American cities are much more powerful than British ones – and that's not always a good thing

They have signs like this one from Texas, for a start. Image: Daniel Schwen/Wikimedia Commons.

The Lincoln Institute of Land Policy is a Massachusetts-based think tank which researches the use, taxation and regulation of – yep, you guessed it – land. Every year, it holds a two day “Journalists’ Forum”, at which it gathers a bunch of relevant hacks, and invites mayors, government officials, and other land-appreciative types to talk to them. It’s basically my Mecca.

I was lucky enough to attend this year’s conference in Washington DC last week. The event was primarily concerned with American cities, and it left me thinking two Big Thoughts.

One was that the issues American cities are facing would be incredibly familiar to their peers here in blighty. They include austerity, in the aftermath of the 2008 crash; power struggles with higher levels of government; and the question of how you create jobs, when the heavy manufacturing industry your town was built on has just collapsed and/or moved to China.

The other Big Thought the conference left me with is quite how different the range of responses from American cities has been. Not because they have different goals; simply because they have a vastly different range of powers at their disposal.

So, here are five wonkish ways in which urban politics is different across the pond.


Land is plentiful

Okay, let’s start with an easy one. The landmass of the US is, give or take, 40 times that of the UK.

As a result, unlike the UK, the US is not gripped by a constant state public panic about the idea it might have to build on some things it hasn’t built on before. It’s actually possible for cities to expand to accommodate the growing number of people who want to live in them.

This is a bit of a mixed bag. It’s led to sprawling car-based cities like Houston and Atlantic which, while great from a house price point of view, are pretty ghastly in terms of the environment or walkabilty. And it hasn’t saved the whole country from housing crisis, or the economic damage that comes with it: plentiful land in Utah can’t provide homes in San Francisco.

But it does at least mean that, while housing came up, not once in two-days, did anyone snap “Brownfield!” and then look smug about it. And for that I am grateful.

Cities can set their own boundaries (sometimes)

One of the causes of the problems in Detroit, Congressman Dan Kildee told the conference, was that the state of Michigan revoked it’s powers to set its own boundaries. In the mid-20th century, huge numbers of people moved from the city proper to a ring of affluent commuter suburbs, in a phenomenon known as “white flight”.

Once upon a time, the state’s rules on municipal annexation meant that the city was empowered to expand its boundary (“city limits”) to include those new suburbs. But after the 1970s, it wasn’t. As a result, it lost those rich residents, and the taxes that came with them.

There are two things to notice about this story. The first is that cities can set their own boundaries. Not always – it depends on the rules set by the individual state – but often. As a result, you get oddities like this Chicago, whose city limits extend west in a 200 foot-wide strip so that it could incorporate O’Hare Airport.

Funny shape, Chicago. Image: Wikimedia Commons.

Imagine how much easier devolution deals would be if Leeds could unilaterally annex, say, Wakefield.

The other thing you’ll notice about that Detroit story, is...

US cities have financial freedom

...cities can set their own taxes. Which would be pretty handy, if they wanted to, say, build a new road.

They can issue municipal bonds pretty easily too: Carl Weisbrod, New York City’s director of planning, told the conference that the city’s goal is to keep its debt service payments below 15 per cent of its operating budget. In a city the size of New York, that’s a lot of room for manoeuvre.

All of which gives American cities a fair degree of financial freedom to invest in themselves. Mick Cornett, the mayor of Oklahoma City, gave a well-worn presentation about how the city had reinvented itself after tax breaks failed to persuade United Airlines to relocate to the city in the 1970s. The problem, Cornett explained, was that the firm sent a few executives and their partners to spend a weekend in Oklahoma City checking out their potential new home, and all of them were so bored that they decided they didn’t want to move there. (The firm went to Indianapolis instead, which probably burned a bit.)

After that, the city spent several decades reinventing itself: refilling a dry ditch that had once been a river with water; rebuilding its schools; building a street car. Now, the city has gone from a “suburb of nothing” to a city that people move to – voluntarily! – from as far away as California.

Water taxis in Oklahoma City's Bricktown district. This used to be a ditch. Image: SoonerFever/Wikimedia Commons.

It’s difficult to imagine a UK city pulling off this sort of trick, simply because they don’t have the ability to invest in themselves. UK cities can issue bonds, but the rules are set by the Treasury, and the vast majority haven’t. And while councils will soon get to retain their own business rates, that’s a long way from being able to levy local taxes. Most British cities just aren’t that powerful.


Transparency is assumed

Okay, this risks being a bit navel gazing, and isn’t specific to cities at all, so feel free to scroll past it. But it’s an important point, so I’m sticking it anyway

There was an entire presentation, from a member of the federal government, about how journalists can get the most out of publicly available data. Not only is that stuff out there – the government expects people to use it and, in a roundabout way, wants to help them do it.

