Proper localism or proper centralism: a house divided cannot stand

Apparently unaware of Ed Miliband’s recent announcements that a Labour government would cut the Housing Benefit bill by building more homes, shadow community secretary Hilary Benn has now announced that a Labour government will do the precise opposite, by reversing what little the coalition has achieved on planning. It has sparked a new ‘debate’ over housing and planning, which is largely a farce because both sides throw almost identical soundbites at each other. Hilary Benn claims: ‘there will be a lot of anger when people discover they have been denied any right to have a say as unpopular and inappropriate developments go head on the say-so of a national quango.’ Eric Pickles lashes back: ‘Labour would reintroduce regional planning, handing power from local people to unelected quangocrats’.

Yet there is a tiny bit of truth in both sides’ claims. The coalition’s reforms involve a little bit of localisation and a little bit of centralisation at the same time. Local authorities are required to draw up local development plans, over which they have full control. But if they try to impede development by unduly procrastinating on the completion of this plan, developers can take their application directly to the Planning Inspectorate, a national body. If the latter approves the application, it can override local objections. So the approach of the National Planning Policy Framework (NPPF) could be described as ‘conditional localism’. It allows both sides to portray themselves as the champions of localism, and the other side as its enemies.

This mock-debate is not the first of its kind. When a British politician talks about ‘empowering local communities’, they do so in the same way in which Joe Bloggs talks about his intentions to lose weight, give up smoking, read more classics and learn a foreign language: We like to talk about these things in the abstract, but part of us knows exactly that we are not going to do them anyway.

In this case, there is a specific reason for that: the UK has one of the world’s most centralised tax systems, exceeding even France (!) on this count.

Share of total tax revenue by level of government


As long as Whitehall pays for everything, Whitehall will always want to have a say over everything. Yes, Whitehall centralism is awful – but we cannot combine Swiss-style localism with a French-style tax system. An arrangement in which local governments could adopt the most outrageously wasteful policies, and then send the bill to Whitehall, would be madness.

The best example is housing/planning, where this is exactly the arrangement that we have. Local decision-makers can block development in order to please the local branch of some nimby group. By making housing less affordable, these policies lead to higher public expenditure on Housing Benefit (HB), Support for Mortgage Interest (SMI), social housing and, in the future, Help to Buy (HtB) – but all of these are national programmes, paid for out of national taxes.

This is why nimby organisations are being disingenuous when they present themselves as the standard-bearers of localism. Their idea of ‘localism’ is a system in which no blade of grass must be touched if it upsets the sensitivities of some nimby resident posing as ‘the local community’, but in which the general taxpayer always stands ready to pick up the bill.

Should communities have a right to object to development? Of course – as soon as they fund local expenditure on HB, SMI, social housing and HtB out of local taxes. Until then, Whitehall should force communities to accept development on a massive scale, and ignore the whining of ‘concerned citizens’.

Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

1 thought on “Proper localism or proper centralism: a house divided cannot stand”

  1. Posted 17/06/2013 at 14:20 | Permalink

    ‘Compulsory purchase’ , as its name implies, is a system whereby central government is enabled to make compulsory purchases of property, at a ‘reasonable’ price, ‘in the national interest’, subject to a system of appeals. It is hard to see how any other system would be practicable. The community as a whole can’t be held to ransom by a lone objector, or even by a tiny minority. Life isn’t always fair, and from time to time no doubt it is most unfortunate if someone is required to leave their home to make way for a motorway, HS railway, or whatever. Buit as long as in principle a ‘market price’ is paid in compensation, and there is provision for appeals, in an imperfect world, that is probably the best that we can hope for.

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