Posts Tagged ‘housing’

Evidence in a post-experts world

October 11, 2016

(c) The Thick of It / BBC

Something I wrote for the What Works Centre that I thought would be good here too.

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The What Works Centre for Local Economic Growth is three years old. So what have we learnt?

Two weeks ago we were in Manchester to discuss the Centre’s progress (the week before we held a similar session in Bristol). These sessions are an opportunity to reflect on what the Centre has been up to, but also to think more broadly about the role of evidence in policy in a post-experts world. In Bristol we asked Nick Pearce, who ran the No 10 Policy Unit under Gordon Brown, to share his thoughts. In Manchester we were lucky to be joined by Diane Coyle, who spoke alongside Henry and Andrew on the platform. Here are my notes from the Manchester event.

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Evidence-based policy is more important than ever, Diane pointed out. For cash-strapped local government, evidence helps direct resources into the most effective uses. As devolution rolls on, adopting an evidence-based approach also help local areas build credibility with central government departments, some of whom remain sceptical about handing over power.

Greater Manchester’s current devolution deal is, in part, the product of a long term project to build an evidence base and develop new ways of working around it.

A lack of good local data exacerbates the problem, as highlighted in the Bean Review. The Review has, happily, triggered legislation currently going through House of Commons to allow ONS better access to administrative data. Diane was hopeful that this will start to give a clearer picture of what is going on in local economies in a timely fashion, so the feedback can be used to influence the development of programmes in something closer to real time.

Diane also highlighted the potential of new data sources — information from the web and from social media platforms, for example — to inform city management and to help understand local economies and communities better. We think this is important too; I’ve written about this here and here.

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So what have we done to help? Like all of the What Works Centres, we’ve had three big tasks since inception: to systematically review evaluation evidence, to translate those findings into usable policy lessons, and to work with local partners to embed those in everyday practice. (In our case, we’ve also had to start generating new, better evidence, through a series of local demonstrator projects.

Good quality impact evaluations need to give us some idea about whether the policy in question had the effects we wanted (or had any negative impacts we didn’t want). In practice, we also need process evaluation — which tells us about policy rollout, management and user experience — but with limited budgets, WWCs tend to focus on impact evaluations.

In putting together our evidence reviews, we’ve developed a minimum standard for the evidence that we consider. Impact evaluations need to be able to look at outcomes before and after a policy is implemented, both for the target group and for a comparison group. That feels simple enough, but we’ve found the vast majority of local economic growth evaluations don’t meet this standard.

However, we do have enough studies in play to draw conclusions about more or less effective policies.

The chart above summarises the evidence for employment effects: one of the key economic success measures for LEPs and for local economies.

First, we can see straight away that success rates vary. Active labour market programmes and apprenticeships tend to be pretty effective at raising employment (and at cutting time spent unemployed). By contrast, firm-focused interventions (business advice or access to finance measures) don’t tend to work so well at raising workforce jobs.

Second, some programmes are better at meeting some objectives than others. This matters, since local economic development interventions often have multiple objectives.

For example, the firm-focused policies I mentioned earlier turn out to be much better at raising firm sales and profits than at raising workforce head count. That *might* feed through to more money flowing in the local economy — but if employment is the priority, resources might be better spent elsewhere.

We can also see that complex interventions like estate renewal don’t tend to deliver job gains. However, they work better at delivering other important objectives — not least, improved housing and local environments.

Third, some policies will work best when carefully targeted. Improving broadband access is a good example: SMEs benefit more than larger firms; so do firms with a lot of skilled workers; so do people and firms in urban areas. That gives us some clear steers about where economic development budgets need to be focused.

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Fourth, it turns out that some programmes don’t have a strong economic rationale — but then, wider welfare considerations can come into play. For example, if you think of the internet as a basic social right, then we need universal access, not just targeting around economic gains.

This point also applies particularly to area-based interventions such as sports and cultural events and facilities, and to estate renewal. The evidence shows that the net employment, wage and productivity effects of these programmes tends to be very small (although house price effects may be bigger). There are many other good reasons to spend public money on these programmes, just not from the economic development budget.

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Back at the event, the Q&A covered both future plans and bigger challenges. In its second phase, the Centre will be producing further policy toolkits (building on the training, business advice and transport kits already published). We’ll also be doing further capacity-building work and — we hope — further pilot projects with local partners.

