Has the British government abandoned its fiscal devolution plans?

Poor George. Image: Getty.

The recent Queen’s Speech made no mention of the Local Government Finance Bill. That suggests that the business rates reform has been put on ice, at least for the time being – and that the UK will continue to be one of the most centralised countries in the developed world.

This is a concern for a number of reasons. Firstly, business rates devolution could play a crucial role in supporting the development of local economies. It would enable local authorities to capture the fiscal benefits of economic growth within their area, therefore giving them a greater incentive to take the right decisions to improve their economy.

There is no such incentive under a full-grant system of funding, because local authorities generally receive an amount of money that corresponds to their needs, regardless of how well they perform. In other words, fiscal devolution rewards good policy practices by increasing local revenues. So far the move towards a 50 per cent retention structure, in place since 2011, has not been substantial enough to generate this incentive.

Secondly, business rates devolution would give local authorities more control over some of their revenues and how they spend them. This greater control is important from a policy point of view, as it means local authorities can develop more tailored policies, moving away from the one-size-fits-all model.

From a political perspective, it also results in stronger accountability for local government. Currently in the UK local taxation only represents 5 per cent of total tax revenues, compared to the OECD average of more than 10 per cent.


But this also comes with challenges, which may explain why the government has been relatively wary about moving towards more devolution.

One difficulty is making sure the system is well-designed to incentivise and reward good policy decisions to the largest number of places across the country. The system as it is currently constructed mainly rewards the building of more floor space – but this isn’t an appropriate solution everywhere because of the varying economic performance of places across the country. Another challenge is to make sure that the weakest economies will still be supported by this funding mechanism, without hindering too much the growth incentive in more successful places.

Of course, cities already possess a number of tools to increase their revenues – with or without business rates devolution – as the Centre for Cities’ latest report on public assets illustrates. By adopting a more entrepreneurial approach to using the assets at their disposal, cities can support economic growth, increase their tax base, and attract more businesses and jobs.

Nonetheless, business rates devolution would be a hugely important step towards reversing decades of centralisation in the British political system and giving cities more of the control they need to boost their economies. Scrapping these plans now would be a backwards step by the government.

It is unclear if the plan to devolve business rates has been dropped or simply postponed to later. But given how far discussions went – pilot areas to experiment the new system had been launched and are to be maintained – seeing the legislation reintroduced is a conceivable option.

Our upcoming work will reflect on those issues set above, and will focus on how business rates devolution can be designed so that every city and local authority across the country can get the most out of devolution. Watch this space for more details in the coming months.

Hugo Bessis is a researcher for the Centre for Cities, on whose blog this article originally appeared.

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Owning public space is expensive. So why do developers want to do it?

Granary Yard, London. Image: Getty.

A great deal has been written about privately owned public space, or POPS. A Guardian investigation earlier this year revealed the proliferation of “pseudo-public spaces”. Tales of people being watched, removed from or told off in POPS have spread online. Activists have taken to monitoring POPS, and politicians on both sides of the pond are calling for reforms in how they are run.

Local authorities’ motives for selling off public spaces are normally simple: getting companies to buy and maintain public space saves precious public pounds. Less straightforward and often overlooked in this debate is why – given the maintenance costs, public safety concerns and increasingly unflattering media attention – developers would actually want to own public space in the first place.

To answer that question it’s important to note that POPS can’t be viewed as isolated places, like parks or other public spaces might be. For the companies that own them, public spaces are bound up in the business that takes place inside their private buildings; POPS are tools that allow them, in one way or another, to boost profits.

Trade-offs

In some cities, such as Hong Kong and New York, ownership of public space is a trade-off for the right to bend the rules in planning and zoning. In 1961 New York introduced a policy that came to be known as ‘incentive zoning’. Developers who took on the provision of some public space could build wider, taller buildings, ignoring restrictions that had previously required staggered vertical growth to let sunlight and air into streets.

Since then, the city has allowed developers to build 20m square feet of private space in exchange for 80 acres of POPS, or 525 individual spaces, according to watchdog Advocates for Privately Owned Public Space (APOPS).

Several of those spaces lie in Trump Tower. Before the King of the Deal began construction on his new headquarters in 1979, he secured a pretty good deal with the city: Trump Tower would provide two atriums, two gardens, some restrooms and some benches for public use; in exchange 20 floors could be added to the top of the skyscraper. That’s quite a lot of condos.

Shockingly, the current president has not always kept up his end of the bargain and has been fined multiple times for dissuading members of the public from using POPS by doing things like placing flower pots on top of benches – violating a 1975 rule which said that companies had to provide amenities that actually make public spaces useable. The incident might suggest the failure of the ‘honour system’ under which POPS operate day-to-day. Once developers have secured their extra square footage, they might be tempted to undermine, subtly, the ‘public’ nature of their public spaces.

