Financialization and Local Statecraft

Abstract The UK government reduced expenditure and introduced local financial self-sufficiency in pursuing austerity after the 2008 crash, forcing local governments in England to find savings and new income sources to close funding gaps. As new financial strategies and practices were devised, ‘councillors at the casino’ were characterized taking risks with local taxpayers’ money and jeopardizing local public service provision. Beyond the high-profile cases in an internationally resonant local public sector reform laboratory, Financialization and Local Statecraft examines the wider landscape across local government in England since 2010: a local tier of over 300 governments, managing £100 billion of revenue expenditure, and employing almost 1.5 million providing services to over 56 million people across the country. Underpinned by local statehood attributes, a new local statecraft theory explains how local statecrafters act in realms including financial strategies and risks, external advice, borrowing and debt management, and in-area and out-of-area activities. The framework reveals and accounts for their vanguard, intermediate, and long-tail approaches with differing engagements with financialization. While limited within the overall landscape, such relations and UK government policy are rewiring and rescaling local statecraft and relocating risks and uncertainties onto local government and the wider local state. UK government policy and the extension and intensification of financialization expose the local state’s financial sustainability and resilience in the longer term. They raise fundamental questions about what local government is for and how it should be funded. Erosion of local accountability of local statecraft in financialization risks a depoliticized and post-democratic local governance.