At the same time, we’ll continue to push for more transparency in evaluation. BEIS is now publishing all its commissioned reports, including comments by reviewers; we’d like to see other departments follow suit.

At the Centre, we’d also like to see wider use of Randomised Control Trials in evaluation. Often this will need to involve ’what works better’ settings where we test variations of a policy against each other — especially when the existing evidence doesn’t give strong priors. For example, Growth Hubs present an excellent opportunity to do this, at scale, across a large part of the country.

That kind of exercise is difficult for LEPs to organise on their own. So central government will still need to be the co-ordinator — despite devolution. Similarly, Whitehall has important brokering, convening and info-sharing roles, alongside the What Works Centres and others.

Incentives also need to change. We think LEPs should be rewarded not just for running successful programmes — but for running successful evaluations, whether or not they work.

Finally, we and other Centres need to keep pushing the importance of evidence, and to as wide a set of audiences as we can manage. Devolution, especially when new Mayors are involved, should enrich local democracy and the local public conversation. At the same time, the Brexit debate has shown widespread distrust of experts, and the ineffectiveness of much expert language and communication tools. The long term goal of the Centres — to embed evidence into decision-making — has certainly got harder. But the community of potential evidence users is getting bigger all the time.

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Jane Jacobs: City Limits

May 18, 2016

(c) 1971 Laurence Hyde / NFB

City Limits is a lovely 1971 film about Jane Jacobs. You can watch the whole thing here; it’s about 30 mins long. Directed by Laurence Hyde for the Canadian National Film Board, the documentary features Jacobs talking through her ideas, interspersed with some terrific footage of Toronto, New York, London and other cities around the world. I’m indebted to Martin Dittus for digging it out of the NFB archives.

(c) 1971 Laurence Hyde / NFB

The 30-minute film is worth watching for many reasons. For starters, Jacobs herself appears in much of it – sat in a park, shopping in a market, buying a newspaper, and at one point clambering into a helicopter to survey Toronto from above.

(c) 1971 Laurence Hyde / NFB

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At the same time, the film is a great summary of Jacobs’ big ideas about how urban neighbourhoods – and cities – work, when they succeed and when they fail. Jacobs is a superb writer, but she never spells it out for you. The film does, and in the author’s own words:

A city is an organism, and a very complex  one, and an ever changing one.  I would like us to see cities as ecologies – because that’s what they are. As surely as the ecologies of the natural world. The ecology of a city is of the same order of complexity as the ecology of a woodland. And this is what proper city planning ought to be directed to.  

This is the essence of a crucial chapter buried in the back of The Death and Life of Great American Cities: ‘The Kind of Problem a City Is’ (page 558 in my edition). It’s the research design for the book: it’s also Jacobs’ whole way of doing urbanism.

jacobs34 jacobs21 jacobs16(c) 1971 Laurence Hyde / NFB

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Watching the film reminds me how prescient Jacobs was. There’s a surprising sequence on cultural diversity, which Jacobs presents both as an amenity, and as a channel of innovation:

Foreign districts introduce extra dimensions into a city. They often introduce new kinds of food, new customs, new music, even new kinds of clothing. And they’re a lot of fun for people who aren’t familiar with those customs, foods and so on. … that’s the way things spread in cities. And from cities to other places.

(c) 1971 Laurence Hyde / NFB

This innovation argument is the big idea from The Economy of Cities. ‘Jacobian externalities’ are knowledge spillovers across sectors: these are self-reinforcing, and help cities become resilient to economic shocks. What I hadn’t previously spotted was that Jacobs sees *cultural* and *economic* diversity as so closely intertwined.

(c) 1971 Laurence Hyde / NFB

Jacobs also makes some subtle points about mobility and technology. She came to prominence in New York opposing Robert Moses’ megaschemes for urban motorways and ‘sum clearance’:  not surprisingly, then, much of the film is concerned with congestion and pollution. But Jacobs has a much more profound argument:

People worry that there’s too much progress – in fact it’s just the opposite. … Automobiles don’t represent     progress any more – they’re pretty old …

There’s no solution in saying people should live close to their work and shouldn’t travel. People change their  jobs, goods have to move. So the problem is mobility – but the automobile isn’t providing much of an answer.

