So what does that Cities Unlimited report actually say? Chs 1-5

Reader, unlike 92% of You, and 100% of Them, I’ve read it. It’s taken a few weeks, in odd bursts of ten minutes, but I was sustained by an absurd faith that, contrary to what the newspapers would have us believe, most people do not have the attention span of a chicken in a hurricaine, and are on the whole quite reasonable really.

As a public service to the cause of Lib Demmery, I therefore intend to feed the Cities Unlimited report into your eager brain in bitesize (okay, large bitesize) chunks so that you can decide on its merits and demerits for yourself, free of the rancid rantings of the silly season press.

I will offer a summary of the report in three posts, mostly factual except where I really might burst like a bally balloon if I don’t comment. I will attempt, but do not promise, to make my commentary shorter than the actual thing. This post will summarise chapters 1-5. One note – I have left out the executive summary and I’ll return to it at the end. Alas for the authors, the executive summary may have been their undoing.

The central arguments of Tim Leunig & James Swaffield’s Cities Unlimited paper could be very heavily precised and summarised thus:

Cities Unlimited is the third of three papers in a series. The first, Cities Limited, established that the regeneration funding supplied through the current central mechanisms to a sample of 18 British towns and cities had “failed” to achieve its goals.

Failure here is defined not as failure to improve the cities absolutely – as the authors point out, it’s a rare urban settlement anywhere in Britain that hasn’t seen some absolute improvement since 1997, and billions of pounds worth of expenditure has to result in some improvement. It is defined as a failure to enable them to “catch up” with the successful cities and raise their speed of improvement relative to that of the country as a whole. If a city starts out behind the national average on a range of measures, it follows that it has to improve at a faster rate than the rest in order to properly catch up with the national average. This must therefore be the aim of regeneration funding.

The authors compared a sample of 18 regeneration cities against national average figures, and also  against the averages for a particularly successful group of six cities and towns which were already improvers in 1997 and have received no regeneration funding (Windsor, Milton Keynes, Peterborough, Swindon, Bristol and Edinburgh).

Incidentally, one criticism made of the Cities Limited paper at the time was that the authors had deliberately picked “failing” cities for their sample of 18 – why no Manchester, no Newcastle, no Leeds? Their response is that these critics need to explain why there are anything close to 18 “failing” cities in the regeneration pool in the first place. This seems to me to be a fair question which does, however, dodge another fair question, so I leave it you to mull.

The evidence for said “failure” of the sample of 18 cities and towns is briefly as follows:

(A) Gross Value Added (GVA), the local equivalent of GDP, fell as a percentage of the national average from 90% to 86% between 1997 and 2005. In the same period, GVA as a percentage of the national average in the block of 6 successful towns rose from 131% to 143%.*

(B) Average incomes in the 18 regeneration cities fell from 1997 to date, continuing the pre-1997 trend.

(C) Unemployment in Britain as a whole has fallen over the last decade, and throughout that period  unemployment in the regeneration sample has remained 40% higher than the national average. Ergo, employment levels are not “catching up”.

(D) The proportion of the population living in the 18 regeneration towns has fallen by about 5% over the last decade. This is in spite of the fact that housing is typically cheaper than the national average, which ought, all other things being equal, to be a strong draw to the native population to stay, and to people from more expensive areas to move into regeneration cities. On the whole, it seems, that isn’t happening. So all other things are not equal.

There is also a fair bit of interesting (if you’re a histo-nerd) discussion about the historical roots of today’s economic geography, a theme the paper plays on throughout. The regeneration cities of today mostly, though not entirely, correlate with the cities that shot to prominence during the industrial revolution. For their purposes, proximity to the sea was a strength – thus, Liverpool, Newcastle, Grimsby. Nowadays, proximity to the sea is not a particular strength, and can be a weakness insofar as it also suggests distance from land-based transport networks.  Proximity to sources of coal was also a strength in the eighteenth and nineteenth centuries – again, not so now. The authors are not so much insisting that these vanished advantages are now disadvantages, but rather that other cities, which were sited on other advantages, still have their advantages intact – centrality in road networks, proximity to Europe etc.

