Tag Archives: Economy

Summer Institute in Urban Studies 2014 – Some Reflections!

Elnaz Ghafoorikoohsar (SEED), Gwyneth Lonergan (SoSS) and Elisa Pieri (SoSS) reflect on their participation in the first Summer Institute in Urban Studies …

cities@manchester’s Summer Institute in Urban Studies took place last (30 June – 4 July) at the University of Manchester. The twenty eight participants – selected out of the 180 plus applicants – came from across the UK, Europe, Australia and North America, and brought with them a wide variety of research interests and experience. What united them was a keen interest in cities, whether in Europe, the United States, Africa, East Asia or the Indian Subcontinent.

Participants get to work!

The Institute provided an excellent opportunity for lively discussion on many of the pressing theoretical issues in urban studies today, including notions of urban assemblages, policy mobilities and the worlding of different cities, various forms of gentrification, sustainability, sustainable development, and climate change, and politics and post-politics in the city. Many speakers discussed the various methodological implications of studying the urban, and how to engage in academic practice that is ethically and politically responsible and accountable. Ultimately, we were interested in thinking reflexively about the future of urban studies and our role in the field. We were fortunate to hear presentations from leading urban studies scholars, both from within and from outside of the University of Manchester. These included speakers working outside of academia, in NGOs and in policy circles. Manchester’s own experience of post-industrial regeneration provided a case study, with a panel of speakers on this topic and a walking tour of East Manchester regeneration sites.

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The Institute also gave participants a chance to consider many of the challenges facing early career researchers, including interdisicplinarity, different publication formats and strategies, ethical dimensions of academic research and practice, and engagement with stakeholders outside of academia. A large component of the program was devoted to professional development – for example, effective teaching, and curricular development, writing funding applications, securing a post following completion of the PhD, and planning a career trajectory. Many participants found this career guidance especially valuable, as they had not received any such advice as PhD students. Moreover, with participants coming from a wide variety of countries, it allowed us to exchange information and ideas about the different national research cultures and expectations.

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The week was intense with participants enthusiastically engaged with all of the sessions, and we also enjoyed a friendly, sociable atmosphere.   The program allowed participants to explore issues with peers at a similar career stage as well as with more experienced academics, in a supportive environment. There was achieved through a mixture of both formal and informal opportunities for discussion and socialising. Many of these were classroom based, although highly varied, including a daily plenary as well as smaller workshops. Participants were expected to play an active role, completing preparatory reading in addition to chairing a panel, or acting as discussants. These activities were complemented by the walking tour, and the use of multimedia materials, including film, to stimulate discussion. An ‘official’ institute dinner was held at Yang Sing on the Thursday evening, but there were plenty of other opportunities for informal after hours socialising. Even as the Institute ended on Friday, there were already plans being made among many participants for future collaborations.

 

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Open up the gates

Manchester’s creative economy – where to next?

Based on his contribution at last week’s “Manchester’ creative economy – where to next?” urban forum at Twenty Twenty Two, David Gledhill, professional artist and co-administrator of Rogue Artists Studios, the largest studios in the North of England, writes …

Manchester has a particularly vibrant, resourceful and innovative visual arts community. We have great art schools, affordable group studios and plenty of artist-led initiatives and alternative spaces to exhibit in. Artists may be self-employed, working in the service sector or teaching to supplement their activities. Many of them may be exhibiting at a national or even international level and yet Manchester audiences rarely get the chance to enjoy their work and to benefit from the artistic status enjoyed by cities such as Liverpool, Glasgow or Leeds. Manchester isn’t mentioned in the Arts Council plan for 2011-15 which cites the BALTIC in Gateshead, MIMA in Middlesborough, the Hepworth Wakefield, Yorkshire Sculpture Park and the Liverpool Biennial as evidence of the strength of the visual arts in the North. (http://www.artscouncil.org.uk/publication_archive/arts-council-plan-2011-15)

If this doesn’t ring any alarm bells, the almost complete absence of any initiatives that may benefit, promote or support artists in the region may do. Manchester has no visual arts biennial, no art prize (like Liverpool), no annual open submission competition (like the London Open at the Whitechapel) no purchase schemes, and no artist residency programmes at its biggest institutions. We’ve never been in the running for European Capital of Culture. In fact you’re more likely to see a Manchester artist working as a gallery attendant than exhibiting in the city. If we want artists to live and work in the region, rather than moving south in search of opportunity, our major galleries must join hands with the artist-led sector to nurture a fully integrated visual arts ecology.

