Horse and Cart, Clacton War of the Worlds 1952 (EAFA 1990)

When I read Grant Shapps’ announcement (4^th February) of a competition to select 12 local pilots to test ‘Town Teams’ recommended by the Portas High Street Review, I googled ‘putting the cart before the horse… town centres’. I am delighted that I did.

The day of the announcement was my mother’s 79^th (she says 74^th!) birthday, and I have always remembered her telling me of her summer trips in the 1950s to Clacton to work on her uncle’s fairground stall on Clacton pier. My google search took me to the most wonderful East Anglian Film Archive (EAFA) restoration of an amateur production of ‘War of the Worlds at Clacton’ – a 32 minute 16mm short produced in 1952. It shows a vibrant, busy, diverse town centre before the martian carnage. EAFA notes, exquisitely, ‘ Unaware of the invasion the council chamber sits as normal, likewise folk drink in the pub, sit in the barber’s shop and the library, all without a clue of Clacton’s fate’. Indeed….

Government has ‘put the cart before the horse’ with its Portas Pilot announcements, but, the competition nevertheless represents an interesting challenge for ambitious town centres, and a real opportunity to produce a 21^st century equivalent of the images and endeavour displayed by this 1952 Clacton jewel.

To deal with government first…the pattern of their approach to economic development has now been clear for some time. In default of a coherent strategy, they come up with an ad hoc announcement, with derisory funding, to give the appearance of leadership.

‘Town Teams’ are probably a sensible evolution of a lot of partnership working that has been going on for decades in town centre management, Business Improvement Districts (BIDs) etc. Some extra resources to develop the concept further in the new economic development landscape are welcome. But, as usual, why ‘12’ pilots (especially when government is seeking to cover nine different types of ‘high street’ – large, rural, coastal, market, and new towns; villages, suburban, parades and ‘other’)? What do we really think £1m between them (i.e. around £80k on average over an indeterminate period) will really test? And of course, government has not suggested how the ‘pilot’ will be run and the lessons considered and disseminated.

The (in this case miniscule) ‘cart before the horse’ approach arises, because the Portas Review recommended some very major ‘asks’ of government – a National Planning Policy Framework (NPPF) presumption in favour of town centre development, Secretary of State call in of out-of-town retail-led applications, ‘affordable shop’ quotients in retail developments, new legislation for landlord participation in BIDs, greater CPO powers, new business rates regimes etc.

Instead of briskly and seriously answering these questions, Shapps bungs £1m at two non-controversial recommendations (town teams and pilots). The problem for pilot propositions is that they will have to be formulated without knowing what the bigger national policy picture will be (which of course will shape a local strategy). The fear is that announcements in March (budget time) on NPPF, Local Government Resources Review (business rates) etc., may not be as unequivocally supportive of the high street as Shapps’s self-congratulatory February 4^th sound-bites.

Nevertheless, the ‘Portas Pilots’ proposition is interesting, and I hope towns like Clacton will put forward propositions.

Firstly, this is one of the few economic development initiatives that is not explicitly ‘big city’-led. Margate (a Portas reference point but with a vacancy rate above 36% in the latest Local Data Company Vacancy Report) has as strong a case for inclusion (perhaps stronger) as, say, Manchester.

Second, the scale of the challenge is significant and important. Portas identifies around 5400 ‘high streets’ in the UK with retail spending shares dropping from 49%-39% from 2000-14 compared to impressive growth of out-of-town and non-store (i.e. internet-based) over the same period. 25000 high street stores closed in the last decade with a 10% reduction in footfall.

The need to define and embed new distinctive roles and functions in our town centres – Portas’s ‘social hubs for shopping, learning, culture, health, wellbeing, creativity, socialising and having fun – does require intervention, and her proposition that ‘once we invest social capital in the heart of our communities, economic capital will follow’ needs testing and development.

Third, the town centre management and BID-models appear intuitively highly relevant to the grain of new local economic development – partnership-based with additional income streams and limited core public funding. However, the model does need to evolve and go to places it hasn’t yet reached. The DCLG February 2010 list of around 90 successful BIDs in England showed by far the most numerous (22) in London but only three in the North East and two in Yorkshire and Humber. Since then there appear to have been a further 22 new BIDs established in England, mainly in Greater Birmingham (6), the East Midlands (7) and South West (5). There have been none in the three northern regions – all of which have vacancy rates over 16% compared to an England average of 12%. There needs to be a serious debate about the role of town centre management and development in economic ‘rebalancing’, and it might be useful if Portas Pilots helped test some propositions on this.

Finally, the invitation to post a Youtube clip with the Portas Pilot application submission is potentially an exciting exercise. What is perhaps even more striking than the bustling town centre about the 1952 ‘War of the Worlds in Clacton’, is the fact that the amateur film was ever made at all. Led by the Youth and Day Centre, including lots of young people but also Police, Fire Service and a range of other partners – this is surely the type of innovative expression of civic energy that can build the social and thereafter economic capital of many high streets over the coming period.

If you have a spare 30 minutes and want to smile, I do recommend this archive piece. However, rejuvenating our town and village centres is a much longer and more serious endeavour. Portas is probably right when she suggests the traditional high street is not at war with out-of-town and on-line. But turnaround and reinvention will be a struggle. Yet again, it will be local leadership – not government – that can turn the Portas Pilots into positive and useful contributions to this process.

