The drive for devolution of greater powers from Westminster to the regions implies complementary measures to be taken within regions. The more detailed levels of action are barely mentioned in the national political debate and are hardly ever included in macro-economic analysis but they will be crucial to the success of the policy as a whole.
The Prime Minister recounts that in 2007, when he was Chief Secretary to the Treasury, he tried to introduce northern regional economic projects, only to be told by officials that none of them would pass Treasury ‘Green Book’ criteria for generating sufficient UK profit over 25 years. ‘I finally understood why England has always felt like two countries. Only the EU funded infrastructure on the basis of social deprivation. The UK government’s economic test was a recipe to give more to the places that already had most’.
An important element in the Prime Minister’s vision is the emphasis not just on the social wage but on ‘growth in every postcode’. He is not just seeking a fairer distribution of the nation’s earnings but improvement in the poorer areas’ own earning power. Is this realistic? The most disadvantaged neighbourhoods are not well placed to nurture economic initiatives of their own. They tend to have relatively:
- less money circulating, and a higher proportion of it from social security rather than earnings
- more unpaid carers
- further/costlier travel to work distances
- poorer health
- greater demand on the health services
- greater demand on police and fire services.
Underlying the Treasury’s frustrating rationale there is a reality which also makes itself felt at regional level. Highly profitable industries cluster geographically. In terms of sheer profitability London is way ahead of other regions purely because of the City. To invest profitably and attract private investment a region needs to build or amplify economic hubs which are bound to take advantage of existing assets. These tend to be geographically concentrated – university research, good transport links, desirable locations, clusters of complementary business. Boosting these might narrow the economic gulf between rich and poor regions but, without supplementary measures, could widen economic disparities within the region. There could even be ‘growth in every postcode’ but if the growth in the richest parts of the poorer regions is twice that in the poorer parts, there will be an increase in inequality within the region. Clearly this is not the government’s intention, so a strategy is needed to ensure that an improved economy for a region flows at least equally but in preference more to its poorer parts. This will only happen if there is a cascade of additional economic measures at different geographical levels. David Miliband once called this ‘double devolution’, meaning from central to local government and then again from local government to neighbourhood communities. The principle is right but there are more than two layers and there are a variety of agencies working at different population levels so perhaps the term ‘fractal devolution’ is more appropriate.
Strategists need to ask what economic, as well as social, initiatives can be established in poorer localities. What is the most local level at which it would be possible to generate new economic activity? And how could the most disadvantaged neighbourhoods be linked to economic initiatives at higher geographical levels? Activities which save costs in public services are also an economic gain – value acknowledged even in Green Book-type analysis.
These questions are crucial in poorer regions but relevant in all regions. If you only look at regional averages you might imagine that all Londoners are wealthier than all residents of the North East. Regional averages disguise the fact that there are extreme differences of wealth and poverty within London and all other regions.
If we take life expectancy as one of the clearest indicators of advantage and disadvantage, focusing on regional averages shows differences of around three years’ life expectancy between London and the North East. Focusing on ward levels (around 6,500 people, roughly the size of a neighbourhood or village) there are differences of ten years and over within every region and city, and some rural areas.
Of course there are many more poor neighbourhoods in some regions than others, hence the differences in regional averages, but all regions and cities have some extreme contrasts. In other words, disadvantage and inequality are both widely scattered everywhere and also clustered in some regions and localities more than others.
Under any economic system, even one that is governed by social democratic values, there will be some tendency for disparities to widen between better and worse off areas. Disadvantages reproduce themselves. People who get better jobs sometimes move out of the area. People who are losing income move in, or are moved in by the housing authority.
The basic ‘old Labour’ solution, which is still the essential bedrock of national cohesion, is redistribution (what the EU call social transfers), i.e. social security and progressive taxation. The nation collects more taxes from the better off and distributes them through several mechanisms, some benefiting all citizens (e.g. national defence, policing, health, environment), some helping the most disadvantaged. The latter take both individual forms (such as social security payments and housing) and collective forms (such as regeneration). All these instruments are needed in order to maintain social cohesion, yet it is obvious that even all these measures together still leave big gaps in equality across the nation, within neighbourhoods and from one individual to another. There is no credible system for complete equality: regimes which have claimed it, such as Soviet Communism, conceal the emergence of new elites and the sacrifice of millions of people in the name of equality for the rest – who then live in a climate of permanent fear. The highest socio-economic objective we can hope to attain is the maximum amount of equality that can be achieved without sacrificing freedom.
Micro-geographical disadvantage was recognised and to some extent addressed by the big regeneration schemes between 1995 and 2008, firstly the Single Regeneration Budget (SRB) under John Major and Michael Heseltine, then Neighbourhood Renewal (NR) under New Labour. Both of these channelled significant resources to disadvantaged neighbourhoods. But, as Burnham and Liverpool City Region Mayor Steve Rotherham complain, they did so under tight central government control which meant local authorities and their partners having to go cap in hand to the Treasury and conform to top-down micro-management, not able to create their own programmes from close knowledge of local needs. Nevertheless, the national regeneration schemes built up increasing success between 1995 and 2008, and their experience is still an important source for regionally-governed devolution.
