It was suggested this week that a group of Tory MPs will propose council tax discounts as the way to break through Britain’s Nimby problem. The Conservative Growth Group, a faction largely formed from Liz Truss’s backers, is expected to announce an initiative of discounts in areas that allow development, as a sop to those who would otherwise block homes. Yet the plan seems to show the same sort of muddled thinking that led to Truss’s premiership imploding.
The proposal is a typical bit of economically liberal Tory thinking. Truss and her allies believe incentives matter, and that tax incentives are the ones that governments can use to encourage the sort of behaviour they want. Offer people a cut, they figure, and they will change their behaviour, turning Nimbys into Yimbys. Yet this seems a spurious rationale.
To start with, a council tax cut is a fairly limited benefit. For the average household, the tax is around £2,000 a year, not nothing but hardly life-changing, especially when the poorest already benefit from means-tested reductions. Even for the highest rate, a cut of £5,000 for a Band H property in Rutland looks pretty paltry when you consider you’d need a home worth about £2m to be paying it. The policy also intends to focus on cities, where council tax rates are lower still due to the density of population. An incentive only works if people see it as valuable, and even a few grand off council tax is unlikely to assuage those who fear years of disruption or their own houses losing value.
Elsewhere, we’ve seen how incentivisation has failed because people saw “bribes” as a sign their interests were being abused. Offers of free appliances and discounted heating were not enough to sway locals in Ellesmere Port, Cheshire, to take part in trials of using hydrogen gas as fuel in homes. Opposition intensified as locals saw this as a way of buying off their consent. There has been a similar reaction in Essex and Suffolk, where cash payments have been proposed for allowing pylons connecting offshore wind farms to the grid. There is every chance that if this policy is rolled out, it will only increase opposition to local building.
Even if the locals are swayed, the success of a policy would bring a bigger headache for councils whose finances are already stretched. A recent BBC investigation found that the average council anticipates a £33m deficit by 2025-26. Further cuts to council revenues would only exacerbate this, with little room left for councils to reduce their spending.
Many councils are already struggling to provide the statutory services required of them. In particular, a failure to deal with social care at Westminster has left councils to bear the increasing burden. Local authorities are the main funders of adult care, and the bill is only set to increase with an ageing population. Meg Hillier, who chairs the Public Accounts Select Committee, described the state of council finances as “flashing red across the board”. Rebates for richer homeowners are unlikely to improve this situation.
The proposed policy is riddled with issues that make it unlikely to work. Homeowners perhaps aren’t the hard rationalists that the Growth Group thinks they are, and may well baulk at the attempt at bribery. Or else, weighing up their options, they may think the incentive isn’t worth the cost of embracing development. Even if they do, there is likely to be controversy over giving rebates to richer locals when councils are straining after more than a decade of cuts to the central government grant.
This points to a wider problem in planning – the system now is a vetoer’s charter. The largely discretionary system makes it easier to block developments than one that has a presumption in favour of development. Removing the scope of campaigners to stop much-needed housing is a simpler policy than attempting to buy them off. Though one fraught with political difficulties.
The Conservative Growth Group has, however, fallen into the same trap that Liz Truss did the first time around. “Financial bungs to those who agree with us” isn’t necessarily a solution to a large systemic problem. The council tax bribe is unlikely to be effective in its aims, nor will it be particularly palatable for those who see it as another way of enriching the well-housed.
[See also: The town that was gambled away]