Artists contribute far more to a region’s tourism, academic, service and construction sectors than they ever absorb through direct public subsidy. They revitalize neglected zones of the urban environment and lend cultural prestige to a city’s portfolio of attractions. The Arts Council’s attempts to support excellence and diversity, including aesthetic diversity, are foundering on their agenda of driving public-funded institutions towards the open arms of the private sector in the attempt to broaden income steams. The commercial art world in particular, is founded on exclusivity, with self-appointed ‘gatekeepers’ promoting their own vested interests and excluding the vast majority of practitioners. Imagine turning up at hospital to be told that you’re not welcome because you haven’t been to dinner with the administrator.

An independent report (http://www.theroccreport.co.uk) concluded that there’s an urgent need for investment in arts production outside London. Nevertheless it failed to critique the rampant croneyism that is infesting the museum sector and leading to homogenization and stagnation in the visual arts. In his book ‘Dark Matter’ (2011) Gregory Sholette talks about the ‘structural invisibility’ of most artists. The passion and dedication of Manchester’s artists and the legendary DIY spirit of our great city can only carry us so far. Artists deserve the widest possible audiences and a platform alongside the international talent that visits the city. Manchester deserves to experience the greatest art in the world together with the greatest art from right here. The arts community must come together and make it happen!

Wage theft!

Nik Theodore from the Department of Urban Planning and Policy of the University of Illinois at Chicago writes about the problem of wage theft in the United States.

Ana worked for five years for a cleaning company in Chicago, where she was paid $8 an hour, even for overtime hours. “One time I worked for 22 hours in a row and was paid only $120, Ana explained. “My boss told me that was all he could give me.” She is owed about $1,800 from bounced checks, plus wages she should have received if her employer had abided by overtime laws. She was fired from her cleaning job after she developed carpal tunnel syndrome. Ana says the debilitating injury was caused by the strenuous work she had been doing: “I got carpal tunnel in my hands from the repetitive motion. I went to Cook County Hospital and I covered my medical expenses. But I couldn’t afford to go to therapy. I fell behind on my school payments, and now I even owe the [Internal Revenue Service] because my employer was not deducting money from my check.”

Ana is not alone in experiencing these types of workplace violations. Increasingly, it is clear that there has been a breakdown in the enforcement of core employment and labor laws in Chicago and other major US cities. Employers must pay workers at least the minimum wage, and time and a half for overtime. They must follow regulations to protect workers’ health and safety, and carry workers’ compensation insurance to cover on-the-job injuries. They may not discriminate against workers on the basis of age, race, religion, national origin, gender, sexual orientation or disability. And they must respect workers’ right to organize and bring complaints about working conditions. Yet there is growing evidence that employers are evading these bedrock labor standards.

A study of workplace violations in Chicago, Los Angeles and New York City (http://www.unprotectedworkers.org/index.php/broken_laws/index) found evidence of widespread violations among workers employed in low-wage industries. In the Chicago area, the nonpayment and underpayment of wages take a heavy monetary toll on workers and their families (http://www.ndlon.org/en/resources/item/412-unregulated-work). For those workers who experienced a pay‐based violation in the previous week, the average amount of lost wages was $50, out of average weekly earnings of $322. This amounts to wage theft of 16 percent. Assuming a full‐year work schedule, it is estimated that these workers lost an average of $2,595 annually due to workplace violations, out of total annual earnings of just $16,753.

Furthermore, it is estimated that in a given week, approximately 146,300 workers in Chicago and suburban Cook County experience at least one pay‐based violation. Extrapolating from this figure, front‐line workers in low‐wage industries lose more than $7.3 million per week as a result of employment and labor law violations.

Wage theft not only depresses the already meager earnings of low‐wage workers, it also adversely impacts their communities and local economies. Low‐income families spend the large majority of their earnings on basic necessities, such as food, clothing and housing. Their expenditures circulate through local economies, supporting businesses and jobs. Wage theft robs local communities of a significant portion of this spending, and it ultimately limits economic growth.