Regeneration and Renewal, and this blog in particular, has previously (November 2011) questioned government’s approach to Regional Growth Fund (RGF) and their claims for its effectiveness and value-for-money. There is virtually no transparency in the process by which applications have been appraised and approved, and scant assurance on the manner in which jobs created/safeguarded and private sector leverage have been calculated.

With bidding for the next round of funding (worth up to £1billion) due to be launched in February, it is now an appropriate moment to return to government to demand a transparency and accountability for RGF decision-taking and implementation that matches their rhetoric and purported values.

The announcements last week of a further four awards throws no further light on the questions surrounding RGF. Three of the awards – amounting to 98% of the amount allocated – are Round One decisions made in April 2011. There has been much criticism of the length of time it takes between RGF ‘decision’ and completion of due diligence and confirmation of grant. If it takes 10 months (and longer for those round one successes still awaiting approval) to verify an application, one has to question the original decision-making process and the basis upon which some bids were passed and others rejected.

Looking at such details as government and the companies have made available also throws up issues. The largest award – to E2V of Chelmsford – is of £6.25m, leveraging an apparent £3.70 of other investment for every £1 of RGF invested. This is significantly below the much publicised 5:1 ratio lauded by Nick Clegg as evidence of the value for money of the fund. The second largest announcement of £1.69m is to Bentley, and boasts a £2.70:£1 ratio and, according to the company web-site is to maintain and enhance skills of the existing workforce, whilst the DBIS press notice couples this with increasing job numbers. One Round Two success received approval – but this is for a relatively modest £200,000 and is only a component of the much larger Leeds City Region proposal rather than for the complete package.

The current position on RGF, therefore, remains as before:-

• The criteria for success remain unclear and inconsistent (and the feedback for at least some unsuccessful applicants has been minimal)
• The appraisal process both for initial ‘success’ and for due diligence is lengthy
• The benefits in terms of job numbers – both direct and indirect – and for private sector leverage remain to be proven
• The conditionality of the awards (e.g. if job numbers, leverage or indeed other factors change during the life of the project) has not been announced

Government should choose to address these issues seriously and thoroughly concurrent with the launch of the February bidding round. LEPs should demand this. And potential applicants deserve it.

Clegg and Clark’s announcement of ‘new city deals’ in December 2011 was broadly welcomed as a positive outcome of the Core Cities Group engagement with the Localism Bill (now Act), and was presented as a radical opportunity for putting Government’s ambitions for local growth and decentralisation into practice. It provided some localism and decentralist seasonal cheer from our Minister for Cities AND Decentralisation (not forgetting ‘Big Society’ and ‘Planning Policy’) at the end of a long arduous 2011.

In the cold light of 2012, however, Government’s ‘offer’ (in ‘Unlocking Growth in Cities’) appears incoherent and incomplete. How can cities, LEPs and other local partners turn it into something that will actually do ‘what it says on the tin’?

Superficially, there is much to commend in the new city deals. Some of the powers, freedoms and flexibilities on offer are tangible and significant – the single capital pot, the powers and influence over rail and bus development and transport investment, the devolution of HCA resources etc. However, most of the ‘illustrative menu of bold options’ in ‘Unlocking growth…’ is actually potentially available to any ambitious area. The Regional Growth Fund (RGF), the various financial reforms arising from the Local Authority Resource Review (e.g. business rates and TIF related), the potential to aggregate apprentices programmes, to work better alongside JobCentrePlus etc. Indeed one might argue that the ‘Minister for Decentralisation’ indicating the ‘bold options’ that government will work on with the eight Core Cities and their LEPs, is in fact a smokescreen for pushing these potential powers, freedoms and flexibilities for everyone else into the ‘long grass’.

The counter to this cynical view, though, lies in the actual ‘evidence’ government produces for its commitment to cities in general and to Core Cities in particular. We are told that 58% of population and 61% of jobs are in English cities, and then that £744m of RGF has been allocated to them – i.e. 53% of RGF Rounds One and Two. The Core Cities’ growth potential is lauded, and then government offers them and their LEPs £134.4m (26.9%) of the Growing Places Fund (GPF).

‘Unlocking growth’s…’ analysis of Core City comparative advantage is also revealing. The report suggests ‘core cities compare well with their European rivals on the number of graduates they can draw from’, but the accompanying table shows we are certainly no better than Spain, France and Germany, and that English Core Cities (except Bristol) are actually well below national averages in graduate density.

Core Cities knowledge based enterprise intensity is meant to have made them more resilient during the downturn (and perhaps it has), but the (admittedly extremely odd) accompanying figure suggests that all except Bristol have had higher than average increases in claimant count.

Core City ‘world class universities’ are major assets. However, if this is a key determinant of opportunities for ‘new city deals’, then one could argue that at least Oxford, Cambridge, York, Durham, Brighton (for Sussex), Southampton, Norwich (for UEA), Exeter, Coventry (for Warwick) – all of which perform at least as well as some of the Core City Universities in world and national rankings – and their respective LEP areas ought to be in the mix for ‘Unlocking growth…’.