In other words: the car-based city is old thinking. The future is mass transit, bikes, and mobility as a service, enabled by technology. Scroll forward to 2016, and that future is taking shape all around us.

In 1971, however, this meant ‘Dial-a-Bus’ [link7] – a prehistoric Uber Pool, summoned to your house by landline and whisking you and fellow commuters to the local train station.

(c) 1971 Laurence Hyde / NFB

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Jacobs was a thinker and an activist, not a consultant. It’s not as easy as it looks to derive practical guidance from her work – not least because she is the original full-field urbanist, drawing together history, built form, economics, social structure and culture into her analysis. Watching the film is a salutary reminder of this; it also emphasises how much Jacobs’ work draws on close observation of specific places she knows well.

Death and Life … tends to be distilled into four urban design tropes: high density, short city blocks, mixed use, old buildings. Result: every 1990s block of flats with space for a shop at the bottom (but VAT rules that incentivise developers to knock down old buildings). That’s clearly not enough to make a street or neighbourhood ‘work’, if it has no relation to the demographics and socio-economic life around it. The film is a neat reminder that we shouldn’t reduce Jacobs to design code box-ticking. But it also highlights just how tricky it is to roll her ideas into generalised practice. ‘What should a city be like?’ asked Reason in 2001. Jacobs’ answer: ‘it should be like itself’.

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(c) 1971 Laurence Hyde / NFB

The film also highlights how much Jacobs’ thinking about urbanism is a product of its time. All around her cities were losing people to the suburbs, and losing old urban grain to modernist, car-centric city form. Many neighbourhoods were emptying out. In London and New York today, all of that has flipped around: populations are growing, high-value activity is back, and we have an urgent crisis of housing and cheap space.

Ed Glaeser famously has a go at Jacobs in The Triumph of the City, arguing that preserving old buildings simply chokes off the supply of bigger, newer ones, and the subsequent gentrification pushes out the artists and mixed communities she sought to preserve. I’m not sure that’s completely fair: she was dealing with a different era’s problems. But it also seems that she had fairly little to say about today’s urban crises. That is the message from of this 2003 Brick interview, conducted three years before Jacobs’ death. She’s asked whether today’s cities are in better shape. She replies:

In some ways there’re worse and in some ways better. The things that are worse I don’t think are so much focused or anchored in cities as they are in our North American culture as a whole … I think that things are getting better for cities in that there’s not the great ruthless wiping away of their most interesting areas that took place in the past … however, I think the urban sprawl outside of cities has gotten much worse.

In the Reason interview she goes a little further, citing Portland, Seattle and San Francisco as ‘attractive places … where good things are being done.’ The interviewer asks about gentrification and rising prices. She bats away the question.

By this point her  writing had also moved on to other issues:  the nature of work, economic ecosystems. Clearly, she wasn’t much interested in going back to the street.

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It’s early morning, and the city is beginning to dance. The camera follows Jacobs as she crosses a busy street. A man walking beside her notices the camera and gazes in increasing curiousity at our heroine, trying to place her. Unable to do so, he wanders away. Lost in thought, she disappears into the crowd.

jacobs9 jacobs8 jacobs10 (c) 1971 Laurence Hyde / NFB

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Here’s the link to the film again.

 

Estate renewal and neighbourhood regeneration

March 8, 2015

(c) Max Nathan 2012

At the end of January the What Works Centre on Local Economic Growth, where I’m a Deputy Director, released its review of estate renewal programmes. For many of those who’ve worked in regeneration policy, and (like me) want such programmes to succeed, the results were deeply disappointing.

The team found that

1/ Estate renewal programmes do a good job of improving housing, public space and physical amenities.

2/ Estate renewal programmes lead to increases in property and land prices and rents, although not necessarily for nearby properties that do not directly benefit from improvements.

3/ Programmes tend to have a limited impact on the local economy in terms of improving income or employment.

4/ Programmes tend to have a limited impact on the local area in terms of reducing crime, improving health, wellbeing or education.

Worse, we found no evaluations that were able to unpick effects on existing residents, as opposed to people moving into an area. This matters, because it means that – for example – area-level improvements in employment rates might simply be driven be people moving into the area, rather than real improvements in life chances for people already living there.

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A few thoughts on this.