The cities of the industrial revolution also bet on a losing horse economically speaking, and were in no position to know that. As the report bluntly points out:

Luck has also played its part: in 1900 London had finance and Manchester had cotton. Finance has since prospered and cotton collapsed.

As a broad observation this is true, but Manchester seems an odd foil to pick on, firstly because it is reasonably successful and secondly because it passes the authors’ own test of being well-connected and centrally placed in the country. Granted, it’s not as rich and successful as London in absolute terms, and it can’t support its satellites like Bury and Oldham in the same way London can support Guildford and St Albans. But we knew that already – it’s still basically a thriving economy where Bradford, for example, ain’t. And this may well be partly because Manchester sits at the centre of a web of cities and networks – Liverpool to the west, Sheffield to the east, London a couple of hours south.

In fact, isn’t it a prime exemplar of the importance, even in this age of information, of the authors’ favoured theme of physical location? An odd choice, then, for poster-girl for the dead cotton industry and not much else.

Anyhow, I quibble. What Happened Next was in many ways quintessentially Lib Dem.

In order to garner raw material for proposals to address the situation of arrested development uncovered in Cities Limited, the authors looked overseas.  In their second paper, Success and the City, they studied a sample of regeneration project towns and cities including Vancouver, Hong Kong, the Ruhr cities of Germany, Amsterdam and the surrounding Randstad cities, and the polish Cities of Warsaw and Lodz (which isn’t spelt quite like that but WordPress will have its little ways).

Their conclusions were that the best-performing cities had a combination of a high level of freedom (meaning local decision-making unfettered by central control) and a high level of ability (meaning a strong tradition of expertise and experience in local policy-making and implementation, which is prestigious, serious work and attracts high calibre individuals). Where either freedom or ability were lacking to some degree, the city was less successful.

They came up with this rather wonderful poultry-based two-by-two matrix to express the four possible combinations of freedom and ability, or lack thereof.

The caged hens get a sorrowful write-up:

These towns are entirely at the mercy of others. They do not have the right to make their own policy, nor is it clear that they would be successful were they to be given those rights. Knowledge of their own limitation leads to dependency, so that rather than calling for more decision making powers… they are content to be the hand-maidens of central government, waiting to be told what policies they should implement.

A description which will command a shudder of recognition in any British liberal soul, or indeed the soul of anyone of any political persuasion who has ever picked up a local newspaper.

The authors cite four reasons why we cannot expect the situation described in Cities Limited to improve. These are:

1. Economic geography. This starts from the perspective of the “notes for histo-nerds” outlined above. The regeneration towns’ historical advantages have faded. The towns now with the advantage are those already  oriented to the ever-growing service industries. These latter are generally towns with the best transport links, both to the country and the wider world, and to the suburbs where the commuting workpool lives.

2. The skills mix. Regeneration towns and cities have, on average, a lower skills base to start with than the successful towns. Their high achievers are likely to gravitate to economically more successful places and thereby keep that average skills base low. This low skills base has two outcomes: first, firms in high-skill industries are less likely to locate themselves in the regeneration city, because their target workforce – perhaps also their target clientele – is lacking; second, average incomes in the regeneration city will continue to decline relative to the country as a whole, because income levels between manual and managerial jobs are diverging ever more sharply.

3. Politics. They don’t mince words, our authorial pair. The next government is likely to be a Conservative government, and powerful Conservative figures tend to represent leafy, affluent, suburban and shire town constituencies  much more typically than they represent inner city regenerational areas. As the report frankly puts it:

It is of course possible that a Cabinet who represent leafy shire towns in Britain’s more affluent counties will prove to be as generous towards inner cities, but such an outcome cannot be assumed. To some extent politicians will always, and perhaps should always, be in line with their constituencies.

And here’s the killer line:

It seems most unlikely that levels of urban regeneration funding are hot topics in Witney or Tatton.

YOUCH. No wonder Cameron reacted to this report like a spoilt brat.

4. Money. Another brutal political reality. When times are hard and cuts need to be made, it will be in areas that the public won’t notice. Regeneration does not involve a set number of projects or employ a set number of people. Phasing in and phasing out can cover a multitude of sins, and, the authors reckon, will. However good the intentions of the next, or any, government, the nation’s fiscal position currently leaves little room for manoeuvre.

