National government in the casino?

Across the literature coming out of much of the Anglophone world and Europe, there has been a sustained concern since the global financial crisis with the impacts of financialization at the local scale (Aalbers, 2020; Christophers, 2019; Kass et al., 2023; Peck and Whiteside, 2016; Ward and Wood, 2021). While much of this literature begins from the assumption that a process termed financialization is actively happening and that it is producing effects on the social and built environment, in his new book Financialization and Local Statecraft Andy Pike begins his inquiry into the so-called financialized local state elsewhere, asking the much broader question “what is local government for and how can it be funded?” (p. 228). Where so much of the work in this field is heavily steeped in theory—taking the ever-stretched concept of financialization (Christophers, 2015) as a given—this deeply empirical book, grounded in extensive document analysis, over 50 qualitative interviews, and 10 in-depth case summaries, is something to be admired and was a major undertaking to produce. Furthermore, like any good work of economic geography or geographical political economy, Pike’s book highlights the importance of recognizing both interdependencies and differentiation across space. Grounded in a strategic-relational approach to state theory (Jessop, 2016) and focused on the era following the global 2008–2009 financial crisis, he demonstrates the need for the work he has done, as “the differentiated landscape across England from 2010 and its effects and implications for people and places are incompletely known and poorly understood” (p. 13).

One major aim of the book, which Pike accomplishes in our view, is to dispel the growing narrative of local government actors acting like “councillors in the casino” (p. 5). Using extensive data, Pike demonstrates that local governments’ engagements with finance and financial markets are highly differentiated, with the vast majority having either very cautious or non-existent engagements with these novel sources of funding. Further still, he shows that, while many innovative approaches to public, or municipal, finance have meant increased commercialization (local government operating in more market-facing ways) and/or “entrepreneurialisation,” (the “introduction of more entrepreneurial forms of statecraft” (p. 39)), this does not necessarily indicate an increased engagement by local states with commercial finance, per se. Another critical distinction is between the use of finance as a means of delivering a policy objective versus its use as a means of generating funds. This distinction between commercial and municipal finance is an important one that is made in the book, helping to introduce further critical distinctions that provide increased clarity to the post-crisis landscape of UK local government. By creating a typology of “vanguard,” “intermediate,” and “long tail” approaches, Pike can provide support with extensive empirical data for the assertion that, despite narratives to the contrary, a minority of municipal governments are engaged in complex and innovative ways with commercial finance, particularly as a means of generating funds. A study from the National Audit Office (NAO) underscores this by showing that around 170 local governments, around 50% of the total, are either inactive in the world of commercialization and financialization or are resisting it (p. 219).

While UK cities’ and towns’ engagements with commercial finance are fewer and farther between than prevailing discourses would lead us to believe, there are still many examples where novel financial arrangements are being leveraged and experimented with. In what we consider one of the most interesting contributions of the book, Pike captures the complex interplay between different scales of government, highlighting some of the particularities of the UK that have led to financialization working differently in that specific context. Unsurprisingly, geography matters, and in this case, it plays a considerable role in explaining the tolerance for and scalar distribution of financial risk. To make sense of this, Pike first draws out the distinct ways that UK local government functions differently from local government in the US or other comparably sized neighboring countries like France, Germany, and Italy. Critically, “local government operates as only ‘semi-autonomous’ from national government,” with some even going so far as to assert that “local government is directed from London in a semi-colonial fashion” (p. 51). This means that pressure to engage in riskier financial behavior is not necessarily emanating from banks or other fractions of capital but is often coming down directly from higher levels of government. As he puts it in the book’s concluding chapter, “Is it national rather than local government that has taken the local public service gamble?” (p. 225).

For the remainder of this piece, we want to take up this assertion that when it comes to making risky financial decisions, it may be the national government “in the casino” (p. 5) rather than local councilors, and the broader implications of this fact. Through the historic devolution of political power and responsibility, fiscal and monetary policy, and financial crises that reshape pensions and housing, local statecrafters are the unwilling subjects of a larger political economy. Examining how they approach their situation, the tools at their disposal, and the policies they take on points to circumstances largely outside of their control. However, the choices they make now will reverberate for decades to come, begging the question of whether their actions are good ones.

If one word could describe the municipal landscape in the UK, it would be “chaos.” Overlapping functions, irregular geographies, and numerous entities make it challenging to discern who governs what, how, and why (Pike, 2023: 55). Financialization does not neatly take root in this disarray. Pike concludes, “there is no clear geography to these varied local statecraft engagements with financialization in England since 2010” (p. 220). Although Pike attempts to grapple with the diversity of local responses to finance, more could be done to guide the reader through how this fragmented local landscape came to be. What historical political economy created the competing, contradicting, and convergent local geographies? Although Pike details policy shifts over the last 50 years, readers outside the UK would benefit from a short history lesson in scales of UK governance to understand the present problems.