First, as Ruth Lupton points out, we have to be careful to assess such programmes on what they set out to achieve. The main aim of estate renewal is usually to improve the quality of housing supply, the built environment and other local amenities. The review shows programmes are pretty good at achieving these. An important result.

Where such programmes score less well is on broader objectives. New Labour broadened estate renewal into a wider ‘neighbourhood renewal’ agenda – programmes like the New Deal for Communities included economic as well as social goals. The review included a number of independent and officially-commissioned NDC evaluations, and the results on these wider goals are not great. As John Haughton suggests, this is consistent with a larger body of evidence on ‘people’ vs ‘place’ interventions, and where views cut across the political spectrum.

It’s worth thinking a moment about why this might be. Urban economies are complex, and adjustment is hard to predict, sometimes chaotic. There’s clearly space for for neighbourhood regeneration programmes to try and deal with co-ordination problems, provide public goods, and try to mitigate some of the problems facing people in deprived areas.

On the other hand, these programmes are microsolutions for megaproblems: the economic elements of NDC are trying to roll back huge structural trends that two decades of national intervention under Labour more or less failed to shift. I’ve got a chapter coming out in this book, edited by Dave O’Brien and Peter Matthews, which talks more about these ‘regeneration expectations’.

Second, as John also says, it is important to understand in more detail *why* some estate renewal programmes have not delivered on their objectives. John suggests a few reasons: lack of community ownership, a lack of learning culture in the ‘estate renewal industry’, and shifting / conflicting central government priorities (a point also made by Ruth and others).

To dig into this, we need better quality impact evaluations (the What Works team used just 21 out of over 1,000 candidate studies). We also need to look through the complementary literature on programme process, implementation and management. The Centre has now started to do this – across a range of policy areas – and will be reporting back in the coming months.

Third, we need to set our expectations for such policies in the future. As a whole, regeneration programmes involve an implicit contract with communities, as Lee Pugalis and David McGuinness argue, and there remains a strong equity case for such initiatives. However, effective urban and neighbourhood policy is hard to design: neighbourhoods and cities are complex systems, which adjust in messy and uneven fashion. This creates space for policymakers – dealing with market and co-ordination failures – but also implies that impacts are likely to be incremental at best. That means presenting a realistic positive case for regeneration and estate renewal, rather than asserting economic transformations that stand little chance of coming about.

The world according to Brûlé, part 2

June 18, 2013

(c) Fischli & Weiss

Tyler Brûlé is in trouble again. Monocle have published their annual ‘global quality of life’ index, and as editor he has received a good deal of flak from FT readers for his latest column. Some people dislike his choices; others his methodology; others his attitude. That’s understandable: ‘For readers in Chicago, yet again your appalling homicide rate knocked you out of the running’, says Tyler at one point.

I’ve got some sympathy with attempts to rank cities against each other – after all, everyone loves a league table. But it’s very hard to do this in a way that has much general meaning – especially if, like Tyler, you’re a high-maintenance frequent flyer who rarely seems to be anywhere for more than a few days.

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Here’s what I said a while back:

First, let’s remember what we’re trying to do with city rankings. All of this is – very loosely – trying to achieve what urban economists call ‘spatial equilibrium’. This is where people and firms sort themselves across space, trading off economic, social and environmental pros and cons so that everyone finds their best place to be.

… Indexes are usually commercial products aimed at specific users. In Monocle’s case it’s globe-trotting cosmocrats  with Japanese friends; for Cushman Wakefield’s Cities Monitor it’s developers and property investors; for the Economist and Mercer, CEOs. So policymakers – who have to think beyond single interest groups – should approach with caution.

Second, actually measuring the ‘real cost of living’ is very hard to do. No-one has the definitive answer. I’ve been helping on a SERC project looking at these issues – the best work is from the US, where government economists have access to price data on thousands of items at very local level (like this paper by Bettina Aten). But even here, the researchers don’t go near the kind of soft measures Monocle is using.

Third, we need to remember that this is all about tradeoffs. In spatial equilibrium, actors are balancing economic, social and physical welfare. The main sources of urban growth and vitality – critical mass, big labour markets and ideas flow – tend to have a flipside, namely congestion, pollution and expense.

