It seems obvious that restricting out-of-town big boxes should help central city retailers. So planning guidance that restricts their entry not only protects the green belt but also helps revitalise town centres. And it should also help independent retailers to boot. Right?
As is so often the case, unfortunately, life is not that simple. A fascinating new paper by Raffaella Sadun suggests that in England, restricting out-of-town big boxes can actually hurt independent retailers. Why? Because big chains appear to have substituted out-of-town boxes for smaller stores in city centres that more directly compete with those independent retailers.
Of course, this can't tell us about the overall effects on town centre vitality or on the environment. But it does remind us that the law of unintended consequences means that there is a crucial role for careful research in evaluating these effects. SERC researchers are intending to look at some of these issues in the near future. It will be interesting to see what we find.
CEP Urban and Spatial Programme Blog (formerly SERC)
Friday, 26 September 2008
Friday, 19 September 2008
House building (again)
A few weeks back, I wrote about the fact that the most recent housebuilding figures didn't bode well for long term affordability. David Orr, the chief executive of the National Housing Federation is set to talk about this today - he suggests that the government target of three million new homes in England by 2020 is "almost impossible" to meet. To help, they want more spending by government and faster planning decisions.
Its difficult to see how either of either of these measures can make a significant difference. £400m pounds from CLG will help pay for 5,500 homes over the next 18 months. Mr Orr is predicting a shortfall of 1.4m homes ...
Faster planning will help to some extent, but not if planners still end up saying no to housing. As I've discussed elsewhere, addressing such anti-house building sentiment will require more imaginative ways to ensure that communities are actually willing to accept new housing.
[PS: The post that I just referred to was concerned with rural housing. One of the issues that always crops up there is the "problem" of second homes. So, I was interested to see that CLG's latest report on Housing in England (published yesterday) had some figures on this. In the last decade, the number of second homes increased by roughly 40,000 to 241,000. While this might cause a problem for a small number of selected rural communities, its hard to see this as a major issue for housing affordability in the UK as a whole.]
Its difficult to see how either of either of these measures can make a significant difference. £400m pounds from CLG will help pay for 5,500 homes over the next 18 months. Mr Orr is predicting a shortfall of 1.4m homes ...
Faster planning will help to some extent, but not if planners still end up saying no to housing. As I've discussed elsewhere, addressing such anti-house building sentiment will require more imaginative ways to ensure that communities are actually willing to accept new housing.
[PS: The post that I just referred to was concerned with rural housing. One of the issues that always crops up there is the "problem" of second homes. So, I was interested to see that CLG's latest report on Housing in England (published yesterday) had some figures on this. In the last decade, the number of second homes increased by roughly 40,000 to 241,000. While this might cause a problem for a small number of selected rural communities, its hard to see this as a major issue for housing affordability in the UK as a whole.]
Wednesday, 17 September 2008
Early intervention
I have just returned from paternity leave, so should declare a personal interest in the issue of early years intervention - the subject of a joint Smith Institute / Centre for Social Justice report published yesterday.
While there are clearly many strong arguments to be made for early years intervention, there is however one conclusion, highlighted by the press release, that I find difficult to square with research literature. This is the idea that "a child stands a better chance in life if he or she comes from a bad family in a good neighbourhood than a good family in a bad neighbourhood".
As Paul Cheshire, Steve Gibbons and Ian Gordon discuss in a recent SERC policy paper "there is little evidence of material effects from local social mix on [life chances] at least for the disadvantaged groups which are the major focus of this concern". If such effects are detected their influence is usually swamped by those of individual and family characteristics so it seems highly unlikely that the influence of a 'bad' neighbourhood could outweigh that of a 'good' family.
This matters because it means that the policy response needs to be targeted to help particular families rather than particular neighbourhoods. And one would imagine that how to go about the former is a much more politically contentious issue than tackling the latter.
While there are clearly many strong arguments to be made for early years intervention, there is however one conclusion, highlighted by the press release, that I find difficult to square with research literature. This is the idea that "a child stands a better chance in life if he or she comes from a bad family in a good neighbourhood than a good family in a bad neighbourhood".
As Paul Cheshire, Steve Gibbons and Ian Gordon discuss in a recent SERC policy paper "there is little evidence of material effects from local social mix on [life chances] at least for the disadvantaged groups which are the major focus of this concern". If such effects are detected their influence is usually swamped by those of individual and family characteristics so it seems highly unlikely that the influence of a 'bad' neighbourhood could outweigh that of a 'good' family.
