It must be the Obama effect. Last year my LSE colleague Tim Leunig became a national hate figure for suggesting that residents of northern British cities should move south.
This is a debate we need to have. Full credit to Tim for starting it (though I don’t agree with everything he suggests). In years to come regeneration funding will be severely squeezed. There won’t be enough cash to do everything everywhere – so we have to think through the feasibility of managing decline.
Two things stick out from the US coverage. First, the scale of abandonment in some American cities is scary. Buffalo’s population fell from 580,000 in 1950 to 279,000 in 2005. Rolls in Flint, Michigan have dropped from 196,000 in 1960 to 120,000 today: up to 25% of land is now abandoned.
Second, the policy response is a twist on ‘green growth’. As explained by Dan Kildee, Governor of Genessee County, he takes as much abandoned land in Flint as possible, largely through foreclosures. County-wide Tax Increment Financing is used to leverage the land bank, forward-funding demolition, refurbishment or conversion into parks, urban meadows and gardens.
Few British cities are as badly off as Flint. The historical data suggests Stoke-on-Trent’s population dropped just 25,000 between 1961 and 2001. Hull’s fell from 303,000 to 243,000 over the same period. Liverpool’s has declined massively – from 746,000 in 1961 to 439,000 in 2001 – although the economy and population have been stabilising in the past few years. Liverpool’s right-sizing may already have happened. By contrast, poorer cities and towns in isolated places – like Stoke, Hull, Barrow or Easington – are still struggling to find a role.
Could we run ‘shrink to survive’? The model won’t easily transfer, since TIF and city-regional tax bases are some way off. The UK’s own experiment in right-sizing – the Housing Market Renewal programme – relies on Whitehall cash and now-vanished private sector investment.
More importantly, what would it achieve? Proponents suggest greening an area helps stabilise house prices. It also improves quality of life for residents. But it’s not clear this provides a real basis for growth (Kildee optimistically suggests ‘entrepreneurial agriculture’).
What about encouraging people out? This might not be welfare-maximising. We would need to weigh up the economic gains (moving people to jobs, savings on physical regeneration) against the economic costs (moving people) and social losses (damaged social capital etc).
Urban economics tells us that spatial equilibrium occurs when wages, prices and quality of life all clear. Local reactions to the Policy Exchange report – ‘I like it here, and it’s cheap’ – suggest that people in supposedly failing cities often don’t see them that way.
A sensible ‘shrink to survive’ strategy for the UK would involve: removing overcapacity in local housing; improving the local environment (which could include some US-style ‘greening’); levelling VAT rates on refurb and new build; developing local skills, access to employment and transport links to stronger labour markets; new funding tools; and as Dermot suggests, some honest repositioning. The Pennine Lancashire Pathfinder ticks most of those boxes.
In practice, this feels like an evolution of Housing Market Renewal. But since physical transformation is now largely done, the funding priorities should be (mobile) human capital, not (immobile) housing.