Monday, 9 October 2017

The case for Devo (Akron, Ohio version) - can we get satisfaction?

Aaron Renn headlines his commentary "Their Problems are not Your Problems" by which he means that basing our economic policies on the needs of superstar cities (New York, London, San Francisco and so on) rather ignores what's going on elsewhere. Renn cites an article by David Zipper:
If you live in a place like San Francisco or New York where urban tech startups (and, ahem, national media) are concentrated, these conflicts seem to be reshaping cities throughout the country. But if you dig a little deeper, it’s clear that’s hardly the case. With fewer than twenty new homes built in a city of 200,000 last year, Akron recently abated property taxes for new housing as a way to prop up the construction market. Many of Akron’s leaders would love to have the problem of excessive housing demand that Airbnb has allegedly created.
There are probably more places more like Akron than like San Francisco yet our discussion about public policy is still dominated by the problems of the latter (housing costs, transport investment, disruption and the gig economy, etc.) except for vague references to other places being 'left behind' with their people being unsuited to the shiny and exciting new economy being forged in the Superstar Cities. And when (as Trump did by unpicking some of the energy greenery policies promoted by his predecessor) policies do lean towards a place like Akron, they are attacked by politicians based in those superstar cities.

Right now in the UK we're in the throes of another somewhat occult but rather important debate linked to our planning system. The national government is consulting on a standardised methodology for the 'objective assessment of (housing) need' or OAN. For the layman this is the way in which the planners (backed up by lucrative consultancies selling macroeconomic models) decide on the number of houses that need building in a given 'local planning authority' or LPA. The reason for this new system is pretty straightforward - without a great big stick lots of those LPAs won't be allocating anything close to the amounts of land needed to meet housing need in their area. We're solving a problem for San Francisco (or London) rather than a problem for Akron (or Burnley if you'd rather).

The case for devolution - appropriate because the splendid 1970s semi-punk band, Devo came from Akron - is very clear when you realise the extent to which near every policy in England is determined by the needs of London and a few other over-heating places. It's not just the obvious stuff about housing and transport but also things like health systems, benefits and policing that get policies designed for London, Cambridge and Brighton rather than Bradford, Oldham and Stoke. Despite this case, the English programme of devolution is ridiculous consisting as it does of 'coalitions of the willing' competing through 'asks' for the few crumbs of power central government is prepared to give up.

I guess this brings us to the real deal in devolution - taxes, benefits and regulation. There's a debate in the UK about returning business rates to local councils (note this is the cash not the ability to set the rate) but no-one has raised the question as to whether local councils should get other taxes devolved - stamp duty, for example - or whether things such as planning and licensing policies should be locally determined rather than constrained within a tightly drawn national framework. Akron could zero property taxes to incentivise development but such an option isn't available to Burnley. In the 1960s, Singapore could use corporation taxes and investment exemptions as a way to attract business investment - Leeds and Manchester can't. We talk about the 'Celtic Tiger' but fail to notice that it was low taxes and business-friendly regulation that made those big tech companies head to Ireland (the EU noticed as they're busy trying to clobber the Emerald Isle for having the audacity to be creative in order to develop its economy). None of these policies are available to the North of England (even the bits with Heseltine's mayors) - we don't even get to decide which roads get improved first, we just get a promise of a meeting with the national agency responsible. Same goes for flood defences, for health services and for education investment.

For the North of England - or for it's constituent regions - the case for devo rests with the fact that, without real devolved powers, policy will always be determined by the demands of England's superstar city, London. And, right now, the devo deals on offer involve elected mayors with limited (now officially termed "soft") power and not much else. It may be that the Two Andys will transform Birmingham and Manchester by sheer force of personality but I suspect that real devolved power - even what Wales has got would do, we needn't go full Scots - would be a deal more effective as a way of transforming the economy and society of England's provinces.


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