Finally, in terms of incoherence, Government offers the directly-elected mayor ‘model’ for strong decisive leadership in our major cities. But the Core Cities are not the only cities going through this process. Leicester has already moved to an elected Mayor; Coventry will have a referendum; Leeds City Region could end up with up to three Mayors (Leeds, Bradford, Wakefield), or none. Sunderland is excluded from the process (although it meets size criteria) on the frankly contrived grounds that the city voted against the elected Mayor (56%/44%) in 2001 – a referendum over ten years ago with a pitiful 10% turnout.

One overall impression of ‘Unlocking growth…’ therefore is of a government which doesn’t really know what to do on sub-national development, throwing together a portfolio of ad hoc incentives most of which are available to all, finding a willing group to work with, rolling out the ‘one size doesn’t fit all’ truism, and then congratulating themselves on a radical transformational approach.

None of which is to reject ‘new city deals’ out of hand. Core Cities and their city regions, and other coherent economic geographies do need well-evidenced development strategies and new models of intervention covering skills, enterprise, innovation, and infrastructure to catalyse and support local growth. They do need new approaches to community regeneration to ensure all communities benefit from and participate in this process. They do need cohesive local leadership teams (public, private and community) and purposeful partnership working. And they do need all parts of government to take their well-founded propositions seriously – from whichever economic geography they come.

In 2011, as Minister for Cities, Greg Clark managed (just) to produce the ‘new city deals’. As Minister for Decentralisation, though, his progress report on government’s commitment to devolution remained mired in the corridors of Whitehall. One fears that until this impasse is resolved, ‘Unlocking growth in cities’ in practice will remain elusive and half-baked.

The publication of 1981 Cabinet Papers discussing a strategy of ‘managed decline’ for Liverpool has caused considerable comment at the start of a year in which many places in the UK may well face this direction of economic travel. Beyond the controversial emotive terminology, what is most striking is development and regeneration’s enduring struggles with the relative balance between investing in success and tackling deprivation; and that tackling deprivation still needs to present a compelling case for interventions sustaining better futures as opposed to making present poverty bearable. How far might we see continuity and/or (transformational) change in 2012?

There are consistent themes and approaches across the decades. Heseltine’s 1981 prescriptions for Liverpool (e.g. heritage and cultural-led tourism – Albert Docks/Garden Festival; knowledge economy – Wavertree Technology Park; modernised transport hub – ‘super Port’, comprehensive community regeneration – Toxteth) have some read-across with his 2011 report. Agendas, though, have evolved with the emphasis on devolved city-region powers and resources a refreshing change of tone compared to 1980s Whitehall-led Development Corporations.

‘Results’ of interventions have also been problematic. The blog I did last August on ‘Back to the future’ for Birmingham, compared that city’s 1991 20 year strategy with contemporary economic performance in 2011, and suggested real concerns at redressing long-term challenges. Heseltine and Leahy’s 2011 Liverpool report describes a more confident, forward-looking city leadership and ‘branding’ – offering hope that a future devolved approach will reap greater returns than hitherto.  And the evidence does suggest some grounds for optimism.

In GVA per head terms, Liverpool has arguably been the most consistent core city in improving GVA per capita (at NUTS3 sub-regional level). This has risen from just over 90% of UK average in 1997 to 99.1% in 2009 (the latest year for which GVA data at this level is available). Over the same period all the other core cities’ (except ‘Tyneside’) relative positions declined, albeit often from a much higher starting position.

GVA improvement is also reflected in Liverpool’s move up the UK local competitiveness index. Although still ranked as the least competitive core city at 35^th (out of 41 major cities), it is the fastest improving over the period since 1997. In deprivation terms, though, Liverpool remains the most deprived local authority district in the country as ranked by Local Super Output Area (LSOA) scores. Population at both city and Merseyside-level was at its peak in 1931, and although 2010 mid-year estimates show the decline has slowed, there is not yet evidence of any sustained turnaround.

The Liverpool ‘pen picture’ illustrates a fairly positive record for progressing city development of an internationally competitive character. That mix (high quality master-planned physical regeneration, enterprise and innovation support, together with service sector strengthening e.g. leisure and visitor economy), combined with modern approaches to strong leadership with devolved powers, operating on city region scale, and promoting a coherent distinctive creative and enterprising city branding/positioning are potentially on offer through the Government’s new ‘city deals’ launched in December

The counter to this positive conclusion, however, is that these improvements are neither strong enough to be nationally significant; nor are they pervasive (or connected) enough locally to address the scale and intensity of deprivation – hence the unwelcome thread from Heseltine’s 1981 ‘It took a riot’ report on Toxteth to the urban disturbances last summer.

On the national position, successful Core Cities are a necessary but not a sufficient condition for England’s prosperity. In broad employment, just over 30% of new urban jobs are created in London, just under 30% in the eight core cities, and around 40% in a further +/-40 major urban areas. Moreover, a number of these smaller cities perform significantly better in terms of growth than the Core Cities. For instance, the Centre for Cities typology of ‘private sector cities’ had only Bristol in the eight ‘buoyant’ cities outside London, and only Leeds in the top half of ‘stable cities’.

