Download RacoHSA20121 - Housing Studies Association

The Localism Agenda, Privatisation, and the
Emergence of Hyper-plural Local Governance
Mike Raco
Bartlett School of Planning
University College London
Introduction
• What does the Coalition ‘see’, what remains ‘invisible’
and what explains its selective visions?
• Barriers to localism and the changing nature of the
‘state’
• Not too much government but too much governance
• The key role of asset ownership
• Implications for (local) democracy and the future of
the democratic state
• The politics of ‘perpetual crisis’ or the ‘end times’
(Ẑiẑek, 2011)
• What has been left for the state to do?
Localities as Subjects and Objects of Policy
• ‘Localities themselves are best placed to
understand the drivers and barriers to local
growth and prosperity, and as such localities
should lead their own development to release
their economic potential. Local authorities,
working with local businesses and others can
help create the right conditions for investment
and innovation….[Aim to] promote efficient and
dynamic markets and increasing confidence to
invest…with focused investment’
A Dependency Culture?
• “The Coalition Government is ambitious for
all of our communities, and we recognise
that the challenges they face are not the
same. So we are also investing in a £1.4
billion Regional Growth Fund over the next
three years, which will help areas which
depend too heavily on the public sector
for jobs, helping create more sustainable
private sector employment” (Clegg, 2010:
p.3)
Barriers to Localism
• Key role of legacies and policy de-construction
• The ‘judicialisation’ of public policy
• States regulated by the private sector and private
sector regulated by states (Braithwaite, 2008)
• Hyper-pluralisation of ownership structures and
post-political institutional landscapes
• Institutional re-placing of power and
accountability away from the local scale in the
1990s and 2000s
• The post-politics of the new localism
Broader Geopolitical Changes
• Acquiring contracts to build and operate EU
welfare assets is the world’s biggest business
opportunity (Murphy, 2011)
• The rise of ‘regulatory capitalism’ (Braithwaite,
2008)
• General Agreement on Trade in Services
(GATS):
– Article I(3) of the GATS excludes “services supplied in
the exercise of governmental authority”.
• Global firms are calling for ‘liberalisation’
• Austerity governance and privatisation
• ‘private industry has discovered that rather
than trying to innovate new products in an
uncertain consumer marketplace it is much
easier to make profits from the certain
commodities that people are always going
to need, such as health, education, local
government services and so on that we
once the preserve of government’, (Richard
Murphy, 2011: p.5)
• New forms of elitism have been established
in which powerful private sector investors
benefit by ‘securing irrevocable contractual
claims over taxation revenues that they will
manage henceforth in their own private
companies which they claim will undertake
the tasks of the state so much better than
the state could do itself’ (Richard Murphy,
2011: p.30)
Governance: Key role of assets
• Land Ownership
– Unequal distribution of land ownership (e.g. 30% land in
England and Wales unregistered; 69% owned by 0.6%
of the population)
– No national register of assets
– Land banking and planning permission
– Taxation of unearned wealth – Land Value Taxes
• Changing nature of state assets:
– Privatisation and Private Finance Initiatives
– £280billion+ of repayment liabilities for services and
assets
• New assets to be funded by international investors
Private Finance Initiatives (PFI)
• A prolific type of Public-Private-Partnership
• Private companies are not just partners but:
–
–
–
–
Design
Build
Finance
Operate
• The state pays nothing to start with but then pays
private company under long-term contract
• Model copied across EU, Australasia, and North
America
Problems with PFI model
• Antithesis of localism agenda
• Removal or ‘re-placing’ of democratic
accountability
• The increased costs of private finance and poor
value for money
• Loss of strategic planning control over key welfare
infrastructure
• Representative or participative democracy?
• Public sector institutions lack the skills to
negotiate effectively with private companies
Stakeholder Types
Greenwich (Queen Elizabeth
Hospital)

Herbert Smith Ltd – Legal

KPMG – Financial
Bromley (Princess Royal
University Hospital)

Herbert Smith Ltd. – Legal

Arthur Andersen – Financial

Charterhouse – Financial

Cyril Sweett

AYH – Technical

Richard Ellis
Lewisham (University Hospital
Redevelopment)

Ernst & Young – Financial

Cundall Johnston –
Technical

Cyril Sweett

Bevan Brittan – Legal

Llwewlyn-Davies Architects
Private Sector Contractor



Shareholders/Members/Partners


Meridian Hospital Company
Plc
Innisfree (50%)
Kvaerner (50%)
Skanska – Design & Build
ISS Mediclean Ltd – Soft FM
Skanska Rashleigh
Weatherfoil Facilities Services
– Hard FM
George Trew Dunn – Architect

Public Sector Authority Advisors
Private Sector Contractors




Private Sector Advisor(s)
N/A
















Principal Bank/Bond Arranger

Barclays Capital Plc.