Kim Bobo has correctly referred to wage theft as the “crime wave no one talks about.” It is high time that policymakers confront labor standards violations and their detrimental impacts on families and local communities. The policy agenda must include updating employment laws so that they apply to 21st Century workplaces and employment arrangements, redoubling enforcement efforts to strengthen the effectiveness of laws that are on the books, and ultimately devising strategies to hold employers responsible for the workplace conditions under their control.

 

 

 

 

Who owns London’s revenues?

Adam Leaver of Manchester Business School, University of Manchester picks up a point made by Evan Davis in replying to an earlier blog Size matters? London – the subsidy junky. Evan asked the following question about whether London was a ‘subsidy junkie’:

“Don’t you have to take revenues earned by each region into account too? To reduce it to basics, it could be that London is more productive and as a consequence is more tax-generating and more expensive. It thus needs extra public spending. That is not a subsidy if London more than raises the money to pay for it”.

Putting to one side the dubious point that more productive regions are necessarily more expensive, two issues arise immediately out of this intervention. First, Evan raises a question about measurement: how do we measure regional cross subsidy when one region is so successful and requires higher levels of public service investment to sustain its success? Second, implicitly, he raises a question about ‘ownership’ of those revenues – that higher levels of expenditure are not a cross subsidy if that region is simply spending its own money.

The issue of cross subsidy is a difficult one to measure. On a per capita measure, it is certainly the case that Londoners receive higher levels of public expenditure than individuals elsewhere in the country. As my colleagues argued, identifiable expenditure on services per capita is higher in London than any other English region, though figures for Scotland, Wales and Northern Ireland are higher. On transport infrastructure expenditure, the per capita figures are: south-west £215, north-east £246, Yorkshire and Humberside £303, north-west £839, London £4895. The differences are astronomic. However, it is also true that London has historically generated a greater proportion of gross value added growth, and – as figure 1 shows – this has increased significantly post- crisis. Since 2007, London and the South East account for close to a half of the UK’s total GVA growth.

In some ways these figures support Evan’s query. Even if we consider the possibility that tax efficient schemes are more active in London than elsewhere, it is frankly implausible that London doesn’t also generate a significantly greater share of the UK’s total tax take. But perhaps that is the wrong way of looking at the issue of cross subsidy because it only takes into consideration ex post distributions. By thinking about ex ante cross subsidies – that is distributions, guarantees, bailouts and other subsidies that underpin activity – a different picture emerges.

To take one example: financial services. The cost of the UK bank bailouts, are estimated at between £289 billion to £1,183 billion by the IMF. Similarly the presence of a state bailout guarantee, reduces banks credit risk and allows them to borrow more cheaply. In 2009 alone it was estimated that this amounted to a funding cost reduction of more than £100 billion for 13 banks in the UK. With that level of subsidy, of course we might expect those industries to become world leaders. Of course we might then expect an influx of global talent as those subsidies allow us to pay the best wages and bonuses. We might expect foreign direct investment as global companies source here to access that talent. We might expect allied industries to spring up – lawyers, accountants, service firms, boutique establishments. We might then expect agglomeration economy dynamics to emerge as demand multipliers kick in. Those industries would make a lot of money, and would pay a lot of tax – as would their employees. But that is a state subsidy, applied to London and not to activities prevalent elsewhere in the country. Further, because those activities suck in talent from the regions (engineers, mathematicians, physicists and other scientists) they undermine the broad competences of non-metropolitan areas. This implies less palatable conclusions to those of Mind The Gap because gains are zero sum: to replicate the success of London, regions must wrestle power and state subsidy from it.

Let’s take another example: PFI. The problem with ‘identifiable expenditures’ as reported by the Treasury is that it does not capture the leakage of revenues out of the regions. If a hospital is built in Manchester, how much money remains in Manchester? With the example of St Marys – not a lot. The shareholders on the St Marys hospital PFI were Bovis Lend Lease (50%) (HQ Kent); HSBC (25%) (HQ London) and Sodexho (25%) (HQ London). The contractors were Bovis (Design & Build) (HQ Kent), RKW (HQ Dusseldorf, Germany), WR Adams (HQ Georgia, US but a Bovis subsidiary), Building Design Partnership (HQ Manchester), Anshen Dyer (HQ Calif/London). The private sector advisors were Clifford Chance (HQ London), Faithful & Gould (HQ London) and Marsh (HQ London). Financing involved the European Investment Bank; Deutsche Bank and the Royal Bank of Canada. With these foreign firms it is also the case that much of the money flows back to their London offices. So this is state money supporting London based business and employment even when investment is in the regions. Infrastructure investment of this kind could be organised differently to the benefit of the regions, but this model has the effect of operating like a quasi-regional policy for London and the South East.