For investing in success, therefore, whilst we need to support Core Cities in securing the best menu of powers, freedoms and responsibilities available under ‘city deals’, there is a need to support small and medium cities both within their LEPs and bilaterally to secure similar packages for their economies.

The other national issue is how to reengage and refresh London’s (or more precisely Inner London West’s) engagement with the rest of the economy. The latest ONS sub-national GVA publication in December strikingly illustrates this dilemma in a fascinating table about national variation in sub-regional performance across the EU. The UK spread is significantly the most acute. In Scandinavia the variation between best and worst-performing sub-region in GVA per head terms is typically around 50%. In the bigger economies it is either side of 100%. In the UK it is approaching 400%! Even within London, the variation is staggering – £110k per capita in Inner London West to £13k per capita in Outer London East and North-East.

A serious radical new look at the City’s connectivity to UK economic growth is crucial, and then something needs to be identified to kickstart a reallocation of economic roles and functions to alternative centres. For instance, were Scotland to vote for Independence, is there a case for moving the seat of (England’s) government to a more central and/or developmental location geographically?

As the 1981-2011continuum demonstrates, avoiding ‘managed decline’ is not a short-term project. But if a start is to be made in 2012, the new city deals need to be broadened geographically and made to drive national agendas. Concurrently we need a fresh look at London’s roles and functions to identify ‘exchanges’ that go beyond office-by-office transfers that we have seen in recent years. Then a new start will need to be made on the communities of chronic enduring deprivation…but that must be the subject of a future blog…

I must admit I still always feel a shiver down my spine, a lump in my throat, and a need to temper watery eyes, when my favourite Xmas Number One of all time – the original Band Aid version from 1984 – comes on. In a somewhat more prosaic context, I suspect many economic development professionals will have similar feelings about 2011 when they reflect back on government’s approach to the subject area we love and into which we put our professional energies.

In recent years the race to become Xmas Number One has pitted manufactured (un)reality-show pop-floss against edgy, darker musical and social statements. Similarly, in 2011, the Coalition’s superficial lip-service to local growth and development is countered by the much more problematic, perverse experience of practitioners in our cities and communities. Indeed, major features of 2011 bring to mind a number of Xmas Number Ones of both the superficial and the edgy variety.

The Nicole Kidman/Robbie Williams 2001 hit with ‘Somethin’ Stupid’ was clearly referenced in Government’s overhasty abolition of a fairly coherent, strategic and resourced regional system, and its replacement by +/-38 Local Enterprise Partnerships (LEPs) – with virtually no powers, resources, limited capacity and a set of balkanised economic geographies.

Government belatedly realised that LEPs needed some purpose and resources. The offer to them of a range of modest programmes (Regional Growth Fund, Growing Places Fund, Capacity Fund etc) and instruments (e.g. Enterprise Zones) has generated a number of  ‘Hallelujahs’ (Alexandra Burke, 2008) from LEP Boards. However, Cohen’s original ‘Hallelujah’ was actually about betrayal (Samson and Delilah, King David’s adultery etc). Government’s piecemeal approach is similarly a deceptively attractive betrayal of more serious strategic and holistic approaches to local development in much of the country outside the most advanced Core City Regions.

I rather hope the race for the Xmas Number One this year is won by Nirvana’s reissue of ‘Smells like Teen Spirit’. This ‘anthem’ to alienated young people is a fitting reminder of the summer outbreak of major civil disturbances across a number of urban areas. The task of rebuilding neighbourhoods and communities remains a major regeneration challenge of our profession. We need new models and approaches, but government’s response was, at one level, like Enterprise Zones on our ‘growth wing’, stuck in a 1980s mindset. The knee-jerk Law and Order/’Broken Britain’ paradigm brought to mind the 2009 ‘Killing in the name…’ and was accompanied by the virtual disappearance of ‘Big Society’.

In 2000 Bob the Builder asked ‘Can we fix it?’, and in 2011 Government answered ‘No we can’t.’ Despite their demonization of Labour’s housing record, completions in the first year of the coalition fell by 9% over the previous year, and the latest quarterly figures from NHBC show a further 10% drop over 2010 with only 22,500 new homes registered. More generally the Construction Product Association has forecast a 0.8% fall in output this year and a further 2% next year. Government responded in the Autumn statement with various new interventions, but their own Office of Budget Responsibility still forecasts residential investment to ‘recover’ to 10% below its pre-recession peak by 2017.

I have to finish my 2011 review with the song regularly voted the worst Xmas Number One of all time – Mr Blobby! A ‘one hit wonder’ for two years, this ‘proof of Britain’s addiction to trash’ found voice in CLG allocating £250m for weekly rubbish collections whilst DECC emasculated swathes of the renewables industry with reductions in feed-in-tariffs. The ‘greenest government ever’ followed ‘Big Society’ into the scorched and parched ‘long grass’.

If we add to the rather partial overview above, our relative isolation in the EU and the impact this could have on European funding, continued fragile growth and public expenditure reductions still working their way through, there is arguably little cheer as we enter 2012. However, I remain an optimist. Whilst Government’s strategic approaches to localism, rebalancing, ‘big society’ and low carbon growth remain profoundly flawed and often contradictory, strong cohesive local leadership can continue to realise opportunities, shape and tailor them for their cities and communities.

