of Policy • ‘Localities themselves are best placed to understand the drivers and barriers to local growth and prosperity, and as such localities should lead their own development to release their economic potential. Local authorities, working with local businesses and others can help create the right conditions for investment and innovation….[Aim to] promote efficient and dynamic markets and increasing confidence to invest…with focused investment’

4. A Dependency Culture? • “The Coalition Government is ambitious for all of our communities, and we recognise that the challenges they face are not the same. So we are also investing in a £1.4 billion Regional Growth Fund over the next three years, which will help areas which depend too heavily on the public sector for jobs, helping create more sustainable private sector employment” (Clegg, 2010: p.3)

5. Barriers to Localism • Key role of legacies and policy de-construction • The ‘judicialisation’ of public policy • States regulated by the private sector and private sector regulated by states (Braithwaite, 2008) • Hyper-pluralisation of ownership structures and post-political institutional landscapes • Institutional re-placing of power and accountability away from the local scale in the 1990s and 2000s • The post-politics of the new localism

6. Broader Geopolitical Changes • Acquiring contracts to build and operate EU welfare assets is the world’s biggest business opportunity (Murphy, 2011) • The rise of ‘regulatory capitalism’ (Braithwaite, 2008) • General Agreement on Trade in Services (GATS): • Article I(3) of the GATS excludes “services supplied in the exercise of governmental authority”. • Global firms are calling for ‘liberalisation’ • Austerity governance and privatisation

8. ‘private industry has discovered that rather than trying to innovate new products in an uncertain consumer marketplace it is much easier to make profits from the certain commodities that people are always going to need, such as health, education, local government services and so on that we once the preserve of government’, (Richard Murphy, 2011: p.5)

9. New forms of elitism have been established in which powerful private sector investors benefit by ‘securing irrevocable contractual claims over taxation revenues that they will manage henceforth in their own private companies which they claim will undertake the tasks of the state so much better than the state could do itself’ (Richard Murphy, 2011: p.30)

10. Governance: Key role of assets • Land Ownership • Unequal distribution of land ownership (e.g. 30% land in England and Wales unregistered; 69% owned by 0.6% of the population) • No national register of assets • Land banking and planning permission • Taxation of unearned wealth – Land Value Taxes • Changing nature of state assets: • Privatisation and Private Finance Initiatives • £280billion+ of repayment liabilitiesfor services and assets • New assets to be funded by international investors

11. Private Finance Initiatives (PFI) • A prolific type of Public-Private-Partnership • Private companies are not just partners but: • Design • Build • Finance • Operate • The state pays nothing to start with but then pays private company under long-term contract • Model copied across EU, Australasia, and North America

12. Problems with PFI model • Antithesis of localism agenda • Removal or ‘re-placing’ of democratic accountability • The increased costs of private finance and poor value for money • Loss of strategic planning control over key welfare infrastructure • Representative or participative democracy? • Public sector institutions lack the skills to negotiate effectively with private companies

14. Past / Future Commitments by Sector (£m)

15. Social Housing PFIs in the UK • Treasury Figures: • 22 projects - £1.156billion of capital spending • Total of £3.716billion in re-payments • Re-payment span 2000-2040 • Emergence of super-companies under DFBO rules • Taking on more and more of local government’s traditional roles

16. Housing PFI in the UK • Major firms now organise: • Costs and • Community ‘consultation’ • Service provision • Citizens’ experiences of ‘the state’ shape wider legitimacy and broader understandings • Linked to wider changes – 30 year Housing Revenue Account Business Plans • New Investment and Service Partnerships

19. Implications of the PFI • Re-payments of £314m over 20 years • Costs – over £2million spent on legal bills alone • Time delays - 44 month delay between the estimated date of contract completion in October 2003 and its realisation in June 2007 • Major contractual inflexibilities and policy lock-in • Incentives to increase costs to boost profits • But all homes reached ‘Decent Standard’ by 2010

20. Housing Reform in South East London • A costly ‘democratic premium’ • New locations of authority and power at the local level • International firms, bondholders, regulators, lawyers, accountants, business services advisers • Exemplifies wider trends under localist agenda • Infrastructure as an investment space

21. Response to Local Demands/complaints • ‘The PFI is by its nature a contractual relationship between the Council and the PFI contractor Regenter B3. The contract was subject to a competitive tendering process and part of the contractual obligations relating to both parties are of course financial. The Council regularly reviews progress but any changes in the current arrangements may prejudice the basis of the contract and so have to be taken fully into account’ (Mayor of Lewisham, p.11).

22. The New Lexicon of Localism… • Capital Costs • Competitive Dialogue Procurement Process • Contractual compliance • De-scoping of risks • Derogation Approval • Interface/risk matrices • Liabilities • Risk Profiles • Special Purpose Vehicles • Etc, etc. etc….

23. Conclusions • Too much governance not enough government • The local as a space to be broken up and converted into investment opportunities • State reforms justified by a politics of ‘perpetual crisis’ • Agenda intent on further pluralisation, not localisation • What does localism mean in this context?