Right-sizing cities

July 7, 2009


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.

Now the US Government is thinking about ‘bulldozing entire neighbourhoods’ in up to 50(!) struggling US cities. But instead of being howled down, ‘shrink to survive’ is being taken quite seriously.

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.

6 Responses to “Right-sizing cities”

  1. David Says:

    Scale of “abandonment” – they’re only abandoning their houses because they can’t afford to live there or the financial risk of continuing to pay the mortgage ain’t worth it.

    The US and UK are completely different in terms of space/population pressures. Plenty of people need housing, its just they can’t afford it or the houses that are around are nowhere near employment (Flint for example!)

    What is mobile human capital? Some kind of pseudo-snail?

    • squareglasses Says:

      Thanks David. I think we’re agreeing on US/UK differences. One of the persistent problems in recent UK urban policy has been the importing of ideas from the States without appreciating the kind of distinctions you’re talking about. On abandonment, I guess we need to factor in a) financial pressures on mortgage-holders, as you say, but also b) much larger numbers of people leaving a place over many years. I think the numbers show up the second process pretty clearly. As for ‘mobile human capital’ – sorry for the jargon! People move, houses generally don’t.

      • David Says:

        I think you’re saying we need better transport to make human capital more mobile. Ah well, we’re f&*ked there then.
        You should have a look at the annual Housebuilder Market Intelligence report too….

  2. Tom Says:

    Interesting post. It seems to me that the potential benefit of ‘shrink to survive’ is to help a city to adapt to the new realities (eg the decline of a traditional industry like shipbuilding), and to reduce the negative effects of decline (ie by getting rid of abandoned areas that can be a magnet for crime). It doesn’t make sense to me that it should be seen as a “basis growth”. I

    A big contrast with the US is their housing sector is responsive to demand – this makes it easier for people to move to more economically successful places. Should ‘shrink to survive’ go along with expansion of supply in places that can offer economic success?

  3. […] The politics of improving life for people in under-performing places is extremely sensitive, as Policy Exchange discovered when they appeared to suggest moving people out of ‘failing’ Northern cities. Recently there’s been more interest, via LSE’s ‘Phoenix Cities’ book, Julien Temple’s ‘Requiem for Detroit?’ and from the Centre for Cities (see Dermot’s helpful summary, and my thoughts from last summer). […]

  4. […] contrast, US improvements are often funded via county-wide property taxes or fixes like TIF – as I’ve pointed out, tools that UK city leaders don’t yet have at their […]

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