I look forward to 2012 as a year when occasional jewels and much-sought after recognition can be won for local areas by high-performing teams. We will have the ‘Diamond’ Jubilee, and the gold, silver and bronze medals of London2012. Only some will realise the opportunities on offer. This will take a mixture of talent, very hard work, focusing on a small number of goals, and putting all the resources we can muster behind them.

It is (and will continue to be) a ‘Mad World’(Gary Jules 2003) for local economic development. But if we can go forward positively and energetically, I am confident that local economic leadership teams can rescue Government’s approach with the classic from the most successful Xmas Number One artists of all time – the Beatles 1965 ‘We can work it out’.

Turning to the DBIS web pages in the aftermath of the statement, there are three main emphases worthy of Local Enterprise Partnership (LEP) and Local Authority (LA) attention – the National Infrastructure Plan; The Growth Review (Phase Two); and Growing Mid-Sized Businesses (MSBs).

The National Infrastructure Plan identifies a pipeline of 500 major infrastructure investments spanning transport, energy, waste, water and communications schemes to be progressed. There is a range of potential public/private financing options for these, together with streamlined consent processes to speed up delivery. Whilst one can argue the rationale and coherence of the ‘plan’, at the least, local areas need to consider carefully which schemes impact on their cities and communities, what local delivery management capacity needs to be deployed, and whether there are ancillary and complementary measures that will increase the local benefits of the investments.

The Plan for Growth has extended Regional Growth Fund (RGF) by at least one year and £1bn. It has created further Enterprise Zones (EZs) and clarified enterprise allowances for six EZs. Its flagship announcement was the £20bn National Loan Guarantee Scheme for SMEs. Much smaller amounts are also earmarked for science investments (and science teaching), energy-intensive industries, business-led vocational training, export support, ‘Free Schools’ and school places etc. The Update on Phase One of the Plan has also highlighted major continuing developments in Planning – especially the National Planning Policy Framework (NPPF), regulation, trade and inward investment, finance and, effectively, nine priority sectors/themes. Whilst the temptation for many LEPs may be to focus on RGF, EZs (and the recently announced Growing Places Fund), and for LAs to focus on NPPF, the need to understand the local opportunities from priority sectors, skills training, and globalisation are central to any coherent local growth strategy.

Perhaps most intriguing, though, for LEPs/LAs is the (currently rather vague) results of the ‘Growing Mid-Size Businesses (MSBs)’ component of Phase Two of the Growth Review. DBIS tell us these 10,000 firms amount to just 0.2% of the UK business stock yet 20% of private sector employment and turnover. Too small for capital markets, but perhaps too large and complex for local banks, Government is suggesting targeting packages of business support (e.g. finance, export, networking/supply chains, resource efficiency etc) at these cohorts of businesses. The size and scale of the sector makes national management – especially relationship management – problematic. LEPs/LAs might well have the proximity, contacts and understanding to deliver greater local economically significant results from these types of enterprise compared to say general start-up and generic SME support schemes.

The recent Centre for Cities review of LEPs one year on, suggested that only two have produced a strategic plan, whilst many suffer from lack of funding, resources, leverage and influence. Certainly, if LEPs wish to focus on just three areas of work, a local infrastructure plan, developing an understanding of and coherent approach to high growth sectors, and delivering signposting and relationship management services for strategically-significant businesses (whether Corporates, MSBs or SMEs) seems to provide a useful starting point. Shaping RGF, EZs (or other strategic employment sites), GPF, and other LEP resourcing to this framework begins to amount to an implicit strategic approach, even in default of a comprehensive adopted strategy.

The interrogation of the DBIS website, therefore, does offer a useful framework for thinking and action on local economic development going forward. Shockingly, the same cannot be said of DCLG. Their Home Page news as of today (30^th November) majors on ‘Lancashire flag flying at DCLG’. Their more detailed news pages managed to not mention the Autumn Statement at all, but helpfully published their monthly expenditure on hospitality whilst the chancellor was at the dispatch box. Clearly assimilating the consequences of NPPF and other planning changes into the above framework will be a major issue for the LEP/LA interface, but DCLG clearly had bigger fish to fry (or was it just a Lancashire ‘butty’) this week!

Notwithstanding DCLG, there is ‘food for thought’ in the autumn statement. If LEPS and LAs can pull this together to make sense locally, then perhaps we shall all grow to tolerate – if not love – the messy marmite of Osborne’s sub-national economic policies.

The GPF prospectus launches a £450m invitation for local partnerships to bid for infrastructure funding that will promote economic growth and the delivery of jobs and homes. The fund has been distributed indicatively by formula to LEP areas. The formula is very simple – with a 50% weighting given to resident population, and 50% given to ‘Employed Earnings’. These distribution criteria clearly benefit more populous areas, where there are high rates of employment and high average wages – namely London and the Greater South East.

This means that LEPs in the North East have received less than 5% of the GPF allocation; the North West under 15%; and Yorkshire and the Humber just over 10%. Correspondingly, the South East has received 20% whilst the broadly-defined ‘London mega-region’ as a whole commands around 40%.

