For those children of Thatcherism fed on a diet of red-blooded capitalism, civic entrepreneurship — indeed, anything reeking of public sector initiative — was seen as an oxymoron.
The former prime minister decreed that councils had no business interfering in the free market. So their ability to determine and keep business rates was lost 19 years ago — to Whitehall, naturally.
Local enterprise companies, established in several areas to promote community endeavour, were outlawed. Conservative-created urban development corporations were seen as a brave new world of business-led enterprise, designed to bypass town halls with sweeping planning powers.
Much of it, of course, was nonsense, as Lord Heseltine, architect of development corporations in London Docklands and elsewhere, readily acknowledges. UDCs, he now says, were of their time; a necessary instrument of the state for regeneration when councils couldn’t be trusted to be responsible. Now, he insists, they can. As a born-again ‘localist’, Hezza is not alone in extolling the virtues of municipal enterprise.
Around the country, several big councils, from Birmingham to Essex, Sheffield to Manchester — as well as groups of authorities binding together under emerging city-region compacts — are going back to the future.
They are seizing the higher economic ground, with innovative projects that take them well beyond conventional service provision: municipal banking, post office rescues, land acquisition, council-house building and much else under the all-embracing umbrella of ‘economic and social development’.
To students of municipal history, of course, it is nothing new. The old city corporations civilised the country long before any government developed a social agenda. In the later nineteenth century, they even provided banking in some cases. Profits from this, as well as the provision of utilities, were ploughed back into town halls and recycled for the public good.
As mayor of Birmingham, the legendary Joseph Chamberlain, sometime Liberal and Tory, set about regenerating the city — personally bankrolling some of it, it has to be said. Some of the new Tories on Birmingham’s Conservative-run council take inspiration from the great man. ‘We’re pragmatic, not dogmatic,’ according to Neville Summerfield, the council’s Cabinet member for regeneration. ‘We look back with pride to the days of Chamberlain — the great philanthropist — and those who had a belief in local government and its function in society.’
A case in point is the city’s recently announced plans for Britain’s biggest public library, partly financed by the council with £159m of public funds. The steel and glass building, labelled a ‘flagship for the regeneration of Birmingham’ will be second only to the British Library (which does not lend books).
Birmingham is now examining the feasibility of a municipal bank. Last week, it paid £91m for a long lease on the Pallasades shopping centre to trigger the £600m rebuilding of the heavily congested New Street station with Network Rail.
In the days of Chamberlain, of course — and much later — councils were not inspected, regulated and ground down by central diktat. All that is relatively recent. They could borrow freely, issue bonds and build houses secure in the knowledge that any loan would not be counted as a government debt. No such luck today — yet.
But didn’t Prime Minister Gordon Brown announce in January that town halls would soon be free to build houses again? In theory, of course, they can; 290 went up over the past recorded 12 months. But to build even on a modest scale, the Treasury has to let councils raise cash in a similar way to registered social landlords. Although partly funded by the taxpayer, RSLs can borrow billions off the government balance sheet because they are not classed as public bodies.
If Brown’s announcement is not to become empty rhetoric, Chancellor Alistair Darling has to break with current Treasury orthodoxy and carry out the PM’s pledge in this month’s Budget.
He is also due to announce what conurbations, or ‘city-regions’, will be given London-style powers to pilot new forms of governance. They will be judged, in Whitehall parlance, on ‘their potential contribution to regional and national growth’. Greater Manchester is top of the list.
But it is far from clear whether the government is prepared to make the final leap by devolving powers, as promised — from the Learning and Skills Council, other quangos and from regional development agencies — to new city-region compacts.
To be fair, some senior ministers can see merit in setting councils free and transferring functions from national government to town halls. But whether the Whitehall machine is capable of producing the goods is another matter.
Peter Hetherington writes on community affairs and regeneration