Finally, on the question of ownership: are these London’s revenues? That is a tricky question because it raises all kinds of technical questions about how we account for these things and moral questions about proprietorial claims in a national economy. It is perhaps worth noting that banking profits rest on the principle of eking out a thin film of profit on a teetering tower of assets and liabilities. When those assets values rise, the booked profits are assumed to be London’s and are distributed accordingly via the bonus system and comp ratio; when they fall and banks require a bailout, the accumulated losses are assumed to be national. To put this in the parlance of finance, this is a regional moral hazard: the metropolitanisation of gains and the nationalisation of losses.

The issue of what the regions can learn from London deserves deeper thought. UK second cities are small and growing more slowly than London. In ratio terms, the UK’s largest 2nd tier city generates around 10% of the output of London – the second highest capital to 2nd tier city output inequality within the EU. In terms of the regional concentration of GDP creation, that means we have more in common with a Hungary, Bulgaria, Romania or Greece than a Germany, Netherlands or Sweden. It is just not credible to continuously laud London as an exemplar from which others might learn, without recognising the role of these ex ante state subsidies from which London benefits disproportionately and which reinforce regional inequalities.

It all comes together in … Hebden Bridge?

In this second blog post about Evan Davis’s recent BBC series, Mind the Gap: London v the Rest, Iain Deas, Graham Haughton and Stephen Hincks from Planning and Environmental Management in the School of Environment, Educaton and Development at the University of Manchester look at the intriguing suggestion that policy support might in future concentrate on promoting growth in a trans-Pennine super-city radiating outwards from Manchester. In doing so, they draw on a wider critique of ‘agglomeration boosterism’ they began to develop in an open access paper published last month in Environment and Planning A.

The case for a trans-Pennine super-city drew on the now familiar argument that bigger is better in respect of urban economic development: that large cities are associated with higher levels of prosperity and productivity. Citing Word Bank research linking increased city size to raised productivity, the programme frustratingly left unexplored the direction of any causal linkage between population growth and economic development. Instead, it asserted that “if you could make Manchester the size of London (by doubling it and doubling it again) you would expect it to be about 6% to 16% richer”. Thus, what is needed is “the creation of a far bigger second city – one of several million people, which could serve as a counterweight to the mighty force that is the capital” (Davis, 2014).

Manchester and Birmingham, on the grounds of their size and international standing, were presented as the most realistic candidates to assume this status as Britain’s second global city. A survey commissioned for the programme showed Manchester as the preferred second city, if nothing else illustrating the effectiveness of the city’s efforts to transform its external perception as the quintessential ‘dirty old town’. But the programme also offered another way forward: creating a polycentric super-city by encouraging stronger linkages between existing urban areas along the M62 motorway corridor. Suggesting in partly jocular fashion that the commuter town of Hebden Bridge in West Yorkshire possesses the London-style sense of cultural tolerance and liberal mindedness to act as symbolic link between the great Victorian industrial cities on either side of the Pennines, Mind the Gap argued that investment in infrastructure and complementary economic specialism could create a super-city straddling the functional economies of Leeds, Manchester and Liverpool.

Figure 1: The Manchester-Hebden Bridge super-city

Sources: Manchester and the Hulme Arch (Graham Haughton); Rochdale Canal, Hebden Bridge (ManAlive!, flickr.com, Creative Commons license).

Sources: Manchester and the Hulme Arch (Graham Haughton); Rochdale Canal, Hebden Bridge (ManAlive!, flickr.com, Creative Commons license).

