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Short-term thinking costs taxpayers a fortune.

Short-term thinking costs taxpayers a fortune

One of the most colourful clashes in UK politics took place in the early 1980s between right-wing Conservative Prime Minister Margaret Thatcher and left-wing Labour leader of the Greater London Council (GLC) Ken Livingstone.

From his base at County Hall, directly across the River Thames from the Palace of Westminster, Livingstone deliberately antagonised Thatcher through his Fare’s Fair policy of cutting the cost of Tube and bus travel in the capital, meeting Sinn Fein MP Gerry Adams at a time when he was banned from entering Britain because of his links with the Provisional IRA, and endorsing a statue of Nelson Mandela at a time when Thatcher regarded the future South African president as a terrorist. For a time, Livingstone even posted a billboard of London's rising unemployment figures on the side of County Hall.

The GLC and other metropolitan county councils in England eventually became such a thorn in Mrs Thatcher’s side that she abolished them, charging the so-called London Residuary Body with, among other things, selling off the iconic County Hall building. Transformed into a luxury hotel, aquarium, film museum and apartments, it raised around £100 million for the London boroughs that took over many of the GLC’s former functions.

The Labour Government elected in 1997 was committed to bringing back London-wide government. A referendum two years later approved the establishment of a new London authority and elected mayor. Their base is an iconic building down-river from the old County Hall, opposite Tower Bridge. Constructed at a cost of some £65 million, the new City Hall is held on a 25-year lease.

The final receipts from the sale of the old County Hall were still coming in when decisions were being taken about the new base to be rented for a London-wide authority. Political imperatives and short-term thinking, rather than economic good sense, drove the property swap.

In the May 2011 issue of Public Finance, Baber argues that UK local authorities should not focus on selling buildings as they become vacant to raise immediate money. The author underlines that a more holistic approach to asset planning is needed, which will save money and offer better outcomes for local communities in the long run.

A longer-term view is also needed on the repair and maintenance of public assets. In the January 2011 issue of the Banker, Lambe reports on the dire condition of much infrastructure in the USA - including roads, bridges and airports - resulting from the shortage of money on the part of state and municipal governments in the aftermath of the economic and financial crisis and the recession.

US public authorities are so deeply in debt that private capital would seem to offer the only solution to bringing these crumbling assets back up to standard. The China Investment Corporation, China's huge sovereign-wealth fund, seems to be particularly keen to get involved.

Lambe claims that the state and municipal authorities have generally been reluctant to involve private - often foreign - companies in the work. Finally, though, they are beginning to understand that the old US model - of federal government pouring money into states and municipalities - is no longer feasible.

Partnership and teamwork will be the watchwords in the years ahead, as governments strive increasingly to rebuild their battered, post-recession balance sheets. Petty bickering between public and private sectors, or between central, regional and local tiers of government, will increasingly be seen for what it has always been - a luxury we cannot afford.