Posts Tagged ‘politics’

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.

Spaces of Evidence seminar, 26 September

June 27, 2014

(c) richard serra / max nathan

I’m speaking at Goldsmiths in September, at one of the ESRC Spaces of Evidence seminars which will look at different types of economic evidence, their characteristics and limitations, and their uses in policy-making.

Will Davies, the organiser, has put together a nice lineup including Angus Deaton (Princeton), Suzy Moat (Warwick), Martin Giraudeau (LSE), Tiago Mata (UCL), Zsuzsanna Vargha (Leicester) and Vera Ehrenstein (Goldsmiths).

Here’s the blurb:

Economics and economists have a long history of providing a scientific basis or justification for public policy decisions. Concepts derived from welfare economics, such as ‘market failure’, have provided a language through which politicians and government officials can understand where and why the state might (and might not) intervene in market processes. The efficiency of potential regulation can be tested through the use of models, based on neo-classical assumptions.

However, events such as the financial crisis have thrown a renewed scepticism upon the capacity of orthodox economic theories to adequately model situations. At the same time, a new empiricism has emerged, which makes a bold appeal to data and field trials, which are purportedly less cluttered by normative assumptions about causality and probability. ‘Big Data’ and randomised controlled trials are at the forefront of new efforts to probe economic activity, in search of policies which ‘work’. The distinction between ‘model’ and ‘reality’ is abandoned, and the economy becomes treated as a zone of experimentation and data-mining, such that behavioural patterns can be discerned.

The seminar will explore the implications of these new directions in economic evidence, and ask what they mean for the authority of public policy, how they reconfigure expertise, and what types of epistemological and political assumptions they conceal.

It’s open to all, but you’ll need to register. Full details are here.

Agglomeration, clusters and industrial policy

November 25, 2013

Sou Fujimoto, Serpentine Pavilion. (c) Max Nathan 2013

I have a new article out in the Oxford Review of Economic Policy, joint with Henry Overman. It’s part of a special issue on ‘Government and Business’, with other contributions by Jonathan Haskel, Stian Westlake, Dieter Helm, Francesca Froy and Phil McCann.

You can see the whole lot here, and (for the moment) PDFs are free.

My piece with Henry is a constructive-critical take on clusters and the urban level of innovation policy. Here’s the abstract:

This paper considers the appropriate spatial scale for industrial policy. Should policy focus on particular places, targeting clusters of firms that are spatially concentrated? Or should it, instead, be ‘space neutral’, refusing to discriminate between different areas unless absolutely necessary? We provide an overview of the literature and identify two waves of literature that argue strongly in favour of a cluster approach. We argue that this approach rests on shaky theoretical and empirical foundations. In contrast, we suggest that more attention should be paid to the appropriate spatial scale for horizontal interventions. What can policy do to make cities work better, in ways that help firms to grow? That is, what is the appropriate role for ‘agglomeration’ rather than ‘cluster’ policy? Finally, we consider the possibility that some horizontal industrial policy objectives may be better served by specifically targeting particular places or from decentralized design or delivery.

Read the whole thing here.

Policy-based evidence making

March 25, 2013

(c) BBC 2013Heads up: on 30th May I’ll be in Warwick to help give an advanced training session on  ‘Knowledge for Policy, Knowledge of Policy’, organised by the university’s Centre for Interdiscplinary Methodologies.

Evidence-based policymaking was a central trope of New Labour’s time in office.  The idea’s gone in deep: the Coalition is regularly taken to task for ideological policymaking – perhaps one reason  why the Cabinet Office has just announced a major network of ‘What Works’ Centres.

One immediate objection to evidence-driven policy is that evidence doesn’t tell you what you ought to do.  Political values and judgements – even ‘ideology’ – have their place, especially if the alternative is the apolitical solutionism that Evgeny Morozov has been taking to pieces recently.

There’s also an important role for an experimental state which builds an evidence base where none exists.  Sometimes this is pretty uncontroversial, as in the small nudges being tried out by the Government’s Behavioural Insights Team. It’s tougher to make the case in bigger areas of policy – such as devolution to local govt and communities, which has  never been seriously tried in the UK, where the risks of failure are massive, and where there are limits to what we can learn from abroad.  Here, the need for careful piloting is running up against Ministerial enthusiasm for transformational change.

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What does this mean for researchers, especially academics? It’s important to have a clear sense of the policymaking process,  especially the invisible work which goes on between formal consultations and policy events; how policymakers treat different  kinds of evidence and actors in those processes, and the shifting positions of academics and think tanks in the ideas market.

I’ve co-founded a think tank, worked in central government and am now working in academia, so I’ll be bringing some of  these experiences to the seminar.  Also speaking will be Dave O’Brien (City University) and Will Davies (Warwick), who’s organising the session.  Both have similarly heterodox experiences, so it should be a fascinating day … see this post by Will, for instance.

Details here.

High Speed Two, cities and the North-South divide

January 28, 2013

(c) The Guardian 2013

The Government has just unveiled the route map for the UK’s high speed rail network. So will HS2 help the cities on the line? Will it narrow the North-South divide, as some Ministers claim? And what about places left out?