The idea of enhanced inter-city cooperation, or of a trans-Pennine super-city, is by no means new. In the mid-late-1990s, some of our colleagues in Planning and Environmental Management at Manchester produced a series of studies articulating the ways in which a trans-Pennine regional growth corridor, from Liverpool to Hull, could be developed. This in turn prompted interest from the European Commission, and armed with Interreg funding the trans-Pennine corridor eventually extended beyond its northern roots to form a North European Trade Axis stretching from Dublin to Donetsk. This, and other ideas like the starchitect Will Alsop’s proposal in 2005 for a super-city along the M62 motorway, helped for a short time to generate political interest. John Prescott’s Northern Way, again linking the M62 cities but with an additional branch to Newcastle, was proposed as a new growth corridor, helping to bridge the ‘£29 billion gap’ in economic output between the northern regions and London.

The notion of increased inter-city collaboration – or even a pan-regional super-city – has been persistent, but fulfilling it has proved frustratingly elusive. Much of the initial political momentum underlying the Northern Way rapidly dissipated as the constituent cities reverted to more insular policy-making and produced a series of separate (and only nominally linked) city-region development plans, rather than a coherent pan-regional collaborative strategy. This is just one illustration of the difficulty involved in persuading cities with distinct political, economic and cultural histories to work together in any meaningful way. The potency of longstanding parochial rivalries in limiting the scope for meaningful inter-city cooperation is compounded by government efforts over more than thirty years to foster competitive localism and encourage cities to compete with domestic and international rivals for policy resources, skilled labour, inward investment, prestige events and so on.

In this context, it is hardly surprising that many inter-city collaborative initiatives should founder. The Liverpool-Manchester Vision – an attempt from 2001 by the North West Development Agency to promote greater collaboration around external marketing to visitors and inward investors – unravelled amid inter-city acrimony about the location for its launch event. More recently, efforts to agree a name for the new Merseyside combined authority have come unstuck over resistance amongst the city-region’s satellite districts to the use of ‘Liverpool’ in the title of the new institution (‘Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority’ is the less than catchy interim compromise).

Securing agreement amongst reluctant constituent areas is just one of the obstacles confronting efforts to construct the kind of super-city mooted by Evan Davis and others. Infrastructure investment in the North, especially in the rail network, was rightly highlighted by Mind the Gap as an important way of cultivating links between cities. Evidence to date suggests that existing links are inadequate and the necessary investment unlikely to be forthcoming. The programme correctly noted that while HS2 and Crossrail involve billions of pounds of expenditure on improving transport to and within London, resources allocated to trans-Pennine linkages are slender by comparison. Indeed, at the time of writing Parliament is debating the announcement that some 13% of the rolling stock on the overcrowded trans-Pennine rail route is from 2015 to be diverted to meet capacity shortages in the South East (Parliamentary Business, 2014). And even when investment has proved forthcoming, as with the electrification of the Manchester-Liverpool rail line to form a high(ish) speed connection along the route of the world’s first inter-city passenger railway, this has been dependent in part on new infrastructure development in London generating surplus rolling stock to be refurbished and redeployed in the provinces.

Figure 2: Percentage change in public sector employment, 2008-2013

Source: ons.gov.uk (accessed 24th January 2013)

Source: ons.gov.uk (accessed 24th January 2013)

The ability of northern cities themselves to invest in developing new infrastructure or improved links – or to develop their economies more generally – is also constrained. Government’s localist rhetoric implies that cities have been ‘liberated’ and are free to develop whatever policy innovations they deem appropriate. However, the reality, given that austerity measures have impacted on local government more than any other part of the public sector, is that the ability of cities to effect economic change is highly restricted. The prospect of local agencies promoting meaningful economic development is perhaps especially limited in the cities of the north, given that it is provincial regions that have borne the brunt of public sector employment losses. Indeed, as Figure 2 shows, the only English region not to experience a net loss of public sector jobs since 2008 has been London.

The history of London-centric decision-making, and its recent parallel logic that what’s good for London is good for the rest, continues to blight the prospects for development for the country as a whole. Two things are left unanswered by recent calls to focus more resources on just a small number of large cities because of their supposed contribution to national productivity. First, why should the ‘The Rest’ – people outside London and other potential growth areas – accept their taxes funding disproportionate investment in apparently already buoyant urban economies? And second, do we really want to live in a country where decisions about the geography of public spending pander to a highly questionable economistic logic that attaches undue importance to inducing gains in a dubious concept like productivity? Better to think in broader terms, to the benefit of London, Manchester… and Hebden Bridge.