Of itself, there is nothing inherently ‘wrong’ with government deploying a relatively small fund in favour of much-needed infrastructure in the Greater South East. However, as part of a purported rebalancing and local growth strategy, it does raise presentational and substantive concerns.

The GPF prospectus has been launched with no real debate on the distribution criteria, and no discussion on the implications for rebalancing. With a title like ‘Growing Places’, it rather suggests that larger beneficiaries are the types of places which Government expects to ‘grow’ in the future – hence the title of this blog.

More substantively, the GPF prospectus makes it clear that the award is to be used to establish sustainable revolving funds, whereby “developers would use a proportion of land value uplift or financial receipts to repay the public sector outlay”. This potentially institutionalises the distribution of infrastructure resourcing over the longer term in line with initial allocations. It also creates additional complexity to the already crowded value-capture landscapes of TIF, CIL, the Local Government Resource Review/Business Rates retention, and other financing mechanisms.

To be fair to government, a coherent narrative about local growth could be constructed in which a modest GPF (and subsequent Local Infrastructure Fund) is a useful component of a well-founded strategic approach. Arguably, Labour’s former Growth Area and Growth Point programmes were precisely that. The problem for the coalition is that, in the absence of this narrative, the GPF comes across as another piece of ad hoc patronage for LEPs from a government who is making it up as they go along!

The GPF deconstruction of Government’s rebalancing narrative, in some ways, epitomises an even more fundamental problem for the coalition. This Government spent much of its first year in office changing the language of development as it promoted themes such as Localism, Big Society, Rebalancing, the low carbon agenda of the ‘greenest government ever’ etc. Its second year always had to be about how it began to turn that language into practice.

Recent weeks have seen high profile assertions that “Big Society is dead”. The ‘greenest government ever’ has been comprehensively unravelled by the opposition of Osborne and the Treasury. The localism and centralism pendulum continues to swing backwards and forwards. And now GPF suggests a reversal of rebalancing.

If, one by one, the potential positive themes and principles of the coalition’s agenda are undone, what is left for which the coalition will be known (both come the next election, and in the longer term sweep of history)? Deficit reduction and austerity….

Government has made very little detail of RGF awards available publicly. For both Round One and Two the DBIS website shows only the names of ‘successes’ by ‘DBIS region’ (which are not the same as administrative/EU regions), together with the total direct and indirect jobs per region. There is no detail on the amounts awarded to individual projects, nor job outputs expected per project. There is no information on the means by which the RGF Advisory Panel appraised the 492 bids, what they recommended to Ministers, and how the eventual 119 were selected. To add insult to injury, having announced 119 awards, only 112 successes are actually named on the DBIS website!

What little we can glean from the data, though, does raise some interesting questions. For instance, performance between Rounds One and Two appears to have fallen dramatically. The £450m Round One Awards is said to achieve nearly 28,000 direct jobs at £16,300 per job. For Round Two, cost per direct job has increased by 55% to £25,300; whilst indirect job value-for-money has similarly declined, albeit by a smaller 24%.

There are interesting regional variations. For instance, in both Rounds One and Two, the three northern regions received significantly over 60% of awards, but account for around 50% of direct jobs and only 1/3 of indirect jobs. By comparison, the South East in Round Two received 6% of approvals but produce 20% of direct jobs and 14% of indirect jobs. There is nothing ‘wrong’ with this – but a government professing a regional rebalancing goal needs an open informed discussion on it.

Given an opaque DBIS, one can begin to try and interrogate local press and company web sites to find out more about individual awards – but there is relatively little coverage, and that which there is raises further questions. For instance (and I apologise for highlighting these random individual cases), the Visit England success is described as a bid of ‘up to £20m’ which ‘has the potential to create the equivalent of 9,500 jobs’. Keepmoat Homes £6.5m ‘could pave the way for 120 construction jobs [i.e. at a cost of £55k per job]….over 11 years!’ (my emphases).

Indeed, each individual scheme researched (and I looked at about half a dozen initially) raised a number of fundamental issues that undermine confidence in both Nick Clegg’s ‘delight’ and in the minimalist government justification for the investments. Gross, let alone net, job numbers are notoriously problematic to forecast; and to place any reliance on ‘indirect’ job benefits in an era where everyone knows supply chains in many sectors are global in character, is just disingenuous.

Another key government message has been that RGF is excellent value-for-money because for every RGF£ invested £6 of private investment will be levered. None of the examples examined show leverage anything like this, and it is far from clear what volume of private investment RGF might lever that would not have occurred in any event.

Government needs to be open and accountable in its deployment of RGF – and beyond this, it also needs a robust, learning framework for monitoring and evaluating the results of these investments.

During 2006-09 DBIS undertook an independent Impact Evaluation of RDA expenditure. For 177 evaluations amounting to just over £5billion spend, PWC assessed that around 500,000 (gross) jobs had been created or safeguarded. For ‘business’ investments (the type of RDA spend most close to the avowed aims of RGF), the cost per NET job was £14,221. These ‘real’ results compare very favourably to Government’s RGF forecasts. If the coalition does not wish to be open to the charge of ‘going backwards’ in local economic development, it needs to establish an evaluation framework for analysing and learning from RGF, Enterprise Zones, and the other measures that have superceded previous sub-national growth intervention strategies.

