Local Authorities and the Downturn

After my post on the geography of recession, I have been trying to clarify my thinking on the role of Local Authorities.

It is certainly the case that the recession will impact different places in different ways. Some of these differences are predictable, some not. However, it is a big leap from this observation to the conclusion that we need to further devolve economic decision making.

There are at least three separate issues here. The first concerns the role of local government spending as a complement to national monetary and fiscal policy. Here, local authorities face problems of timeliness, displacement and leakage that surely limit the extent to which policy variation makes sense. I am particularly unconvinced by suggestions that buying locally where-ever possible will (a) do much to stimulate local economies; (b) help cash strapped local council tax payers.

A second issue concerns local authorities role in helping mitigate social effects. Local authorities play a vital delivery role here. Ideally, policy should also vary with local conditions. Case study evidence from IDeA and LGA show that this is the case. Of course, this is one of the well known benefits of devolution, but it doesn't actually make the case for more devolution.

Another benefit of devolution is that it allows for experimentation. That seems to be the case in response to the recession. But it is important that this experimentation draws from past experience and from an understanding of current conditions (it's also important that lessons are learnt for next time). For example, my colleague Christine Whitehead suggests that in the last crisis advice and small scale assistance worked better to help maintain people in their homes and limit costs to the public purse than did either addressing the consequences of repossession through homelessness policies or transfer of stock to the social housing sector. It is hard to see this reflected in current policy experimentation in this area.

This brings us to the third issue regarding housing and planning. But this is already a long post and that is a big issue best left to another day.

The Geography of Recession (part II)

Back in October, I took issue with the way people were talking about the likely geographic impact of the recession. In short, it seemed to me that reports of the economic death of the "south" were greatly exaggerated. Past experience suggests that the gap between north and south might narrow, but is highly unlikely to be reversed. But I noted that even the first "prediction" - that the south was particularly hard hit in the last recession- is still the subject of some dispute.

Which brings us to some recent reports and figures. First, Centre for Cities City Outlook received wide coverage yesterday of its finding that cities in the north are seeing the highest increases in JSA claimants [NB: they also point out that the north-south divide language I am using here hides some important details - sorry for that]. Second, the ONS tells us that manufacturing made the largest contribution to the slowdown with a 4.6% fall last quarter, as opposed to a 0.5% fall for business services. This will clearly be bad news for those cities that rely on manufacturing more than services, and as we know those cities tend to be located in the north.

One final thing, the comment in my October post about "two quarters" now looks optimistic, but doesn't change my conclusion on the geographic impact. In short, it's grim everywhere.

Golden Handcuffs: Teacher Recruitment and Retention

One of the key problems for poor neighbourhoods is the bad educational outcomes for children that live there. As I have argued before, the evidence suggests that traditional regeneration programmes (with a strong focus on the built environment) don't do much to address this problem. So will the government's proposal to pay teachers more for working in the most disadvantaged schools (themselves generally in the most disadvantaged areas) fair much better?

The answer is that we don't really know. There isn't much strong evidence of a link between teacher pay and student outcomes. But these "golden handcuffs" are targetting recruitment and retention rather than pay per se. Unfortunately, we know even less about the extent to which this might affect educational outcomes. Intutively, it feels like it should matter, but there is little, if any, evidence to back up this intuition.

Even if the policy does work, it will not do much to affect the spatial concentration of poor educational outcomes. This is because about 60-70% of the variation in educational outcomes is down to pupil background, with only about 10% attributable to the school and even less, if any, to the neighbourhood. The fact that we have evidence that school matters more than neighbourhood at least argues that this is a move in the right direction. But the overwhelming importance of family characteristics and the spatial concentration of poor families, means that the targetting of disadvantaged schools can only ever do so much to improve poor education outcomes in disadvantaged neighbourhoods.

It's Christmas Time

.. and I am off on holidays for a couple of weeks. Back to all things spatial in the New Year.

I hope you enjoy your festive season.

Congestion charging

Manchester voters have overwhelmingly rejected proposals for a congestion charge.