This matters because it means that the policy response needs to be targeted to help particular families rather than particular neighbourhoods. And one would imagine that how to go about the former is a much more politically contentious issue than tackling the latter.
Friday, 29 August 2008
Building Bridges
What role might a new Thames Gateway Bridge play in the regeneration of that area? GLA Economics' latest research to answer this question looks back to the building of bridges across the Thames in the medieval period. The report makes for an interesting read and reminds us that the impacts of infrastructure projects are complex and long term. But I'm not sure that it brings us much closer to providing an answer to the specific policy question. [An observation that could be made about much academic work - so no particular criticism implied.]
Generally speaking, the economics literature is pretty sceptical about the role of infrastructure in boosting local economic activity in struggling areas. After all, as population in these places is historically declining, they likely have plenty of infrastructure relative to people. How is adding more going to help? (You can make a similar argument about net increases in the supply of housing).
Thames Gateway might be a little different given that growth in employment and population are projected if regeneration is successful. But even if this happens, standard cost benefit analysis (which would look at the gains in travel time) almost certainly wouldn't justify building. So supporters of the bridge need to point to the wider economic (regeneration) benefits that might materialise.
The problem is, that we have very little idea how important these are in practice. DfT is about to propose some guidance on how these might be incorporated in appraisal but these will be based on best estimates of what the gains might be. What is needed is some evaluation of projects to see what actually happened. SERC is hoping to undertake some of these shortly, although I think we'll be looking at projects from the 1990's not the 1290's.
Generally speaking, the economics literature is pretty sceptical about the role of infrastructure in boosting local economic activity in struggling areas. After all, as population in these places is historically declining, they likely have plenty of infrastructure relative to people. How is adding more going to help? (You can make a similar argument about net increases in the supply of housing).
Thames Gateway might be a little different given that growth in employment and population are projected if regeneration is successful. But even if this happens, standard cost benefit analysis (which would look at the gains in travel time) almost certainly wouldn't justify building. So supporters of the bridge need to point to the wider economic (regeneration) benefits that might materialise.
The problem is, that we have very little idea how important these are in practice. DfT is about to propose some guidance on how these might be incorporated in appraisal but these will be based on best estimates of what the gains might be. What is needed is some evaluation of projects to see what actually happened. SERC is hoping to undertake some of these shortly, although I think we'll be looking at projects from the 1990's not the 1290's.
Thursday, 21 August 2008
House building and affordability
I was never much good at "up-and-down" economics and couldn't tell you what today's house building statistics mean for next quarter's house prices.
But the fact that completions in the year to June 2008 were 4% lower than in the previous year doesn't bode well for long term affordability.
Also, its interesting to see that, in keeping with historical trends house building in England is only marginally biased towards the south (my back of the envelope calculation had 44% of housing completions in London, the South East and East regions as opposed to about 42% of the stock). That certainly puts all the fuss over policy exchange's "move to the south" suggestions in to perspective.
But the fact that completions in the year to June 2008 were 4% lower than in the previous year doesn't bode well for long term affordability.
Also, its interesting to see that, in keeping with historical trends house building in England is only marginally biased towards the south (my back of the envelope calculation had 44% of housing completions in London, the South East and East regions as opposed to about 42% of the stock). That certainly puts all the fuss over policy exchange's "move to the south" suggestions in to perspective.
Thursday, 14 August 2008
Are Policy Exchange Insane?
Policy exchange have caused controversy with their report on urban regeneration. [I should declare an interest - one of the reports co-authors, Tim Leunig, is a SERC affiliate]
The report actually contains a lot of thought provoking material. So, why the extreme reaction? Because, to stylize grossly, it suggests that some places have lost their reason d'etre, that economic regeneration isn't working and that we should build houses so that people can move to places with more economic opportunities. A stylized reaction then goes: I am from [insert name of place]. It's a lovely place to live because [insert something nice about the place / the cost of living is low]. Also, if you want to see the future just look at the development of [insert name of nice new buildings].
These reactions are important because they remind us that people and places are different and that amenities and cost of living matter as well as economic opportunities. Many policy discussions and proposals forget this, but it will be central to SERC's research on spatial disparities.
What is lost in the storm that has been created, however, is a focus on the much more serious question: what should society do if the economy works in such a way that jobs are created in places different from where people live? The traditional response is to bring jobs to the people. This has been government policy for a long (i.e. decades) time. Policy exchange claim that this isn't working and suggest that instead we should help people move to jobs. Getting the answer to this question right matters a lot more than whether I think my town is better than yours.
