Urban policy in the age of austerity

The chancellor George Osborne has been peddling the rhetoric of ‘rebalancing the economy’ since the coalition came into power in 2010, yet for the first time in over 40 years there is no national programme of regeneration to address the needs of the most deprived areas. Furthermore, the agencies tasked with tackling regional disparities have been closed and many of their functions centralised.

For the past two years, the coalition has been busy dismantling the framework for urban regeneration erected by the Labour government, opting to end the latter’s flagship schemes in favour of cost cutting.  In our latest report, People or Place? Urban policy in the age of austerity, we consider the lessons that can be learned from these initiatives as the government presses forward in its agenda to reduce spatial disparities.

The report considers two of Labour’s major initiatives: the regional development agencies (RDAs), which aimed to close the gap in the growth rate between regions, and the New Deal for Communities (NDCs), which attempted to tackle deprivation at the neighbourhood level.  Both of these programmes were well-supported financially.  The NDCs were each given £2bn over the course of a 10 year lifespan.  The Social Exclusion unit described the initiative as the ‘most concerted attack on area deprivation that this country has ever seen’.

The success of Labour’s attempt to tackle persistent economic disparities is questionable. Over the period in which the RDAs were active, regional economic disparities (as measured by gross value added per head) actually accelerated.  The regional data shows that areas in and around London grew at a much faster rate than the rest of the country in spite of the mechanisms put in place to increase the competitiveness of declining regions.

The NDCs didn’t fare much better, especially when it came to individual outcomes. There was very little change in worklessness. More attention, and money, was spent on enhancing housing and physical environment, although in communities such as Aston, where a better balance was achieved between spending on worklessness and other outcomes, there was a higher degree of success in relation to outcomes for the people living there.

What is clear is that, like many urban policy initiatives before them, the NDCs had unrealistic ambitions.  The supposedly generous funding was overstated  – it was around £100 per head per annum per outcome (the NDCs were tasked with achieving on three ‘people’ and three ‘place’ based outcomes).  Moreover, in many cases these initiatives failed to change the behaviour of mainstream providers. Where NDC money was available, it was often used instead of, and not in tandem with, mainstream resources.

This government has a new approach: a ‘hands-off’ localist approach, encapsulated in the statement from DCLG that ‘it is not for government to define what regeneration is, what it will look like, or what measures should be used to drive it’.  However, at present many areas  are excluded from the ‘new freedoms and flexibilities’ provided by the government’s new City Deals. Combined with a lack of new funding streams and the constraints on local authority budgets, it is difficult to see how England’s deprived communities will get the support they need.  That’s why our report is calling for those local enterprise partnerships (LEPs) currently not part of the City Deals to develop the evidence base and make the case for new powers and responsibilities.  There is also an important role for local government in building local social capital, encouraging and supporting community ownership of assets and plugging gaps in mainstream services.

While it is understandable that the coalition government cannot invest as much in regeneration as their predecessors, more needs to be done in the name of rebalancing these economies and supporting deprived communities.  We welcome the recent announcement of core government funding for LEPs, although the amount is still minimal.  Without effective financial support, the government’s narrative of ‘rebalancing the economy’ falls rather flat.


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