There have been some suggestions that the problem was the particular scheme that Manchester was proposing. I haven't been following the details, but I have a sneaky suspicion that this may not be the root cause of the problem. Just take a look at the furious public response to Eddington's suggestion for national road pricing (nearly 2 million people signed an online petition against the idea).

Most experts agree that charging is the best way to deal with the problem of traffic congestion. When people decide how to make a journey they weigh up their personal costs and benefits of different ways of travelling. Unfortunately, choosing to travel by car also imposes costs on other people, but we ignore these costs when making our decision. The end result is too many car journeys. If only we could find a way to get each of us to take in to account the cost that we impose on others when we decide to drive by car. Congestion charging does this, while still leaving people free to choose how they travel.

Lined up against this are terribly emotive arguments around our right to travel, the effect on the poor and the impact on specific businesses. These are all far easier to sell than the economists argument about large overall benefits outweighing any of these specific costs. Somehow, we need to convince the public that the latter really is the case. Sadly, the result in Manchester suggests we still have a huge way to go.

Changing UK

The BBC are focusing on geographical segregation. Lots of pretty maps show how areas of the UK differ in terms of health, wealth, ethnic composition, political engagement etc. You can even see how the geography of "loneliness" is changing. On a wide number of indicators areas of the UK are becoming increasingly different. The tone of the coverage suggests that this is all bad news. Is it?

According to the maps, areas in the south seem to generate higher incomes than areas in the north. Surely that's bad? But it turns out that the south has also seen the largest population growth. So population is growing fastest in areas that offer the best economic opportunities. In terms of individuals, doesn't that sound like a rather good thing?

Let's take another example. It would take 4,289,377 people moving home to make the geographical distribution of age even across the country. But are unequal age distributions a bad thing? There are clearly rather large benefits to having families with children spatially concentrated in one area, while young workers live elsewhere (the former want good schools, the latter good night clubs and spatially separating schools and night clubs is generally good not bad).

What about "loneliness"? You are loneliest if you are non-married, live in a 1 person household, have moved within the last year and are renting privately. Let's set aside the issue of what you are actually capturing here and imagine that you fit that category. Are you better or worse off living close to people who also fit in that category? There seem to be good arguments why spatial concentration might on balance be a good thing (imagine for example that you were hoping to change your non-married status - isn't that easier to do when surrounded by other non-married people).

These maps are a nice description of what is happening in different areas. But they are not an analysis of the benefits and costs of the resulting segregation. Because people are different, places will tend to be different. Whether this is good or bad depends on whether the composition of a place actually has any direct impact on the well being of individuals who live in that place. These maps can't answer this question, so they tell us something about who is living where, but not whether this matters.

Response to the Sub-National Review

The government published its response to the public consultation on the SNR earlier this week.

Despite the current economic situation, government still needs to make progress on fundamental questions about the future of urban and regional policy. Indeed, for local policy makers, because there is little they can do that will affect the impact of the economic downturn, it is doubly important not to lose sight of medium to long term issues.

So, then, to the SNR. There is more detail on how the local authority economic assessment duty will be implemented and the form that sub-regional collaborative agreements might take. There's also confirmation of the move to integrated regional strategies. As I have discussed elsewhere, these strategies will need to make a decision on the extent to which efforts to deliver regional growth rely on the spatial concentration of resources as opposed to "jam spreading". Sign off by a "local authority leaders' forum" (the original plan) would tend to favour the latter. In the new proposals, a "local authority leaders' board" will have joint responsibility with the RDAs (with disputes resolved by ministers). This will, in principle, allow more concentration and less jam spreading.

From the view point of achieving regional economic growth, current evidence suggests this may make sense. The problem, of course, is that this reduces democratic legitimacy. In the absence of elected regional bodies, squaring that particular circle will require careful thought about how to provide local authorities with incentives to sign up to integrated strategies that concentrate resources. I have talked about this in the past with relation to housing targets. Successfully agreeing (rather than imposing) integrated regional strategies will require far more work to tackle this difficult issue.