Invention and Intervention are poles apart
ECONOMIC PERSPECTIVES 147
When economic principles are allowed to operate freely, any competing impulses are resolved without recourse to protective trade barriers or using redistributive taxes to subsidise sectors that otherwise would fail. The latest escapade is Michael Gove’s intention, as Housing Secretary, to solve the dire housing shortage by “changing the law” to encourage landlords to convert empty commercial property into homes.
In the wake of two by-election catastrophes, and a general election looming, he and other ministers are displaying an uncommon sensitivity to issues most likely to determine its outcome. Ministers know that if young voters cannot harbour any realistic hope of owning or renting their own homes they’ll recognise, yet again, the extent of this government’s record of reneging on every promise.
Gove doesn’t address the question of why so many High Street office blocks and shops lie empty, much of it bordering on dereliction, because that would mean explaining how the government’s own half-baked lockdown strategy contributed to this terrible misallocation of resources in the first place. You only have to look: how many nail parlours, tattoo shops, coffee lounges, charity shops, tanning salons, Kebab houses can one suburban High Street sustain? The answer lies in the rigidly enforced zoning bye-laws that no-one voted for. What if the Council receives an application for, say, establishing a drama school? Or a pottery studio for disabled adults and retired folk? Under the Council’s faceless rulebook such applications have no chance!
Nor does Mr Gove explain why a builder’s commercial plan to turn an empty office into a desirable and desperately needed bed-sit apartment requires a change in law: if the need for dwellings exceeds the need for office blocks, why is no private sector business permitted to fulfil what is, and always has been, a screamingly obvious need?
Council intervention is a scourge
The reason is that prior “Council approval” is required, and we all know what that means. Recent measures of productivity in the public sector demonstrate that it languishes at an all-time low, while its spending climbs relentlessly. The paucity of affordable housing has been a potent political football for 30 or more years, during which there has been little discernible improvement. Yet 6 million people are now on the government payroll, and the higher private sector output can no longer compensate: the “working-from-home” ethos persists in the corporate sector too, despite evidence that it makes staff less productive.
We also see it in demands for a 4-day week with no corresponding reduction in pay, and staff openly compete to see how little work they can get away with. There was a time when the alternative to work was penury – but not now. The Office for National Statistics reports that the total of people not working (or seeking work) stands at 9.3 million, including 2.8 million listed as “long-term sick”, and new claims for benefits related to long-term health conditions have doubled. While it’s obvious that this languorous ethos cannot continue, ministers are too terrified to pass moral judgments. Yet when benefits are generous enough to live on, thousands will choose not to work – even the stigmas have long gone.
Gove’s latest initiative is simply a code for removing obstacles that should never have become part of the law in the first place. We can therefore expect a desperate overhaul of grotesquely prohibitive planning rules; we can expect Gove to scrap size-and-time limits for turning offices into homes; and to remove restrictions on brownfield building sites. We recognise this syndrome only too well: wasteful and unwarranted intervention always followed by clumsy reversal – and, always, the hope that local councils will co-operate.
But local government is the arena in which some of the most scandalously obnoxious features of civic life are inflicted. It enables Town Hall jobsworths justify their existence by ensuring a limitless supply of “important things to do”, at which point Parkinson’s First Law comes into operation: “The total amount of work will always increase to fill all the allotted time” – but whether citizens would freely vote for that work, or spend their own money on it, isn’t put to the test.
Then Parkinson’s Second Law kicks in: “Expenditure will always increase in proportion to income growth”. (Remember: we are talking about the “State”, and it’s not their money!) If central government increases a Council’s budgetary allocation by 10%, its departmental expenditure will magically be matched by an equivalent increase - and its officials are guaranteed to achieve it, lest they lose it in next year’s spending round. This matters to the officials because the size of the departmental budget reflects its status – and with it, hierarchical seniority and pay awards.
Procrastination and delay are rife
Officials always multiply their subordinates, but never their rivals. New joiners pick up the rules of the game and “create” work for each other. Procrastination and delay are an art-form, inflicted on citizens as an everyday experience. This pattern is self-perpetuating: all departmental incumbents are playing the same game, no matter how antithetical to the performance of anything that would require actual work rather than, say, a temporary traffic-light and a barrier around a pothole in which you will never see a worker. But at least the miles of tail-backed traffic looks like something has been achieved, despite the collateral pollution.
We are up against the civil service’s default solution to any crisis: it always makes life easier for its staff and more difficult for its customers. To enable a department to solve the problem of phoneline congestion, it closes its lines at 1 pm to leave the afternoon free for clearing the backlog. Yet all that happens is a shift in the timing of phone-line congestion to the mornings. Macbeth’s rueful reflections on life serve perfectly if applied to the workings of local government: “it is a tale told by an idiot, full of sound and fury, signifying nothing.”
It's no wonder that the failure of local councils to provide even the most rudimentary services manifests in a frightening level of financial failure. No fewer than 15 local government Councils, the latest and biggest being Birmingham, have unashamedly filed for their own bankruptcy over the past 3 months without a shred of risk to their officials, let alone censure for conduct that, in any private sector business, would have scarred their reputation and employment prospects for the foreseeable future - plus a requirement to contribute personally towards making up those losses.
These myriad failures represent an amazing opportunity for entrepreneurial initiative to fulfil the needs. There would be risks, of course – but calculating risk goes with the enterprise badge, and if the relevant factors are properly weighed up and assessed there could be huge rewards – for the public as well as the businesses. But (Hamlet this time) ‘tis a consummation devoutly to be wished!
Emile Woolf – February 2024