With an open, honest, learning process on the rationale for and results of RGF decisions, RGF may yet prove a positive catalyst for local growth and provide longer-run rationales for public investment in development. To date, though, RGF has been awarded opaquely and the political spin has been innumerate (at best). It may not take much to ‘delight’ Nick Clegg, but local economies need government funding to support growth that actually adds up…

The evidence of a genre in decline is pervasive – the dramatic decrease in public funding, the destruction of the significant capacity and capability of regional institutions, the ‘market failures’ of retail and residential anchored models, and, perhaps most worryingly, the emasculation of attempts by government at intelligent, broadly-based approaches to sub-national growth and development.

Regional Growth Fund (RGF), Enterprise Zones (EZs) (and probably the Growing Places Fund to come) are clearly ‘divide-and-rule’ patronage-based interventions with no underlying rationale – enabling the differing sizes and shapes of the coalition – literally from Clegg to Pickles – to give an appearance of activity to mask their respective defaults of constructive strategic leadership and understanding.

To be fair to Vince Cable, his renationalisation of enterprise and innovation support may be the antithesis of Localism, but at least it gives the Technology Strategy Board (TSB) a stab at a national industrial strategy. The Technology and Innovation Centres (TICs) TSB are promoting – to date in High Value Manufacturing (HVM), Cell Therapy, and Offshore Renewable Energy – are interesting, if somewhat underpowered and remote from local authorities and LEPs.

To recap, the TIC’s ‘business model’ is to draw on excellence in university research to accelerate the commercialisation of new and emerging industrial technologies. To this end, the HVM TIC brings together seven research centres – two in Rotherham; two in Coventry; one each in Bristol, Durham/Teeside, and Glasgow.

Ambitious local areas will welcome government’s promotion of HVM; and most will see these industries as future sources of economic growth, and potentially employment and profile/prestige for their area. Rotherham, Coventry etc., in particular will be encouraged by the TIC-designation, as the individual centres consider “TIC status will help attract inward investment into high-value manufacturing clusters around each centre “.

The issues, however, are whether the TICS can deliver distinctive contributions to economic and employment growth;   and how, precisely local areas can engage with them.

In terms of the first issue, it is worth remembering the genesis of the TIC proposition. They arose from Herman Hauser’s report commissioned and accepted by Lord Mandelson during 2009/10, and still the template referred to by the TSB as the commissioners and core funders of this initiative.

Second, it is fascinating to consider the English centres chosen to be part of the HVM TIC. Each only exists in a state of readiness for this designation because of significant support and investment by their respective Regional Development Agencies (RDAs) – at least £150m of readily-identifiable grant (and probably much more in total) over the last decade.

Third, government has been very coy about the amount of funding being provided to the TIC. This week TSB announced investment of £140m over six years in the HVM TIC. If the HVM TIC was to get, say, half of this over the current three year spending period, this leaves disproportionately less left for each of up to 8 future TICS from the £200m allocated in the Spending Review. More worryingly, £20-£25mpa (presumably £3-£4mpa for each participating institution) is patently much too modest. The Hauser reference point of the Fraunhofer Technical Institutes in Germany has a turnover of Euros 1.6 billion p.a., whilst even the Dutch equivalent (the TNO) has a budget over Euros 100 m.p.a.

Finally, far from building on proven research excellence, three of the centres (one each in Rotherham, Coventry and Bristol) are not yet substantively open and operating – but are only occupying their new premises as this year comes to a close.

For local leadership teams there is the all important ‘so what’ question. For instance, how does having two of the HVM TIC specialist centres in Rotherham help adjacent Doncaster and Barnsley? And does it in any way impede local areas (e.g. Cornwall or Cumbria) who are not hosting a TIC?

This comes back to my fundamental point from last week’s blog on local industrial strategy. Local leadership teams – whether at LEP, city or community level – need to consider their own strategic approach when it comes to industrial growth rather than focusing exclusively on government patronage (RGF/EZs). Government’s approach to industrial growth relies on a centralist interpretation of an idea born of the labour government; hosted in institutions nurtured by the specialist economic development agencies that the coalition has abolished; with inadequate start-up resources; and with no substantive track record in a number of the participating centres. One assumes that future initiatives – from TICs to Growing Places Fund – will be of a similar character.

Of the five hyperlinks to this blog, the one most worth accessing is surely the first – Eva Cassidy’s rendition of Autumn Leaves. The song was originally recorded in 1945 France as ‘Les Feuilles Mortes’, literally the Dead Leaves, I think by Yves Montand. Since its inception, it has become a popular jazz and pop standard with a number of much more positive interpretations and treatments. I particularly love both Eva’s and a jazz rendition by Keith Jarrett.

The major read-across is ‘localist’. Even if we are in an autumn of local economic development, there are opportunities for local leadership teams to compose distinctive and beautiful arrangements that make something of and go well beyond national, centralist ‘dead leaves’. It is these local interpretations that will see us through the winter, and help shape the inevitable spring of local economic growth that will be desperately needed later in this parliament.

National Government has prioritised ‘active industrialism’ as a key driver of UK economic growth since Mandelson’s 2009 ‘New Industries
New Jobs’ (NINJ) strategy – both as a national response to challenges of global competitiveness, and as a key plank of rebalancing the economy away from the charge of overreliance on London and financial services.