I feel like mischievously adding to point 4 that anyone who automatically translates “cuts in public spending” into “fewer nurses” ought to bear this paper in mind. The North West Regional Development Agency does not save lives or teach children. Cuts in public spending, when they come, will be in regeneration budgets and actually that is something we could be pleased about, given the alternatives.

However my biggest problem here is with point 1. Throughout the report, asides are made to various examples that go against the grain of economic geography. Take Newcastle. Doomed to failure by the authors’ own criteria – former industrial revolution boomtown, original backbone industry destroyed, miles from anywhere, placed to take advantage of the coast and the coalfields rather than the roads and the advertising account execs’ enclave – yet it irritatingly persists in being a success story. The authors conclude, so far as I can see, that this is because it is still quite well-connected. Much easier to get to from London than neighbouring, failing Sunderland for example.

Another counter-cyclical example which defies the authorial criteria for success – Hastings. Not far from London, very close to the Channel ports, ought to be a winner. Isn’t. The authors suggest this is because there’s no fast train to London. Journeys of comparable distance on fast lines take three quarters of an hour, but the fastest Hastings train takes twice as long, putting it beyond the reach of the most dogged south-easterner (and we’re dogged, believe me. You and your twenty-five minute commute, you don’t know you’re born).

All of which is quite true, but if you’re going to start making this and that little itsy-bitsy exception to your rules, then haven’t you conceded that the formula for success or failure of a city is so complicated that they simply can’t be categorised in the way the report attempts? And surely you can’t make such flimsily qualitative judgement about things as concrete as the time it takes to get to somewhere from London? Yes, Newcastle’s very quick for where it is, but in terms of absolutes it’s still of the same order as Liverpool and Bradford, and it’s considerably slower than Sheffield, yet to the best of my knowledge it outperforms all three.

Either people are economic calculating machines or they’re not, and rest of the report is based on the  fairly reasonable assumption that, when it comes to where to live, that’s often exactly what they are if they have a choice about it. So what gives with the Newcastle explanation? No-one ever said, well, I could commute  for half of every week from Sheffield to London, but the Newcastle trains, while they may take longer, cover many more miles in that time, which is a measure of the overall superiority of that commuting pattern and a good economic indicator of the range of opportunities to be found in Newcastle, ergo I will take the broad view and add half an hour to my journey time.

All that aside, points 2 through 4 strike me as reasonable. Chapter 5 ends with a lament for the future of the regeneration towns.

We have been quite clear that urban regeneration spending has not worked, in the sense that these towns are not regenerated. But we have been equally clear that those policies have raised the standards of living in these towns compared with what they would have been without them. It is, after all, hard to spend billions of pounds without achieving anything. So when those billions dry up – as some of them will – towns that are already slipping gradually further behind the UK average will not simply continue to slip behind at their current rate, but will start to slip behind more rapidly.

How do we arrest this decline and guarantee the immunity of northern towns from economic and political upheaval? Tune in for the next thrilling episode…

*There’s an interesting Comment Is Free piece in which Daniel Davis challenges the legitimacy of  the manner in which GVA was used to draw these conclusions. I’m not enough of a statistician to properly follow the argument for doing it Davis’ way instead, which would seem to require a response from the authors. However, since this only forms one plank of the report’s evidence that regeneration has not achieved its goals, my immediate judgement is that this cannot of itself invalidate the entire report.

I am certainly not persuaded that Cities Unlimited focuses in on Liverpool and Sunderland as “particular examples of moribund decline”, as Davis claims. And these are the two cities for which he can provide countering data – is he guilty of selectivity himself, perhaps? Can anyone follow his method for the other cities in the study and let me know?

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  • I hear what you’re saying about Daniel Davis’ argument.

    Unadjusted and per capita GVA growth rates measure different things, so Daniel Davis is making a false criticism of the report by stating ‘living standards have not declined’, when he is really attempting to say that the report didn’t ask the questions he wanted.

    Davis’ preference for per capita GVA growth rates suggests he is really interested in the effectiveness of the spending, whereas the Policy Exchange group seem to have used the unadjusted rate to draw conclusions about the efficiency such spending has had for the wider economy.