For that reason, the most liveable cities – where people might want to be – aren’t necessarily the ones where people need to be. This is why it feels odd that places like London, NYC, Hong Kong and Los Angeles don’t rank higher on the liveability rankings. In these global cities the pull of place is very strong. As Jared Diamond points out, in many ways cities like LA are terrible places to live, but millions of people still choose to be there.

Monocle readers may well live in one place and work in another – so this matters less to them. Tellingly, Brûlé eventually reveals that having tried Zurich for a few months, he moved back to much less ‘liveable’ London. His compromise is to be based in the UK and flit between Zurich (winter), Copenhagen (summer) and Tokyo (business trips). Nice work if you can get it!

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‘Poor Tyler Brûlé, condemned to orbit the earth like some kind of 21st century Flying Dutchman‘, says one FT detractor . Ouch! I guess he can take some comfort from being the star of his own, uncannily accurate parody site. And, of course, persuading people to keep paying for his business class chat.

This is not a Gateway

May 13, 2013

(c) Terry Farrell and Partners

I was in the Economist last week talking about the Thames Gateway. As New Labour’s flagship regeneration programme, the Gateway has not surprisingly been dropped by the Coalition. It hasn’t vanished completely though. Later this year, the Centre for London is publishing a collection of pieces on prospects for the area (for a flavour see this post and discussion). What we might call ‘Gateway Thinking’ also periodically reappears, for example in legacy planning for the Olympics, and in the proposed  Thames Estuary Airport.  And the place retains a strong hold over a certain kind of urbanist, especially in the dystopian excursioneering pioneered by Iain Sinclair and Laura Oldfield Ford.

I spent some time working on Gateway policy while in DCLG, and all of this got me looking back through old notes and papers. Some rough thoughts follow.

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First, the Gateway concept now feels madly ambitious – especially compared to today’s minimalist development environment. Remember that the 70km Gateway was one of four ‘growth areas’ set out in the 2003 Sustainable Communities Plan.  The Plan proposed around  550,000 new homes in these zones by 2016 (42,000 a year, when current annual housing starts for the whole country are now around 98,000), and envisaged ‘delivery’ of  430,000 additional jobs.

In practice, the other three growth areas – Milton Keynes, Ashford, and the ‘Peterborough-Stansted-Cambridge’ corridor – involve building in popular areas where developers are happy to operate. The Gateway was always going to be a much more challenging environment.

Second, there was (and is) a strong social argument for public investment along the Thames Estuary. Some communities along the river are deeply deprived , with residents held back by low incomes, low skills and thin local labour markets.  However, the economic case is rather weaker. It was never clear whether the Gateway programme was intended  as a response to economic pressures in the Greater South East (in particular, high house prices and low building), or a much bolder attempt to restructure the deeper regional economy. Neither was it clear why these communities merited public spending ahead of (say) those in Manchester, Liverpool or Leeds.

The Greater South East economic ‘system’ is heavily weighted towards the North and West of London, where there is a polycentric system of smaller cities (Milton Keynes, Oxford, Cambridge, Reading) around the capital. East of London, towns and cities tend to be smaller and local economies are heavily commuter-powered.

As the Economist notes, parts of London’s economy have been moving Eastwards for years. But the Gateway attempts to shift the entire urban system  towards the East – and to shift activity away from commuting towards self-contained communities. The evidence tells us that urban economies are highly path-dependent (e.g. here, here and here), and  that this kind of rebalancing takes decades if it happens at all. By contrast, the Gateway strategy promised 160,000 net new homes and 180,000 net new jobs over 15 years.

Third, this terraforming aspect is integral to the Gateway’s staying power. As a classic grand projet, the programme was highly appealing to a certain kind of politician (Michael Heseltine, John Prescott, Gordon Brown) and urban planner (Richard Rogers, Terry Farrell). Brown actually raised the jobs target to 225,000 in 2007, just as the credit crunch was kicking in.

Such visioning also gets in the way of getting things done. An obvious but important example: the Gateway isn’t a single zone, but a collection of very disparate communities. This matters. Treating the Gateway as a kind of continuous policy space made for convenient shorthand in speeches, but obscures the huge differences between key economic sites like Canary Wharf and Shellhaven, versus smaller towns like Thurrock, and struggling former resorts like Southend.  Arguably, it also made it harder to think about economic development, since policy had to be retrofitted into a high-level planning concept rather than based on local circumstances.