 

 

 

 

Size matters? London – the subsidy junky

Iain Deas, Graham Haughton and Stephen Hincks from Planning and Environmental Management in the School of Environment, Educaton and Development at the University of Manchester reflect on Evan Davis’s arguments about London’s relationship with the rest of the UK economy …

In a recent BBC series, Mind the Gap: London v the Rest and an accompanying BBC blog (http://www.bbc.co.uk/programmes/b03xp6x7), Evan Davis put forward an argument that government should do more to help large and successful cities prosper – even though this means spending less elsewhere. Central to the case was the notion that cities are best able to prosper when they have dense networks of highly skilled and creative workers intermingling in close proximity, driving innovation and promoting high-value economic activity.  Both local and national economic development policy, the programme argued, ought to concentrate support much more exclusively on the small number of cities that can fulfil this role as epicentres of knowledge-driven economic vitality.

The programme singled out London as an exemplar of this form of urban economic development.  The dramatic transformation of the city’s economic fortunes over nearly thirty years, it was argued, was attributable to its ability to attract and retain skilled mobile labour from around the world, lured by a seductive mix of vibrant cultural environments, attractive neighbourhoods and the prospect of rapid economic enrichment.  Amid predictable images of self-congratulatory, coffee quaffing metropolitan hipsters, the programme argued that London’s growth should be celebrated and promoted.  Although there was acknowledgment of some of the problems associated with rapid growth and overheating – strains on infrastructure, acute housing shortages and the social and spatial marginalisation of residents left behind – these were presented simply as impediments to further growth that policy intervention should and could circumvent.  London’s prosperity, ran this argument, ought to be facilitated by accommodating growth pressures: providing developable land, ensuring a supply of affordable housing, investing further in infrastructure and continuing to meet demand for labour by stressing the city’s openness to newcomers.

Mind the Gap was in some ways an entertaining and deliberately provocative piece of television. What is interesting, though, is that it echoed much of the orthodoxy that many would argue infuses contemporary urban economic development policy – not least in Manchester.  In an open access paper published last month in Environment and Planning A (http://www.envplan.com/abstract.cgi?id=a130335c) we began to question the sorts of academic idea that underpinned Mind the Gap. Building on this, we want in this two-part blog to critique two of the ideas central to Evan Davis’s thesis. In this first post, we assess Davis’s contention that London’s ascendancy ought not only to be tolerated, but should be actively promoted by government as the best way of driving national prosperity.  In the subsequent blog, we review the second episode of Mind the Gap, which argued that by concentrating resources in a network of linked urban areas as part of a northern super-city, England’s provincial cities might begin to develop new agglomerative economic growth and follow London’s path to success.

London: state aid addict

Evan Davis’s treatise said relatively little about the role of policy in underpinning London’s transformation from merely another declining British city in the 1970s to the thrusting global city of today.  Indeed, implicit to the programme was an argument that spatial policy had been trained to too great a degree on the declining cities of the north and midlands, to very limited effect. At the same time, earlier policy efforts to manage the growth of London itself – via green belt policy or the new towns programme – were said to have undermined the city’s economy by restricting in situ development and diverting development elsewhere.

This ignores the instrumental role played by government in enabling London’s growth. The emphasis of national policy, at least until the onset of the crises of 2007-08, on promoting the financial and producer service sectors has been a major part of this.  So too has been associated spending, aimed at accommodating London’s growth via multi-billion investment in infrastructure. What is less frequently acknowledged, however, is that public expenditure in general has also been skewed towards London.  Treasury data on per capita identifiable public expenditure on services for standard regions give some sense of the capital’s favourable treatment (Figure 1).  London, the graph shows, is consistently the best funded of the English regions, and exceeded only by the special cases of Northern Ireland and (to a lesser extent) Scotland and Wales.  The unavoidable additional cost of maintaining capital city functions for the four UK capitals, and other complications such as the variable physical size of the regions and their differing social profiles, makes comparison across regions difficult.  But the extent of interregional disparity is striking nonetheless – and even greater in terms of specific types of spending, like science and technology and transport, where London and the South East again receive disproportionately larger shares than other English regions.