United Healthcare
(Farnborough Hospital) Ltd
Barclays Private Equity
(42.55%)
Innisfree (42.55%)
Taylor Woodrow Construction
(14.9%)
Taylor Woodrow - Design &
Build
ISS Mediclean Ltd.
Taylor Woodrow – Hard FM
Scottish Hydro-Electric plc
Healthsource Ltd.
Barratt Homes
Healthcare Environments
Coda Architects
Desdner Kleinwort Benson –
Financial
DLA Piper – Legal
The Denis Wilson Partnership
Ltd.
Waterman Partnership –
Technical
Zisman Bowyer & Partners Technical
James Nisbet & Partners –
Technical
Dresdner Kleinwort Benson
ABN AMRO
Paribas
Lloyds-TSB















Ravensbourne Health
Services Ltd
Mowlem (50%)
Barclays European
Infrastructure (50%)
Mowlem – Design & Build
Sovereign Hospital Services
– Hard FM
Healthcare Environments
RTKL Associates
Espirito Santo Investments
– Financial
Linklaters – Legal
Aon – Insurance
Gleeds
Troupe Bywaters & Anders
Healthcare Environments
Jacobs Gibb – Technical
Dexia Public Finance Bank
Sumitomo Mitsui Banking
Corporation
Past / Future Commitments by Sector (£m)
Transport
Office accomodation
London Underground / DLR
Leisure
Justice
Post-2011
IT
Pre-2011
Housing
72,949
Health
Environment
Energy
Emergency services
41,049
Education
Defense
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Social Housing PFIs in the UK
• Treasury Figures:
– 22 projects - £1.156billion of capital spending
– Total of £3.716billion in re-payments
– Re-payment span 2000-2040
• Emergence of super-companies under DFBO
rules
• Taking on more and more of local government’s
traditional roles
Housing PFI in the UK
• Major firms now organise:
– Costs and
– Community ‘consultation’
– Service provision
• Citizens’ experiences of ‘the state’ shape wider
legitimacy and broader understandings
• Linked to wider changes – 30 year Housing
Revenue Account Business Plans
• New Investment and Service Partnerships
Stakeholder Types
Public Sector Authority Advisors
Private Sector Contractor
Shareholders/Members/Partners
Companies
 PricewaterhouseCoopers (PwC) – Financial

Gardner & Theobold – Technical

Trowers & Hamlins – Legal

Jardine Lloyd Thompson Risk Solutions Ltd - Insurance


Building Best Value in Brockley (B3)
Regenter 100%:

John Laing

Pinnacle

Higgins Construction - Design & Build

Pinnacle - Soft FM

Equipe - Hard FM (bought out by the Rydon Group 2010)
Private Sector Advisor(s)




Gleeds – Technical
Navigant Consulting – Financial
Denton Wilde Spate – Legal
JLT - Insurance
Principal Bank/Bond Arranger

Barclays Capital Plc.
Private Sector Contractors
Implications of the PFI
• Re-payments of £314m over 20 years
• Costs – over £2million spent on legal bills alone
• Time delays - 44 month delay between the
estimated date of contract completion in October
2003 and its realisation in June 2007
• Major contractual inflexibilities and policy lock-in
• Incentives to increase costs to boost profits
• But all homes reached ‘Decent Standard’ by 2010
Housing Reform in South East London
• A costly ‘democratic premium’
• New locations of authority and power at the
local level
• International firms, bondholders, regulators,
lawyers, accountants, business services
advisers
• Exemplifies wider trends under localist agenda
• Infrastructure as an investment space
Response to Local Demands/complaints
• ‘The PFI is by its nature a contractual relationship
between the Council and the PFI contractor
Regenter B3. The contract was subject to a
competitive tendering process and part of the
contractual obligations relating to both parties are
of course financial. The Council regularly reviews
progress but any changes in the current
arrangements may prejudice the basis of the
contract and so have to be taken fully into
account’ (Mayor of Lewisham, p.11).
The New Lexicon of Localism…
•
•
•
•
•
•
•
•
•
•
Capital Costs
Competitive Dialogue Procurement Process
Contractual compliance
De-scoping of risks
Derogation Approval
Interface/risk matrices
Liabilities
Risk Profiles
Special Purpose Vehicles
Etc, etc. etc….
Conclusions
• Too much governance not enough government
• The local as a space to be broken up and
converted into investment opportunities
• State reforms justified by a politics of ‘perpetual
crisis’
• Agenda intent on further pluralisation, not
localisation
• What does localism mean in this context?