Here’s what I wrote back in 2010, when the detailed modelling was done, and drawing on the international evidence. The punchlines are:

So what does HS2 mean for cities? Urban firms and travellers are the big winners, which is good news for cities if more productive businesses raise wages or employment. Some cities get the kudos of being on the line, and may get a regeneration boost from new stations – although that could turn into a windfall gain for developers. But fairly few firms will relocate, and agglomeration impacts will be pretty small.

On this basis, HS2 isn’t likely to fundamentally change the UK’s economic geography. Rather, it will speed up the economic geography we already have.

… Those who gain from HS2 (business, core cities, those in ‘the North’) are strongly in favour; those who lose (communities and homeowners along the line) are vehemently against. Local opponents of HS2 are hardly irrational – quite the opposite. So rather than handing a windfall gain to business by pegging HS2 fares to conventional fares, HS2 tickets should be pricier – at least in first class.  That provides another way for taxpayers to recoup some of the initial outlay. … The agglomeration benefits for Phase 2 (Manchester and Leeds) seem much larger than Phase 1 (London to Birmingham). Why? Rather than connecting two relatively distant cities, Phase 2 links a lot of nearby places (e.g. Sheffield/Meadowhall to Leeds in 20 mins), and provides indirect access to big cities not on the line (e.g. from Manchester to Liverpool). The fact of HS2 thus strengthens the case for complementary investments like the Northern Hub, which will bring Liverpool, Manchester, Sheffield and Leeds closer together.

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Two other points. First, as John Tomaney argued on radio 4 this morning, the evidence suggests HS2’s economic impacts are pretty complex, and the net effect isn’t clear. Like him and others, I’m basically an agnostic.

Second,  to repeat – it’s crucial to spend money on better links between Northern cities and more London-centric high speed lines. As Richard Leese suggested in the same piece, for policymakers this is not an either/or. Thankfully Ministers agree, and are feeding cash into boring but important investments like the Northern Hub, as well as the bigger and shinier HS2.

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Update, May 2013: The National Audit Office has published its own report, which echoes many of these points.

Bigger, more urban, more diverse

December 12, 2012

(c) Andy Gilmore

The latest Census data confirms three things we already knew. First, Britain is becoming a bigger and more culturally diverse society. Second, net migration is one of the main drivers. Third, this diversity is largely urbanised – especially in London.

Beneath these headlines are many complications. Diversity is shifting across a number of dimensions at once – country of birth, ethnicity, religion and language. Official ethnic groupings are increasingly inadequate to capture what’s going on: see the huge growth in ‘other white’ and other ‘other’ categories.

Many of these trends will continue, with Leeds University researchers projecting a 20% minority ethnic population by 2051. But there is no obvious evidence that diversity is eroding national identity – 91% of residents identify with at least one UK national identity.

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These demographic changes are among the most profound of our lifetimes. So what are the economic and social impacts of these shifts?

My research is taking first steps towards answering the economic questions. European Urban and Regional Studies have just published this piece, which gives you a nice overview.

There is more detail in these working papers on the economics of super-diversity, the long term impacts of migration in cities, ethnic inventors, and diversity, entrepreneurship and innovation in London firms. This last piece, joint with Neil Lee, is coming out shortly in Economic Geography.

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We’re only beginning to understand some of these long term, dynamic channels. So it’s an exciting – and important – time to be working in the field.

Many of the key people will be in the UK in April for the 2013 NORFACE Conference. If you’re around, I’d encourage you to join us.

Olympic Economics

September 14, 2012

Back in the spring – remember? – a lot of people were getting annoyed by the Olympics.

For Londoners, Dan Hancox wrote, “it’s as if someone else is throwing a party in our house, with a huge entry fee, and we’re all locked in the basement.” Roll forward to September and it feels as if a gigantic, city-wide, four-week bender has finally petered out. Everyone had a good time, and nobody fired any missiles.

As the weather turns, though, more sober assessments of the Games are appearing. The Centre for Cities has published a careful five-point legacy plan. And the Economist Intelligence Unit has put out Legacy 2012, a collection of essays on the summer’s economic and social repercussions.

You can download it here. I’ve got the lead piece, written pre-Games, which (post-Games) now seems a bit grumpy.

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Here are the headlines, and some reflections with the benefit of hindsight:

First, the direct economic benefits of 2012 to London are pretty small. This is the overwhelming message from the economic evidence, and the experience of past Games. Predictions of a hit to local retail and tourism also turned out to be correct.

Second, the major hard gain is the physical regeneration of the Olympic site. We can argue about whether winning the Games ‘created’ this, or just accelerated it. But some Londoners (homeowners, certainly) got more out of it than others.

It’s telling that the Centre for Cities suggests a ‘separate’ employment and skills strategy is needed for East London – so what positive effect did the Games have on local people’s employment chances?

Third, the indirect economic effects on the UK may be pretty big – as they have been for Korea, China and Spain. Hosting the Olympics is a massively powerful policy signal, and the Games are a platform from which to tell a story about the UK’s place in the world.

