There’s an ongoing conversation in the United Kingdom right about state capacity and centralization. The United Kingdom is notable for how centralized it is compared with peer first-world democracies of similar size. It also has weak state capacity on matters including infrastructure construction, which quite a lot of analysts and thinktanks assume is connected. Most recently, I’ve seen conversations on Bluesky in British media, talking about how the loss of state capacity in the UK in the last 45 years has really been about centralization of functions that local and county governments used to do and therefore the solution is to devolve some functions in England to counties or regions. Much of this discourse is by people I deeply respect, like the Financial Times’ Stephen Bush, pointing out sundry services Greater London ran before Margaret Thatcher’s anti-local government reforms in the 1980s. And yet none of this is relevant to infrastructure construction costs and the country’s inability to build more than a half-phase high-speed line at costs that would be high for a subway.

English centralization…

England has been very centralized for a long time, since the Early Middle Ages. It never really had anything like the German or Italian states, or even French provinces, not have its reforms to local government established anything like the French regions. Scotland, Wales, and Northern Ireland have extensive devolution, but 85% of the population lives in England, and the overall character of the state is never driven by peripheral regions comprising 15% of it. Indeed, in the OECD, by one measure, the United Kingdom has the single largest share of taxes going to the central government, and the second largest share of spending decided by the central government behind New Zealand. The other reasonable measure of centralization would be to do the same but assign social security to the central government, since it invariably either is national or comes with extensive equalization payments; then a few small countries like Israel and Ireland end up more centralized, but none of the European countries of comparable population.

How to fund and what to devolve to local government in England has been a complex issue over the last few generations. Local taxation is weak, and there is nothing like the German system in which the federal government, which collects 95% of taxes, distributes the taxes to the states by formula to do with as they please. The succession of local council tax programs to fund such governments culminated in Margaret Thatcher’s community charge, better known as the poll tax, which was so unpopular it led to her overthrow in a palace coup; at the time, Labour was polling 20% ahead due to backlash against the proposal.

Thatcher herself worked to disempower regional governance that had been established in the two decades before she took office. She aimed to destroy three institutions that she believed were keeping Britain socialist and thus backward: unions, public-sector bureaucracies, and regional governments. On the last point, she led a reform that eliminated regional governance in the Metropolitan Counties, creating a unique situation in which the constituent municipalities of these counties are single-tier municipalities with no level of governance between them and the state. Anything else would permit powerful Labour regions to challenge state privatization and deunionization schemes. Indeed, reforms by the New Tories to undo this and devolve some functions to the Met Counties created elected mayors, and now the mayor of Greater Manchester, Andy Burnham, has arisen as a powerful Labour politician who is mooted by many (including the Green Party) as a potential replacement for Keir Starmer in an intra-party palace coup.

…is not the reason for high costs

The truth is that while the United Kingdom is atypically centralized, at least in England, the exact same problems are seen across the Anglosphere, with roughly the same origin (except in the United States, whose problems have a different origin). British costs exploded in the 1990s, and Canadian and Australian costs followed suit in the 2000s and 2010s, imitating bad British practices. Australia and Canada both have some of the fiscally strongest states/provinces in the OECD, the exact opposite of the United Kingdom.

Across Europe, subtracting the United Kingdom, there isn’t an obvious relationship between centralization and poor state capacity. The Nordic countries are both rather devolved for small unitary states, managing health care and education subnationally. For example, in Finland it’s done in 21 health care regions, with ongoing debates over reducing the number of regions, but no attempt to eliminate devolution and make it a national system, in a country that after all has about the same population as Scotland. On the other hand, Italy is not much less centralized than the United Kingdom, and its infrastructure construction program is excellent, limited by money and uncertain growth prospects but perfectly capable of building a national high-speed rail network for less than half the budget of the 225 km High Speed 2. In democratic Europe, the strongest correlate of high costs is exposure to the United Kingdom and its way of doing things, with the Netherlands having the worst costs and most compromised infrastructure construction.

The privatization of state planning

At the Transit Costs Project, we are putting together a cost report on London, largely about Crossrail but also other recent urban rail expansion including the Docklands Light Railway and the Northern line extension. And what comes out of this history is that it’s not really about centralization. Rather, the United Kingdom invented what I called in the Stockholm report the globalized system, in which planning functions are privatized to large consultant firms while the role of the state is reduced to at most light oversight.

The explosion in costs in the 1990s, producing the Jubilee line extension at nearly four times the real per-km cost of the original Jubilee line, was part of this transition. It was easy to miss the first time we looked because the telltale signs of the globalized system, like design-build contracts, weren’t there yet. If anything, DLR was more privatized in its project delivery, and had reasonable costs until the Bank extension. And yet, delving more deeply, we (by which I mean Borners) found that beneath the surface it did have quite a lot of those negative features.

For example, while the Jubilee line extension was designed with in-house planning, it was understood that future projects would transition to more privatized planning. Thus, there was no expectation that the knowledge gained while building the extension would stick around, and at any rate, there was pressure to build like in Hong Kong, where pro-privatization British consultants cut their teeth in the 1980s and early 1990s. In effect, while the extension was designed in-house, it had all the features of a special purpose delivery vehicle (SPDV, or SPV), the preferred British and increasingly pan-Anglosphere way of delivering large projects: each project’s team is specific to the project itself and after completion the employees, drawn from a mix of private consultancies and public agencies, scatter and are not reassembled as a team for future projects. DLR was if anything the opposite: it was nominally private in its delivery but the same designers were involved throughout, moving between private employers and functions, so it was not de facto an SPDV, whereas the Jubilee line extension de facto was one.

Why do Brits blame centralization?

High costs in the United Kingdom cannot have much to do with the extent of devolution. Australia and Canada have adopted the same way of planning, after all. The British system in which big decisions can only be made by the minister and not by senior, let alone mid-level, civil servants, can be implemented regardless of scale, and Canadian provinces and Australian states are thus without exception not capable of building infrastructure for costs that were routine as late as 20 years ago.

But it can look like centralization, for all of the following reasons:

• The United Kingdom really does have issues with overcentralization and underempowerment of regional governments, though the latter is being fixed to some extent, at least for the Met Counties. It is natural to see two governance problems that cooccur and assume they’re related.
• The origin of the British cost explosion is, ideologically, the same process that also disempowered regional governments. It took some work to figure out the exact process, which was not at all the same as the conversion of the Met Counties to single-tier authorities. Indeed, in Canada the disempowerment of local or regional authorities never happened, but the transition to privatized planning with political rather than civil service oversight did happen, with large design-build contracts with more consultant involvement.
• The implementation of centralization in the United Kingdom has relied on ministerial approvals, and those genuinely bottleneck the state. A better system of centralization, such as in Italy, relies on trust in the civil service. But a prime minister whose favorite television show was Yes, Minister would never have produced such a system.

But that it may be reasonable for a Brit who doesn’t look too closely at how Canada and Australia fail in parallel ways to assume that it’s about centralization does not mean that it is in fact about centralization. Centralized states that don’t speak English routinely build infrastructure efficiently and highly devolved ones that do are incapable of relieving the most important bottlenecks in their city centers.