But what about where there aren’t necessarily planning benefits to providing public space? Why would companies go to the trouble of managing spaces that the council would otherwise take care of?


Attracting the ‘right sort’

Granary Square, part of the £5bn redevelopment of London’s Kings Cross, has been open since 2012. It is one of Europe’s largest privately-owned public spaces and has become a focal point for concerns over corporate control of public space. Yet developers of the neighbouring Coal Drop Yards site, due to open in October 2018, are also making their “dynamic new public space” a key point in marketing.

Cushman Wakefield, the real estate company in charge of Coal Drops Yard, says that the vision of the developers, Argent, has been to “retain the historical architecture to create a dramatic environment that will attract visitors to the 100,000 square feet of boutiques”. The key word here is “attract”. By designing and managing POPS, developers can attract the consumers who are essential to the success of their sites and who might be put off by a grubby council-managed square – or by a sterile shopping mall door.

A 2011 London Assembly Report found that the expansion of Canary Wharf in the 1990s was a turning point for developers who now “assume that they themselves will take ownership of an open space, with absolute control, in order to protect the value of the development as a whole”. In many ways this is a win-win situation; who doesn’t appreciate a nice water feature or shrub or whatever else big developer money can buy?

The caveat is, as academic Tridib Banerjee pointed out back in 2001: “The public is welcome as long as they are patrons of shops and restaurants, office workers, or clients of businesses located on the premises. But access to and use of the space is only a privilege and not a right” – hence the stories of security guards removing protesters or homeless people who threaten the aspirational appeal of places like Granary Square.

In the US, developers have taken this kind of space-curation even further, using public spaces as part of their formula for attracting the right kind of worker, as well as consumer, for nearby businesses. In Cincinnati, developer 3CDC transformed the notoriously crime-ridden Over-The-Rhine (OTR) neighbourhood into a young professional paradise. Pouring $47m into an initial make-over in 2010, 3CDC beautified parks and public space as well as private buildings.

To do so, the firm received $50 million  in funding from corporations like Procter and Gamble, whose Cincinnati headquarters sits to the South-West of OTR. This kind of hyper-gentrification has profoundly change the demographics of the neighbourhood – to the anger of many long-term residents – attracting, essentially, the kind of people who work at Procter and Gamble.

Elsewhere, in cities like Alpharetta, Georgia, 3CDC have taken their public space management even further, running events and entertainment designed to attract productive young people to otherwise dull neighbourhoods.

Data pools

The proposed partnership between the city of Toronto and Sidewalk Labs (owned by Google’s parent company Alphabet) has highlighted another motive for companies to own public space: the most modern of all resources, data.

Data collection is at the heart of the ‘smart city’ utopia: the idea that by turning public spaces and the people into them into a vast data pool, tech companies can find ways to improve transport, the environment and urban quality of life. If approved next year, Sidewalk would take over the mostly derelict east waterfront area, developing public and private space filled with sensors.

 Of course, this isn’t altruism. The Globe and Mail describe Sidewalk’s desired role as “the private garbage collectors of data”. It’s an apt phrase that reflects the merging of public service and private opportunity in Toronto’s future public space.

The data that Sidewalk could collect in Toronto would be used by Google in its commercial projects. Indeed, they’ve already done so in New York’s LinkNYC and London’s LinkUK. Kiosks installed around the cities provide the public with wifi and charging points, whilst monitoring traffic and pedestrians and generating data to feed into Google Maps.

The subway station at Hudson Yards, New York City. Image: Getty.

This is all pretty anodyne stuff. Data on how we move around public spaces is probably a small price to pay for more efficient transport information, and of course Sidewalk don’t own the areas around their Link Kiosks. But elsewhere companies’ plans to collect data in their POPS have sparked controversy. In New York’s Hudson Yards development – which Sidewalk also has a stake in – ambiguity over how visitors and residents can opt out of sharing their data when in its public square, have raised concerns over privacy.

In Toronto, Sidewalk have already offered to share their data with the city. However, Martin Kenney, researcher at the University of California at Davis and co-author of 2016’s ‘The Rise of the Platform Economy’, has warned that the potential value of a tech company collecting a community’s data should not be underestimated. “What’s really important is the deals Toronto cuts with Sidewalk may set terms and conditions for the rest of the world," he said after the announcement in October.

The project could crystallise all three motives behind the ownership of POPS. Alongside data collection, Sidewalk will likely have some leeway over planning regulations and will certainly tailor its public spaces to its ideal workers and consumers – Google have already announced that it would move its Canadian headquarters, from their current location in Downton Toronto, into the first pilot phase of the development.

Even if the Sidewalks Lab project never happens, the motives behind companies’ ownership of POPS tell us that cities’ public realms are of increasing interest to private hands.

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