Work by Rose and Spiegel, published in the Economic Journal, suggests that on average, Olympic host countries get a whopping 20% trade boost. (Amazingly, even losing bidders pick up some positive trade effect.) The host city stands in for the nation at Games time, so that London effectively was the UK for foreign viewers. Boris clearly understood this before David Cameron.

More prescient than he knew, Tony Blair is fumbling for the political economy argument in this Vanity Fair interview (thanks to Will Davies for the spot):

For a country like Britain, it’s a great thing for us to have the Olympics here. We can afford to do the Olympics. We’re Britain. We’re not some Third World country.

For countries like Korea and China the story is ‘we’re arrived’. For Britain, perhaps – ‘we’ve still got it’?

So perhaps we’ve all been looking in the wrong place. If the message is the legacy, the biggest economic impacts of 2012 may be the long term boost to British soft power.

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The other takeaway  is that economists vastly under-estimated the intangible benefits from the Games. Pre-Games analysis suggested the ‘willingness to pay’ was dwarfed by the £9.3bn budget, but our medal hauls in both Games have clearly changed the calculus.

Perhaps we should have spotted this coming – Goldman Sachs suggest that host countries typically win 54% more medals than usual. That sporting success doesn’t come for free, as Will points out here. But Team GB’s glorious performances are likely worth several billions in – fleeting? – goodwill.

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.

How did London get away with it?

January 21, 2011

A lot of people predicted London would be hit hard during the recession. In fact, London did better than the rest of the UK. Why?

Henry Overman, Director of SERC, delivered the answer at the first LSE Works lecture last night (with some help from me on numbers, trends and jokes). In case you couldn’t make it, here’s a post on LSE’s Public Policy blog which gives the main story.

LSE should be putting up a podcast in the next couple of weeks. Watch out for that here. Meanwhile, the next event in the series is CEP Director John Van Reenen, on ‘Where is Future Growth Going to Come From?’ That’s on 17 February.

In March we have both Lord Stern (on the low carbon economy) and Bruce Katz from Brookings Metro Program (on the ‘next urban economy’, some joint work with me and colleagues at LSE Cities).

Super-diversity

July 29, 2010

Worries about multiculturalism go way back: in 883, fearing unrest, King Alfred banished the Danes from London. So when Leeds University researchers suggested that by 2051 a fifth of Britons would be from an ethnic minority, the reactions were predictable. The Daily Express’s full-page headline was ‘One in 5 Britons will be Ethnics’, complete with picture of women in burquas. Daily Mail readers also excelled themselves – ‘the only effective way to combat this situation is to vote BNP at every opportunity’ etc etc.

Let’s try and dig a little deeper. I’ve now read the (long and complex) report [pdf], so here’s a few thoughts. I’m not a demographer, so I’m focusing on the implications rather than the detailed modelling.

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Britain has a long, often hidden history of multiculturalism. And as the report makes clear, Britain is already getting more culturally diverse. Immigration is a major driver, as is ‘natural change’ – variations in birth/death rates across social and cultural groups. The first tends to feed the second, since a share of migrants tends to settle.

British diversity is also heavily urbanised. People mix is greatest in and around cities, especially major urban centres (with big labour markets and good transport links) and ex-industrial places (which had lots of jobs in the past).

In some urban neighbourhoods we’re seeing ‘super-diversity’ appearing – with dozens of new communities alongside established minority groups. Conversely, recent migration from Eastern Europe was less urban [pdf] – partly because many people were doing agricultural work.

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The researchers make three major predictions about Britain in 2051.

First, the UK will be both bigger and more diverse. Under their favoured model, the population grows to 77.1m, from around 60m today. Black and minority ethnic populations rise from 8% to 21%.

Second, diversity looks different. Essentially, super-diversity will be more common. The ‘other ethnic’ population will be 350% higher, with various mixed ethnic groups increasing by 148% to 249%. Chinese communities will over 200% larger, ‘Black African’ communities  179% larger, and the main South Asian groups 95-153% bigger. The model’s held back a bit here because UK Census categories are so crude.

Third, diversity will be more spread out. The researchers predict that people in minority groups will shift from more to less deprived areas, which (very roughly speaking) will take them from inner city to more suburban locations, and from larger cities to smaller towns and rural areas. That continues a long term historical trend – London neighbourhoods like Spitalfields have historically housed new migrants, who progressively shift to outer London suburbs as they become established in the UK.

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The bigger question is what the economic and social impacts of a bigger, more diverse Britain will be. There’s some evidence, particularly from sub-Saharan Africa, that fragmented countries are prone to conflict and poor governance. Conversely, diverse societies may be more inventive and productive. Given ‘where the diversity is’, a lot of the action will be happening in urban areas.

My academic work is looking at these questions in detail, focusing on British cities.  Here’s a recent working paper which fills two major gaps. First, with help from UCL’s Pablo Mateos, I’ve developed some new descriptive analysis, including a ‘Super-diversity Index’ which is more powerful than the categories used in the Leeds model.

Second, I’ve looked at the links between people mix, wages and employment in urban areas. I find some positive connections between super-diversity and my economic performance measures, suggesting higher diversity might be an economic good for British cities. Other papers and current research take a closer look at what’s behind this – more on those in the coming months.

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