One of the things that SRB did right was to co-ordinate resources from different public services to work together in neighbourhoods. Local schemes brought together elements of urban renewal, business support, training, crime prevention and transport. But they were not co-ordinated with the health service.
Neighbourhood Renewal was in some respects a New Labour rebranding of the SRB but there were two major improvements: first, the inclusion of health as a major factor, and secondly, the move towards applying community involvement criteria across all areas, disadvantaged or not, embedding it as a principle for local government as a whole. This showed insight for two reasons. The fractal pattern of exclusion and disconnectedness does not stop at neighbourhood level but continues amongst families and individuals everywhere, again within both better and worse off localities. Secondly, whilst community involvement is particularly needed to help overcome exclusion, it is also a sign of health and cohesion throughout society and part of the feedback needed for continuous improvement of public services.
Another thing that SRB/NR did right was to align the local initiatives with EU funding. This was one of many babies thrown out with the Brexit bathwater. But, as Burnham noted in passing, the EU allocation system was better targeted on deprivation. It has its own faultlines, but any new strategy should include reviewing how the EU regeneration system works, what we lost from it in 2016, and what we could learn from it now. We should look in particular at the Community-Led Local Development (CLLD) scheme – one of the methods which Britain itself helped to shape.
Regeneration schemes were ruthlessly abandoned under Cameron-Osborne austerity, along with children’s and youth services – a gap which has undoubtedly contributed to the appalling rise in mental health problems amongst young people. The austerity package was a massive move away from prevention to demand, both on the health services and social care – exactly the wrong direction for reducing the costs of public services.
But one useful survival of the regeneration culture was the use of fine-grain population analysis in NHS planning. Neighbourhood-level statistics were collected together in Joint Strategic Needs Assessment reports shared with local authorities. Whilst community work inevitably declined in local authorities, health authorities began to employ ‘social prescribers’ to link people into local community sectors. But the health services alone cannot substitute for depleted local regeneration, and the NHS still has enormous problems in shifting more than a margin of effort and resources from the huge demands on hospitals and treatments to prevention and public health.
The trail of important precedents to regional devolution is not complete without considering the Levelling Up scheme – despite its short and ignominious lifespan. The original plan as set out in the White Paper of 2022 under Michael Gove, written by a team under Andy Haldane, was an important attempt to produce a framework for a degree of regional devolution managed top-down. In the event it was scuppered by the onset of Covid, the Tory political fiasco, the fall of Boris Johnson and not least by the diversion of money to rich areas which Burnham and Rotherham complain of. But some of the ideas in the original plan, especially the attempt to create a unified theory of macro- and microeconomic and social factors, is worth reconsidering.
Focusing on the most disadvantaged neighbourhoods was one of the things that SRB/NR did right. But expecting the neighbourhoods to make lasting economic improvements in isolation from larger, regional level development was unrealistic. What is needed for the economic dimension is a cascade of connected economic initiatives from regional-level hubs through large-local level schemes to clusters of neighbourhoods and then to individual neighbourhood level. This should include feeders both upward and downward from one tier to another. Can the regional hubs prioritise supply chains that draw on the lower tiers? Can ideas and experience from the lower tiers reach upwards to generate larger-scale opportunities? Can regional hubs be twinned with disadvantaged neighbourhoods to streamline job opportunities, supply-chains, sponsorship and flow of innovative ideas?
All this should also be taken into account in the push for new housing, the design of new towns and renovation of old stock. Prioritising building near transport hubs makes sense but, taking account of ageing and technology, we also need to anticipate a less workplace-oriented, less consuming but more connected and participative society. Local authorities need to use their planning gain powers to create new, attractive and centrally located community centres, not just allow some of the declining old ones to be salvaged at communities’ cost. Spatial design must prioritise community life. Are there easily reachable focal points for meeting and interacting rather than just parking and shopping? Green spaces for exercise and sanity? Uplifting townscapes? Spaces that foster the sense of creativity and connectedness not just consumption? Co-location of community centres and health hubs?
In addition to amenities and economic links, neighbourhoods need support in building up their community sectors, the networks of independent community groups which are the fundamental vehicle for participation.
In a disadvantaged neighbourhood there may be little prospect of starting new businesses but good prospects of improving connectedness and caring by boosting the community sector (not just the business-modelled voluntary sector). The model for community work needs to be different from the past pattern, where a small scattering of workers often found themselves working against the grain of other public services, perhaps partly because of too narrow a theory of community development. More important than a major influx of new workers will be changes of method and management amongst the front-line workers of all public services, many of whom are natural community workers if they are given the space to be so.
What is at stake is not only the effectiveness of regional governance and economic growth but people’s sense of connectedness. Involvement in the neighbourhood is a psychological basis for feeling involved in society as a whole, which itself is the antidote to many of our current ills. People need to see themselves as involved in multilevel citizenship. Andy Burnham won the Makerfield by-election on a respectable 60 percent turnout. One test of devolution will be whether there is an increased sense of connectedness amongst the other 40 percent.
Gabriel Chanan is an author and social researcher.