Monday, 15 July 2013

Singapore on the Ship Canal - why it's the economy that matters in regeneration


The thing about regenerating the North of England is that we appear to have tried everything - sometimes more than once. Or rather we have tried every variation of government intervention. And it hasn't worked.

The latest (and this is definitely a rehash) solution is the 'local enterprise partnership'. Now these things - which seem not to be local, not to be about enterprise and bad examples of partnership - are the favoured vehicle for regeneration. And as Neil McInroy from CLES observes:

I recently participated in a round table debate on growth, with northern business leaders in Manchester. Inevitably, the key vehicle for local economic growth came up – local enterprise partnerships (Leps). Starting with a few shakes of the head and the odd raised eyebrow, that bit of the debate was summed up by one participant who said: ‘I am not sure Leps are fit for purpose in the drive for local economic recovery’. He was understating it, but spot on.

The problem here is that Neil, having identified how LEPs aren't the way to do it, stumbles into that old trap of believing that some other form of government intervention will do the trick. Indeed the solution preferred here combines one good idea and several lousy ones. The good idea is that local councils should lead on regeneration - more to the point, that local councillors (who Neil insists on calling 'elected members') should take ownership of economic development strategies.

The bad ideas are these:

We must aim for business success and private gain with social justice. They are not mutually exclusive.

To be fair, I've really not the foggiest idea what we mean in this context by 'social justice' - it seems to be something that has to be said if you're a bit left-wing but want to talk about the necessity of free market capitalism. The problem is that it leads to mission creep - to setting environmental targets that squeeze out growth, to a misplaced belief that 'social enterprise' is an engine for development and to targeting based on social outcomes such as 'equalities' or 'community cohesion'.

It is evident from the recent fairness and poverty commissions and work in local authorities around social inclusion that there is need to match economic development with social growth.

Here's another example of this mission creep (and a warning that, while it's a good idea for councils to lead, they aren't always good at it). I'm sure Neil knows what he means by 'social growth' but it seems to me that, not only are Northern cities significantly more 'equal' than London, but that this is a direct consequence of their lack of success. More importantly, 'social growth' is a consequence of economic development not an alternative. If you trog round the poorer parts of Manchester or Leeds it's abundantly clear that the poverty results from economic failure compounded by poor government in crucial areas such as education and health. So the starting point for regeneration must be economic - get people into jobs, improve skill levels and encourage business creation.

In some ways we seem confused about what we're trying to do. On the one hand, organisations like CLES promote the ideas of an 'economy for all' that rejects traditional models of economic growth and opts instead for the idea of 'activity', for 'greening' and for more cooperative or mutual organisations. This is fine - although it only works if you set aside the desire to 'close the gap' with wealthier regions in the south - but I don't believe it offers genuine hope to the thousands of people stuck on benefits, in poor housing and with some of the country's worst schools and hospitals.

There is, in this argument, a view that equates the public and private sector in economic terms - ignoring the fact that, in general terms, the public sector doesn't produce but consumes (and we should remember that consumption is more important that production - even the squanderous consumption of the public sector). So in regeneration it is the private sector that matters - not the grandees that end up on LEP boards but all the others, the start-ups, the SME, the little manufacturers and the shops, large and small. Without this there is no growth - there might be spending but there isn't growth.

There are things that can and should be done - devolving tax-raising and rate-setting powers back to the local level and, at that local level, carrying through that 'double-devolution' idea to encompass schools, healthcare, leisure provision and much else besides.

But growth - and let's be clear, it's growth that the North needs not some sort of steady-state economy - will not come from this action but from an environment that celebrates business and enterprise however it is organised. From a society that finally escapes from the belief that some grand bloke in a top hat will arrive and give us all jobs for life.

If the North is to have a successful economic development strategy - or strategies - it has to focus relentlessly on the private sector and eschew the temptation to use regeneration plans to save the planet, eliminate poverty or create some mythical 'fairer' society.

Imagine 'Freeport Manchester' - a low tax, low regulation economy supported by local government and featuring investment in skills, education and business creation. A place focused on science and engineering, on export and exchange - a sort of Singapore on the Ship Canal. Wouldn't that be a better ambition?


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