The British authorities are, charitably, rather less comfortable with this sort of attention. We have a Freedom of Information Law – but we’ve only had it for 16 years, officials tend to see it as a burden rather than a constitutional right, and the man whose government introduced it noisily wishes he hasn’t.

In the US, for all its flaws, everyone in US politics knows who they work for and that they might be being watched. That dynamic is, er, less obvious in Britain.

Okay, now back to your regular service.

None of this is an unalloyed good

We’re pretty noisy advocates of more power for Britain’s cities. We love cities. I mean, it’s right there in the site’s name.

But there is another side to all this political and fiscal freedom. American cities can invest in themselves – but as a result, American cities are expected to invest in themselves.

The result is sometimes a downward spiral. The finances of cities like Detroit or Flint collapsed in part because, once the problems began, the cities lacked the resources to arrest the decline – and neither state nor federal government were coming to save them.

Britain’s cities are weak; Britain’s cities benefit from fiscal redistribution. There’s an extent to which these things are two sides of the same coin.

Jonn Elledge edits CityMetric and tweets too much.

For more of this stuff, follow us on Twitter or Facebook

 
 
 
 

“Without rent control we can’t hope to solve London’s housing crisis”

You BET! Oh GOD. Image: Getty.

Today, the mayor of London called for new powers to introduce rent controls in London. With ever increasing rents swallowing more of people’s income and driving poverty, the free market has clearly failed to provide affordable homes for Londoners. 

Created in 1988, the modern private rented sector was designed primarily to attract investment, with the balance of power weighted almost entirely in landlords’ favour. As social housing stock has been eroded, with more than 1 million fewer social rented homes today compared to 1980, and as the financialisation of homes has driven up house prices, more and more people are getting trapped private renting. In 1990 just 11 per cent of households in London rented privately, but by 2017 this figure had grown to 27 per cent; it is also home to an increasing number of families and older people. 

When I first moved to London, I spent years spending well over 50 per cent of my income on rent. Even without any dependent to support, after essentials my disposable income was vanishingly small. London has the highest rent to income ratio of any region, and the highest proportion of households spending over a third of their income on rent. High rents limit people’s lives, and in London this has become a major driver of poverty and inequality. In the three years leading up to 2015-16, 960,000 private renters were living in poverty, and over half of children growing up in private rented housing are living in poverty.

So carefully designed rent controls therefore have the potential to reduce poverty and may also contribute over time to the reduction of the housing benefit bill (although any housing bill reductions have to come after an expansion of the system, which has been subject to brutal cuts over the last decade). Rent controls may also support London’s employers, two-thirds of whom are struggling to recruit entry-level staff because of the shortage of affordable homes. 

It’s obvious that London rents are far too high, and now an increasing number of voices are calling for rent controls as part of the solution: 68 per cent of Londoners are in favour, and a growing renters’ movement has emerged. Groups like the London Renters Union have already secured a massive victory in the outlawing of section 21 ‘no fault’ evictions. But without rent control, landlords can still unfairly get rid of tenants by jacking up rents.


At the New Economics Foundation we’ve been working with the Mayor of London and the Greater London Authority to research what kind of rent control would work in London. Rent controls are often polarising in the UK but are commonplace elsewhere. New York controls rents on many properties, and Berlin has just introduced a five year “rental lid”, with the mayor citing a desire to not become “like London” as a motivation for the policy. 

A rent control that helps to solve London’s housing crisis would need to meet several criteria. Since rents have risen three times faster than average wages since 2010, rent control should initially brings rents down. Our research found that a 1 per cent reduction in rents for four years could lead to 20 per cent cheaper rents compared to where they would be otherwise. London also needs a rent control both within and between tenancies because otherwise landlords can just reset rents when tenancies end.

Without rent control we can’t hope to solve London’s housing crisis – but it’s not without risk. Decreases in landlord profits could encourage current landlords to exit the sector and discourage new ones from entering it. And a sharp reduction in the supply of privately rented homes would severely reduce housing options for Londoners, whilst reducing incentives for landlords to maintain and improve their properties.

Rent controls should be introduced in a stepped way to minimise risks for tenants. And we need more information on landlords, rents, and their business models in order to design a rent control which avoids unintended consequences.

Rent controls are also not a silver bullet. They need to be part of a package of solutions to London’s housing affordability crisis, including a large scale increase in social housebuilding and an improvement in housing benefit. However, private renting will be part of London’s housing system for some time to come, and the scale of the affordability crisis in London means that the question of rent controls is no longer “if”, but increasingly “how”. 

Joe Beswick is head of housing & land at the New Economics Foundation.