The report actually contains a lot of thought provoking material. So, why the extreme reaction? Because, to stylize grossly, it suggests that some places have lost their reason d'etre, that economic regeneration isn't working and that we should build houses so that people can move to places with more economic opportunities. A stylized reaction then goes: I am from [insert name of place]. It's a lovely place to live because [insert something nice about the place / the cost of living is low]. Also, if you want to see the future just look at the development of [insert name of nice new buildings].
These reactions are important because they remind us that people and places are different and that amenities and cost of living matter as well as economic opportunities. Many policy discussions and proposals forget this, but it will be central to SERC's research on spatial disparities.
What is lost in the storm that has been created, however, is a focus on the much more serious question: what should society do if the economy works in such a way that jobs are created in places different from where people live? The traditional response is to bring jobs to the people. This has been government policy for a long (i.e. decades) time. Policy exchange claim that this isn't working and suggest that instead we should help people move to jobs. Getting the answer to this question right matters a lot more than whether I think my town is better than yours.
Tuesday, 12 August 2008
The case for abolishing Regional Development Authorities?
The TaxPayers Alliance thinks that Regional Development Agencies should be abolished.
RDA's were established in 1999 to help raise the growth rates of all regions and to narrow the gap in growth rates between the richest and poorest regions (so that the richest regions didn't keep pulling further ahead). The Tax Payers Alliance argue that regions did better between 1995 and 1999 than they have done since and that RDA's should thus be abolished. If only things were that simple.
To consider whether RDA's should be abolished we need to know what would have happened if they didn't exist. If we assume that regions would have carried on growing post-1999 as they had between 1995 and 1999 then RDA's have been bad for growth. But whose to say this would have happened? Perhaps regions would have grown much slower if it weren't for the efforts of RDA's. After all, the UK's recent economic growth performance is generally considered as comparing pretty favourably to other similar nations. In this scenario, RDA's have been quite good for growth.
What about the gap between the growth rates of rich and poor regions? Again, it depends what we think would have happened without RDA's. Perhaps London and the South East would have pulled even further ahead?
A deeper question relates to whether these two goals, greater growth everywhere and narrowing the gap in growth rates between rich and poor, are mutually compatible (SERC's first policy paper has more on this). For example, the TPA's alternative policy recommendation is a cut in the small business rate of corporation tax. I see that this might do something for growth everywhere, but how, exactly, would this help with the gap in growth rates between the regions?
Personally, I am agnostic on RDA's. There is a serious debate to be had about policy objectives. There is a need for more evaluation of their net impacts (what things have RDA's made happen that wouldn't have happened otherwise) and a comparison to the opportunity costs. There is also much more evidence needed on which policies, if any, need regional coordination. If only answering all these questions was as simple as a before and after comparison of regional growth rates ...
RDA's were established in 1999 to help raise the growth rates of all regions and to narrow the gap in growth rates between the richest and poorest regions (so that the richest regions didn't keep pulling further ahead). The Tax Payers Alliance argue that regions did better between 1995 and 1999 than they have done since and that RDA's should thus be abolished. If only things were that simple.
To consider whether RDA's should be abolished we need to know what would have happened if they didn't exist. If we assume that regions would have carried on growing post-1999 as they had between 1995 and 1999 then RDA's have been bad for growth. But whose to say this would have happened? Perhaps regions would have grown much slower if it weren't for the efforts of RDA's. After all, the UK's recent economic growth performance is generally considered as comparing pretty favourably to other similar nations. In this scenario, RDA's have been quite good for growth.
What about the gap between the growth rates of rich and poor regions? Again, it depends what we think would have happened without RDA's. Perhaps London and the South East would have pulled even further ahead?
A deeper question relates to whether these two goals, greater growth everywhere and narrowing the gap in growth rates between rich and poor, are mutually compatible (SERC's first policy paper has more on this). For example, the TPA's alternative policy recommendation is a cut in the small business rate of corporation tax. I see that this might do something for growth everywhere, but how, exactly, would this help with the gap in growth rates between the regions?
Personally, I am agnostic on RDA's. There is a serious debate to be had about policy objectives. There is a need for more evaluation of their net impacts (what things have RDA's made happen that wouldn't have happened otherwise) and a comparison to the opportunity costs. There is also much more evidence needed on which policies, if any, need regional coordination. If only answering all these questions was as simple as a before and after comparison of regional growth rates ...
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