Figure 1:  Total identifiable expenditure on services by country and region per head in real terms,2007-08 to 2011-12

Source: HM Treasury (2013) Public Expenditure Statistical Analyses 2013, Cm 8663, London: The Stationery Office. Available: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/223600/public_expenditure_statistical_analyses_2013.pdf (accessed 20th March 2014).

Source: HM Treasury (2013) Public Expenditure Statistical Analyses 2013, Cm 8663, London: The Stationery Office. Available: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/223600/public_expenditure_statistical_analyses_2013.pdf (accessed 20th March 2014).

A dispassionate observer might well conclude that London’s growth has been highly dependent on state subsidy.  Moreover, data on disaggregated public service expenditure suggest a pattern for the English regions that runs counter to regional policy. And the sums involved in the latter are, of course, much smaller by comparison with spending on mainstream services. This is important because implicit to the argument of Mind the Gap was a view that past spatial policy has been ineffective in reenergising declining economies, and that public money ought to focus on stimulating agglomerative growth in a few large urban areas instead of trying to narrow interregional inequality.  Past policy for cities and regions, runs this line of argument, is wasteful because it is propping-up areas that are less ‘productive’ than London.

Yet there is an argument that previous regional policy should not to be so readily dismissed, and that it is unrealistic to expect regional economic transformation given the degree to which regional imbalance has been ingrained over a century and more.  Even at its peak in 2005/06, the national budget of £2.2b for Regional Development Agencies (RDAs) represented only 0.2% of national output.  And even in the most generously funded of the RDAs – One North East – peak spending amounted to £240m: a mere £95 per person or 0.75% of regional economic output.  These are miniscule sums, dwarfed by public expenditure directed towards London.  And the contrast becomes even more striking given the abolition of the RDAs and their replacement by Local Enterprise Partnerships, nominally private sector bodies responsible for raising their own resources and benefitting from only modest levels of financial support from government. Viewed in the context of the meagre resources allocated to spatial economic development policy and the hidden subsidy to London and its region, therefore, it is unsurprising that regional economic disparity should prove so intractable.

Mind the Gap echoed the view that past policy for cities and regions has detracted from rather than added to national productivity , and that resources could be better used to enable London’s growth to be maintained and to create mini-Londons elsewhere.  What was missing, however, was any kind of lateral thinking on how to offset the growth pressures accumulating in the London region. Yet the solution to some of London’s problems of overheating, it could be argued, rests not in the capital, but elsewhere in urban Britain.  The sensible response London’s  to spiralling house prices, one could contend, lies not in liberalising planning and releasing more land for development, but in focusing economic development policy on struggling cities and regions in order to bolster their demand for labour and displace some of the pressures from the  existing hotspots of the South East.  Supply-side policies on land and labour in London and the South East over thirty years have failed to resolve growth pressures, hence acute localised wage and house price inflation. Instead of maintaining urban containment and resisting green belt encroachment, concerned residents of the Home Counties might be better advised to lobby for more investment in the north in order to ensure that housing is affordable in the South East.

Boris Johnson, London’s mayor, likes to argue that concentrating investment in already prosperous London is justifiable not only because the city is a net contributor to the exchequer, but also because the benefits ultimately trickle-down to the rest of the country. “I’m making the argument to the Treasury that a pound spent in Croydon is far more of value to the country than a pound spent in Strathclyde. You will generate jobs in Strathclyde far more effectively if you invest in parts of London”, he told the Huffington Post in 2012 (http://www.huffingtonpost.co.uk/2012/04/26/job-creation-london-mayor-huffpost-linkedin_n_1456092.html).  A rather better argument would be to invest more in Britain’s provincial cities, linked to a genuinely integrative national spatial policy, as the best way of maintaining London’s prosperity.

 

 

 

Universities and city-region development in crisis? – Cases of Manchester and Newcastle

Professor David Charles (University of Strathclyde), Dr. Fumi Kitagawa and Dr. Elvira Uyarra (Manchester Business School) have worked on the issues related to HEIs and local economic development over the decade. Here is their reflection on recent changes in two English  city-regions – Greater Manchester and Newcastle …

Universities have long been recognised for their important contributions to the long-term economic prosperity and wellbeing of cities and regions. In a recent special issue “Universities in Crisis” in the Cambridge Journal of Regions, Economy and Society, [http://cjres.oxfordjournals.org/content/early/2014/01/09/cjres.rst029.abstract] we examine the post-financial crisis challenges for the city-regions and higher education institutions (HEIs) in the UK by looking at the city-regions of Greater Manchester and Newcastle. The paper illustrates the recent changes in regional governance, higher education policies and changing expectations and pressures for universities to engage and work with local and regional agendas, before and throughout the financial crisis and the following economic downturn.