Although extensively rebadged, Government’s 2011 ‘Plan for Growth’ follows a similar framework for national intervention as NINJ, with major overlaps in key sectors (e.g. advanced manufacturing, life sciences, digital and creative, low carbon technologies), and areas for intervention (e.g. skills, infrastructure, inward investment and exports, regulatory reforms).

A major change, though, has been of the levers and instruments for industrial policy. Whilst NINJ envisaged regional strategies and capabilities, local economic assessment and intervention management, ‘total capital’ approaches etc.; Plan for Growth is nationally driven in terms of Enterprise and innovation support, with much lower levels of funding available locally (sometimes through LEPs and local authorities) in initiatives like Regional Growth Fund, Enterprise Zones, and the recently announced Growing Places Fund.

For LEPs and local authorities, assuming local industrial leadership in these circumstances is particularly challenging. There are the important efforts of responding to dramatic events like the closure announcement of Pfizer in Sandwich or the difficulties facing Bombardier in Derby; and the understandable focus on lobbying government for the ‘patronage’ of Enterprise Zones and RGF.

However, a well-founded local industrial strategy needs a more comprehensive, nuanced approach. Having worked with IfM, and with a number of local areas over the past 2 years, there appear to be four major prerequisites to formulating a robust, sustainable, approach to local industrial growth:-

- Developing a deep understanding of the industrial assets and performance of the local industrial economy – key sectors, major corporate anchors, support infrastructure (including networks, supply chains and R&D), and a realistic assessment of constraints (e.g. skills, infrastructure, services, global competitiveness concerns etc).

- Building relationships (on an appropriate, tailored ‘cluster’ basis)  with local businesses and major role players (representative organisations, HE and FE, service providers and intermediaries) to deliberate and agree local priorities on which to focus intervention strategies – and particularly fostering improving education – R&D –  Business collaboration

- Nurturing connections with and links to the renationalised enterprise and innovation functions – Trade and Inward Investment, Technology Strategy Board and Research Councils (possibly through relevant new national Technology and Innovation Centres), the national business support products etc.

- Rooting and aligning industrial strategy in and with the broader approaches to key enablers of growth – the Core Strategy/Local Plan, skills and infrastructure strategies, wider place branding and marketing (in global competitiveness terms) etc.

Pulling these four prerequisites together in a coherent initial local industrial proposition is, in itself, a significant undertaking – which can of course always be overtaken by events like major closures or economic disruption. It also goes well beyond a focus on a single (advanced
manufacturing) sector.

Indeed, most studies on the role of advanced manufacturing in UK recovery (from NESTA to Centre for Cities, Work Foundation and most recently New Economics Foundation) recognise that whilst manufacturing is important for growth, productivity, strategic and profile/reputation of successful local economies, it is NOT a ‘golden bullet’. In most areas it will only play niche roles in driving economic success. Employment growth is much more likely to come from the less fashionable but larger ‘business services’ sector.

Any sub-national industrial policy, therefore, requires and will benefit from looking at linkages between sectors, technologies and whole-product, whole life cycle value chains. For instance, IfM has championed the rise of ‘manuservices’. One of the areas with which I have worked recently had a strong industrial policy proposition but only based on bespoke sector clustering – in this case advanced manufacturing/low carbon goods and services/food and drink – on a coherent economic geography (akin to a medium-size ‘city region’) which crossed both council and LEP boundaries.

This work also suggested potential for a second business services/digital and publishing industrial footprint, with larger employment growth potential than the manufacturing-anchored cluster. For many localities, an understanding of business services (and how they relate to manufacturing and other national priority sectors locally) should be the major focus of sector economic intelligence, analysis and relationship-building. In this respect Government’s sometimes ‘demonisation’ of financial services nationally, will retard viable growth policies locally.

However, the formulation of local industrial policy is one thing – implementation and delivery management is quite another. Whilst Ministers like to announce EZs, RGF, and no doubt ‘Growing Places’ awards, they will – at best – be useful catalysts for industrial development rather than decisive enablers of long-term resilient economic growth.

Given public resourcing constraints, industrial policy implementation and delivery management will need to be strongly private sector led through evolution of proactive cluster groups and networks in key sectors/technologies. Local authorities and LEPs can add value relatively affordably through:-

- Facilitating and supporting the initial strategy formulation and relationship-building work (outlined above)

- Creating the supportive enabling context in planning, regulatory, services and place branding terms

- Providing relevant signposting and support services to national and EU programme and funding opportunities

- Project and/or delivery managing specific initiatives where they have capabilities and advantages not available elsewhere in the cluster/network

I have no doubt some LEPs and Local Authorities will demonstrate bold leadership, and a sustained commitment to a well-founded small number of industrial priorities over the medium term. The breadth of LEPs and Local Authorities who do so will be a major determinant of how successful Government’s Plan for Growth will be locally between now and the next general election.

[1] If you are interested in further details of the IfM event on Wednesday 19th October, please contact me on davidmarlow@thirdlifeeconomics.co.uk or Jo Griffiths of IfM at jg393@cam.ac.uk