Fourth, Gateway delivery systems were pretty badly designed. Governance somehow managed to be both too top-down, as explained above, and not dirigiste enough at a local level. Notably, detailed policy development was generally left to Urban Development Corporations, who lacked a democratic mandate, had no statutory powers and held no assets. By contrast, New Town Development Corporations could set long term planning goals, and leverage a substantial public land portfolio. The trade-off was the lack of accountability, but land holdings eventually transferred to local authorities.

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None of this is to call time on the policy or the area. As I said earlier, the kind of deep structure change envisaged by Heseltine and others take decades to take shape. Developments like the London Gateway Port are potentially transformational, and London’s eastern boroughs will continue to evolve. By starting with economic fundamentals rather than grand planning, and placing help for individuals alongside physical regeneration,  a simpler, more effective approach might begin to emerge.

[apologies to TINAG for stealing the title.]

The book of SERC

August 21, 2012

I’m happy to say that LSE’s Spatial Economics Research Centre (where I’m a Research Fellow) has been asked to write a new book. From Urban Economics to Urban Policy will be published by Edward Elgar in 2013. Paul Cheshire, Henry Overman and I are the editors.

The book is essentially SERC’s Greatest Hits Part 1. We’re putting together a number of chapters based on the Centre’s first phase of research, under four broad themes: the nature and drivers of spatial disparities, labour markets, housing markets and planning, and policy / governance responses.

You can get a flavour by looking at some of SERC’s policy papers imprint. Many of these authors will also be contributing book chapters. But we’re also commissioning brand new material (some of which I’ve been working on today).

More news when we have it. Academic publishers don’t move at great speed …

Planning reform

November 6, 2011

The past few months have seen furious public debate about planning reform in England. Here [pdf] and here [pdf] are two new papers on the economics of planning, written by me and SERC Director Henry Overman. Versions were also submitted to the National Planning Policy Framework (NPPF) consultation last month.

The papers pull together SERC research on planning, alongside wider evidence (paper 1) and assess the Government’s proposals for planning reform (paper 2). Henry and I don’t agree on all of this – I’m certainly more pro-brownfield than he is – but we both felt that important pieces were missing from the recent public conversation.

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The key messages are:

1) The job of planning is to balance environmental, social and economic welfare. This means tradeoffs, so all planning systems have costs and benefits.

2) Planning’s economic effects, especially the costs of the status quo, have been underplayed in recent debates. We summarise evidence strongly showing current rules increase house prices and volatility, increase office rents, probably lower retail productivity and lower employment in small independent shops.

3) Paradoxically, land restrictions in the most popular areas have led to some truly unsustainable development – such as selling off school playing fields for housing. Similarly, brownfield-first policies have delivered some positive benefits for cities like Manchester, but aren’t a panacea.

4) The draft NPPF needs to be much clearer about sustainable development, potential tradeoffs and how practical decisions might be made (for example, using the National Ecosystem Assessment).

5) We agree with the National Trust and others that there’s a basic tension between Government’s desire for localism and some important national objectives. Ministers need to be clearer about what trumps what, or (more in keeping with localism) provide stronger incentives to align interests.

6) The presumption in favour of sustainable development that is consistent with the plan should be retained. But local authorities need time to adjust to the new rules, and the Government should introduce the change gradually.

7) Current incentives to ramp up housebuilding, such as the New Homes Bonus, are probably too weak and need to be strengthened. And one-size land restriction policies (such as town centre and brownfield first) don’t work well in practice. Rather, we suggest Whitehall sets the appropriate framework to try to encourage particular patterns of development but then allows local authorities to develop their own land use restriction policies.

Facetime limited

December 5, 2010

What’s on sale here? Will Davies and I both have been puzzling over this ad on the Tube. Will’s worried about the politics of ‘facetime’, but I think there’s a more basic problem.

I can see the point of putting this ad up in (say) Barrow-in-Furness, or in the middle of the countryside. But if ‘facetime’ is the commodity, why offer Londoners access to 400 million people, when they can reach several times that number in the capital itself?

I would have thought that Birmingham’s comparative advantage in ‘facetime’ (or dynamic agglomeration-derived proximity benefits, to be precise) has to be usability, not quantity.

Core cities like Birmingham offer a good balance between size, speed and access. For the businesses targeted here, Brum has pretty good infrastructure, amenities and markets – but is also easy to navigate. Isn’t that the selling point?