    Davis is arguing that the spending was necessary, Policy Exchange was arguing the money could have been spent better.

    Of course both are right in essence, but both are wrong in opposing the other – the political challenge is to navigate a way between the two.

    In which case today’s Eurostat annoucement that the population of the UK is set to rise by 15 million by 2060 (making our little island more heavily populated than Germany) should be recieved warmly as a way to reinvigorate regional planning and development in the country by uniting the interests of both northern urban centres and southern shires (although I doubt Labour and Conservative will be happy about all those new immigrants and children).

  • Giles Cranning 27th Aug '08 - 10:29pm

    Stupid report and it is shamning for our party that people who are supposed to be Lib Dems should be associated with this nonsense. On the basis of their analysis you could argue that Wales is hardly efficient and it should be closed down.

    Stupid academic nonsense!

  • Alix Mortimer 27th Aug '08 - 10:58pm

    Giles, I’m not sure where you’re getting this “shut down” idea. The report’s whole point (as I shall explain in part two) is that to save the situation, the best thing to do is to give funding streams directly to the cities and towns in question rather than administering it all from the centre. That’s not shutting down, is it.

    As for objecting to the notion that taxpayer’s money should be spent as efficiently as possible on regeneration… er, why are you objecting to that exactly?

    I suggest you wait for part two. The whole point of me bothering to read the report and regurgitate its main points is so that you don’t have to carry on believing the utter nonsense the papers spew out. Since when do we uncritically believe everything they say?!

    Please stay open-minded.

  • Andrew Turvey 27th Aug '08 - 11:04pm

    Liberal Democrats believe in an open society where we can discuss important issues – even highly personal issues like these.

    I’m glad the report came out if only to spark the debate.

  • Alix – first, thank you for reading it, and providing such thoughtful comments.

    We excluded Manchester, Leeds and Newcastle because they have structural advantages (size, skills mix) that other places do not have. That they have seen real regeneration does not imply that the same is possible for Blackburn and Sunderland, because these places do not start from the same position as M, L & N.

    You are right: our finance v cotton sentence would have been stronger had we said “Blackburn” instead of “Manchester”.

    Location also explains Newcastle’s advantages – it is top dog in its area, in a way that Hastings is not. For historic reasons Newcastle has a reasonably good skills base, good train line, and relatively little local competition from other towns and cities. It attracts skilled people who want to stay in or move to the area, because it is a metropolitan centre with the standard attractions that metropolitan centres offer. Hastings doesn’t do that and nor does Sunderland (or not to the same extent).

    David Davies argued that we should look at GVA per head, not GVA. He is right -and we did! This was clear in Cities Limited, but the words “per head” were omitted in Cities Unlimited (my fault). I wrote to him to offer to discuss his criticisms of our stats, but he did not reply. He is right that Liverpool and Sunderland do better than the average of our sample, but as you suggest, this implies that other towns are doing worse. Averages are like that. We wanted to use an average so that we could not be accused of picking on a town or city, and because sub-national accounts are hard to construct, and the figures for individual towns have significant margins of error that are reduced by using an average of a number of towns. In Cities Limited we list lots of other independent reports that come to the same conclusions: the gap between successful and unsuccessful towns is not getting smaller.

    As a quantitative academic I take criticism of my numbers very seriously, and am always willing to discuss them, and retract errors as and when necessary.

  • Can someone explain Hastings, please?

    Eastbourne, just a few miles away, is doing fine. So is Bexhill. The town is surrounded by typical Homes Counties villages. Rye, just ten miles to the east, oozes prosperity. So what is the problem?

    It isn’t lack of position (Southend and Blackpool have none). And it isn’t a dearth of good property. Victorian terraces abound, filled with houses and flats that no-one wants to buy. It could be something to do with the missing hotels (not an AA 5-star in town), the non-existent conference centre, the vagrants begging in the streets and the general feeling of misery.

    I don’t believe it has anything to do with the railway for one moment. Hastings is no worse off train-wise than Worthing and Bognor Regis, and is in a far better position than Selsey, Swanage and Lyme Regis, that have no trains at all.

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