Manchester and Newcastle are two old industrial cities in the North of England, in the regions that have historically lagged behind the rest of England and the UK in economic terms. Both traditionally manufacturing regions (manufacturing still accounts for 20% of GDP in the North West), in the last 20 years they have diversified into higher value added activities such as biotechnology, aviation and energy. Economic growth has also been driven by a rapid expansion of the service sector, mainly professional and financial services, with public services still being an important component particularly in the North East. Both Newcastle and Manchester can be seen as having experienced something of an urban renaissance although significant pockets of deprivation remain. HEIs have been important actors embedded in such urban transformation.

Between the late 1990s throughout the 2000s, universities in Manchester and Newcastle took strong roles in the economic and social development of their respective regions, working collaboratively through their higher education regional associations, and the Regional Development Agencies (RDAs). This collaboration emphasised the complementarities between different types of institutions and the formation of ‘regional systems of innovation’. The ‘new regionalist’ model supported by the New Labour government was gradually accompanied and then overtaken by a new ‘localism’ – institutional partnership and governance models embedded in city-regions. Both Newcastle and Greater Manchester received designation as Science Cities since the mid 2000s, with a focus on city-level partnerships, which for Greater Manchester reflected a longer experience of city-region partnership models.

Since 2010, the economic development landscape has substantially changed under the Coalition government, with the abolition of the nine RDAs in England, replaced by 39 Local Enterprise Partnerships (LEPs) at a city-region level.[i] The recent shift to LEPs signals a more focused and strategic alignment between universities and city regions, with the higher education sector represented in the LEP board member. Further, this ‘scalar shift’ of the local governance mechanisms has coincided with the financial crisis and subsequent austerity measures, cuts in public funding and changes in the higher education funding mechanisms, including the increase in the home/EU students’ tuition fees. The drastic reduction of funding and supporting structures devoted to HEIs regional engagement from the loss of RDA funding and additional pressures placed upon universities have further brought institutional differences into sharp focus.

Under the new governance structures emerging during the 2010s, whilst universities have been enrolled in the new city-region strategic alignment, it has become clear that different types of institutions are forming and implementing different strategies. Regional level collaboration, meeting regional needs and demand, seems to have declined in terms of universities’ institutional priority and strategies. Policy infrastructure, resources and funding incentives at the regional level are no longer there, replaced by city-region/local partnerships. Increasingly, universities in both the North East and North West regions are finding little incentive to collaborate with each other at the regional scale. Tensions between the regional and the city-regional levels have always been more prominent in the North West region, where the Greater Manchester city-region had always had strong political identity. However, even in the North East, where the regional HE collaborative mechanisms had existed over the last three decades, the new local partnership model with LEPs seems to be overtaking the regional collaboration model.

Our findings resonate with Sir Andrew Witty’s recent review of “universities and growth” (published on 15 October 2013)[ii], which highlighted the heterogeneity of both universities and LEP strategies. The case studies of the two city-regions show how universities are part of the new city-region alignment where new strategic leadership roles are expected – however, under a post-crisis environment characterised by austerity, changing funding mechanisms and more pressure to compete, universities are facing challenges to meet these new expectations.

The political and institutional vacuum left by the recent local governance changes has led to practical issues such as management of EU funds. The time of austerity also provides new opportunities to realise new city-region and university collaboration by linking and managing resources available at multiple levels – local, national, European and global. Universities are partners in local governance, but are not simply bound within their city-regions. Universities seek to join up and integrate across missions and across spatial scales – local, national, European, and global. Both in Greater Manchester and in Newcastle, the new alignment seems to be still in a state of flux. It is imperative to develop strategic visions and plans rooted in a sound understanding of the city-region’s comparative advantage, by asking: How can universities and LEPs better work together for the benefit of the city region?