London might be a megacity, but it also has to be one of the least usable and most frustrating places in the UK to travel around – as anyone stuck on underground reading this ad would realise …

So, farewell then …

July 9, 2010

… eco-towns, by the look of it. This is a good thing. Eco-towns are largely unloved, often in the middle of nowhere, and would have little impact on overall CO2 emissions.

Dermot (and Adam Marshall) have rightly criticised eco-towns for distracting from the much bigger task of greening Britain’s cities. As I’ve explored elsewhere, that’s a job which should have both a significant impact on the UK’s carbon footprint, but also much greater economic development potential.

Eco-towns have also failed dismally at being the kind of demonstration project the Government originally envisaged. There are much better examples abroad, both self-standing cities like Masdar in Abu Dhabi, and (more realistically) urban extensions like those in Vauban, Freiburg, or Hammarby Sjostan, Stockholm.

The latter also have the benefit of localist in design and delivery. In the coming months, let’s hope the Coalition can give British cities the financial flexibilities to try something similar.

Getting ahead in the countryside

July 7, 2010

The big city’s the place to find fame and fortune, wouldn’t you think? Not according to the Commission for Rural Communities, whose new report claims ‘rural areas have more entrepreneurs’. This seems odd – aren’t cities supposed to help ideas flow, with banks to lend money, and customers to sell to?

All the evidence suggests innovation is heavily urbanised, for example. So what on earth’s been going on in the British countryside? Is the fresh air good for the brain?

The report’s here. It’s nearly 200 pages long, so to save you reading it I’ve done some digging. The relevant findings are:

1) A survey of bank lending finds that in 2008 and 2009, rural areas had more start-ups per working-age population than urban areas (p131)

2) GEM survey data for 2004-2008 finds higher rates of ‘entrepreneurship activity’ in rural areas than urban areas. Strikingly, the survey suggests rural entrepreneurship rates are ‘as high as inner London’ (p133).

The report uses good definitions of ‘urban’ and ‘rural’, based on this DEFRA typology. But there are questions about which rural areas we’re talking about – more on that in a moment.

Let’s start with start-ups. First, there’s not much urban-rural difference in business birth rates – 13.9 per thousand people in rural areas, 12.7 in urban areas. Second, in absolute terms there are far more start-ups in cities than the countryside – hardly surprising since c.80% of the English population live in urban areas.

Third, there’s noise in the data – the survey in question covers 93% of all bank lending, which is pretty good, but doesn’t adjust for the rest. If 80% of those loans were to city firms, a reasonable assumption, the urban-rural difference is less than one percentage point.

‘Entrepreneurship’ is a slightly more nebulous concept, and it turns out the GEM data needs a big pinch of salt. For one thing, the survey is based on just 43,000 firms across the UK – which might risk sampling error if you’re looking at small rural areas.

More seriously, GEM actually measures something called ‘total early-stage entrepreneurial activity’ – which is a weighted index including ‘nascent business activity’. This could include things like writing a business plan, but not actually doing anything with it. (I’ve also no idea how the Index is built because GEM doesn’t say.)

In the CRC small print, GEM concedes it’s tracking ‘propensity to be entrepreneurial’, rather than *actual* entrepreneurs. It’s hardly convincing.

So, case not proven – on the basis of these numbers. However, let’s suspend disbelief and assume there is a new generation of rural whizz-kids. What might explain this?

It could be a lifecycle effect – people downsize or move their families out of the city, starting new businesses in the countryside. Migration data suggests there could be something in this – young single people move into cities, older people with partners and children move out. Other studies suggest people gain skills and learning in cities, taking these with them when they leave.

There could also be a technology effect. The CRC’s start-up figures suggests that most loans go to business services like accountancy and consulting, a lot of which can be done by phone or online (anecdata – my accountant operates out of deepest East Sussex).

That implies a third point – many of rural areas are actually around the edges of big urban areas. In the jargon, they’re ‘peri-urban’ – pleasant, leafy communities with decent schools and public services, and good links into the urban core. Not surprisingly, these neighbourhoods tend to come near the top of ‘best place to live’ surveys.

In turn, that suggests some final lessons. Don’t overspin your data. The city and country have more in common than you might imagine. And ultimately, enterprise is less about place than about people.

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