Fractured geographies, however they came to be, are fertile grounds for devolution. Pike writes, for example, about the UK’s 2011 Localism Act, which aimed to shift away from grants and other transfers and streams of funding from the central government and toward making local government “raise more of their own funds” (p. 86, quoting Deputy Prime Minister Nick Clegg). This “fiscal localization” (p. 87), as Pike calls it, means that the UK national government is asking—as many states in the Global North have—for the local state to “spend but don’t tax” (Tapp and Kay, 2023: 1738). Through policies like the Localism Act, the national government backs away from its responsibilities to local governments, actively urging them to do more with less, and thus, in many ways, forcing local statecrafters to move toward the same types of novel financial arrangements that they are critiqued for engaging with. This fiscal localization also reconfigures the relationship between the taxpayer and the local state.

The “taxpayer” is the consummate subject for politics. State making and unmaking invoke the taxpayer to achieve political ends for both the left and the right. In the United States, this spans from the American Revolution to the 1970s property tax to the 2025 One Big Beautiful Bill Act. At the local level, public meetings and decision-making are often dominated by taxpayers who demand protection of property values and efficient government spending. Local government in England is similarly shaped by the narrative of the taxpayer. Throughout the book, Pike notes local officials are accused of “gambling” with the British taxpayers’ money. Pike compellingly demonstrates how national austerity mandates and devolution of risk and responsibility drive local officials to wager with taxpayer funds. But what is less clear is who the taxpayers in the UK are and what their politics are. Who shoulders the tax burden, and how is that politicized in decision-making? Are there clear divides between the left and the right, or do taxpayer ideologies make strange bedfellows? Fitting this piece into the larger puzzle can further illuminate why local governments do what they do.

With raising taxes off the table, demand for debt is the story of municipal finance post the global financial crisis. Particularly appealing in an era of shrinking intergovernmental transfers and resistance to new taxes (Streeck, 2017 [2014]), debt-based instruments are touted as a policy solution to a wide array of social and environmental crises. England is no exception. Pike details the financial innovations that local governments turned to, ranging from tried-and-true Public Works Loan Board loans to riskier Lender Option Borrower Option loans (Pike, 2023: 172) and municipal bonds (Pike, 2023: 175–176). While the devolution of financial responsibility often coincides with the riskiness of the instrument, painting a picture of dynamic financialization, there is another side to this story that is missing: investor demand. According to Pike, asset managers, insurance companies, and pension funds now comprise a significant portion of large bondholders (p. 175), but who were they before the era of financialization?

Asset manager capitalism offers a lens into the municipal debt market. Fueled by retirement accounts, a handful of large asset management firms now control the allocation of capital across all segments of the economy (Braun and Christophers, 2024). Tapp and Weber (2026) show how the financialization of the municipal bond market in the US means large asset managers like Vanguard and BlackRock replace the local households who once controlled the market (see Sbragia, 1996). For Pike, to what end are local statecrafters implicated in the UK pension crisis? Are statecrafters intentionally feeding new assets to the market, or is it happenstance that austerity fuels municipal debt, which buttresses a looming retirement accounts crisis? How does the UK’s monetary policy and interest rates lock in these changes at a local level?

Public management of assets and liabilities extends to other crises, like housing. In the UK, fiscal revenue depends on property tax, making it easy to see why local councilors roll the dice on market-rate housing over affordable and social housing. Pike details the property-based strategies public officials undertake to increase revenues and slash expenditures. Reading like best practices of bad urban policy, fiscal solutions range from the infamous fire sale of public/social housing, known as the Right-to-Buy, to the bait-and-switch tactic of the sale-leaseback, to the “build-it-and-they-will-come” strategy of building high-value housing to collect higher property taxes (p. 104). Affordable housing, with low-to-no profit margins and even lower fiscal revenue, falls by the wayside for entrepreneurial policymakers and statecrafters. Pike’s analysis resonates with Brill and Raco’s (2021) assertion that the UK’s affordable housing crisis is also a governance crisis. However, to what extent are progressive politics at play in these strategies (see Thompson, 2023)? Can’t real estate-minded and financially savvy statecrafters work for the public good (Tapp, 2023)? Pike points to several nuanced local housing and development projects, but broadly, where do we draw the line between informed public officials and bumbling councilors at the casino?

In closing, we return to a question that Pike poses at the end of his own book: “Is it national rather than local government that has taken the local public service gamble?” Numerous structural constraints, the long history of neoliberalism in the UK, and deeply entrenched austerity—particularly at the urban scale since the global financial crisis (Peck, 2012)—have significantly altered the way local government functions. Much, if not all, of this is coming down from higher scales of government. As Pike thoroughly documents, local statecrafters across the UK are responding to these conditions in a vast and largely unpredictable range of ways (see also Ward et al., 2024). As the national government continues to have an outsized role in local government affairs, and as it simultaneously claws back funding and encourages local governments to come up with ways to generate funds that largely exclude taxation, it will continue driving local governments toward the metaphorical casino. While we would assert that it is indeed the national government that is taking the bigger public service gamble, the impacts of their decisions are felt mainly by local statecrafters. Given that fact, it is increasingly important that these councilors understand the role that they play in financialization, and how they might do better. This is a role that scholars like us can play with our research. If turning away from the casino is becoming increasingly difficult—particularly in light of the ongoing gambles taken by the central government on behalf of its people—it’s important that the councilors at least know the rules of the game.