Regeneration elite queue up to shoot the messenger

If Doctor Tim Leunig, a reader in economic history at the London School of Economics, ever had doubts that northerners were a chippy bunch, they have surely been dispelled by the response to his report Cities Unlimited.

The 68-page report from the think tank Policy Exchange, one of a series of three looking at economic development in UK cities, brought a shower of invective upon him and his team, most notably for the underlying suggestion – seen from a tabloid viewpoint – that the only hope for the people of the North was to abandon their cities and seek a new life down South.

That the report made no such suggestion appeared neither here nor there as the region's professional politicians and regeneration elite sought to condemn the doctor in a miasma of provincial spite.

Even David Cameron, who has links with Policy Exchange, was moved to comment that he had heard Leunig's boss – who oversaw the report – was about to depart to Australia: "not a moment too soon".

The response from the tabloids was perhaps understandable. Journalists are not the type of people to sit down and read a bulky report when a quick and inaccurate summation is guaranteed frontpage headlines.

The fact that in order to put this report in context, one would need to study the two preceding reports – Cities Limited and Success In The City – suggests that very few of those from the media would have had the time to digest it in full.

The politicians and regeneration specialists have no such excuse. This is the type of report they are paid to read; it is their job to look at the arguments of Leunig and his colleagues and to provide refutation and counter argument.

Make no mistake, Cities Unlimited and its companion reports form the most important body of work about the effect of UK city regeneration policy that has yet been produced. And its conclusions appear to deal a fatal blow to those who believe that government funding can regenerate areas effectively.

The reports looked at various cities across the UK which had received regeneration funding and compared them with others that had not. In addition the team looked at major cities around the world where growth had either been impressive or dismal and sought to isolate the factors that had caused this differentiation.

One of the main findings, using the Government's own figures, was that the aggregate GVA for cities that were subject to regeneration initiatives fell from 90 per cent of the national average to 86 per cent between 1997 and 2005.

In contrast, during the same period, the performance of cities that were too successful to be given aid saw GVA rise from 131 per cent of the national average to 143 per cent. The researchers also used data from HM Revenue and Customs to show that personal incomes in these cities followed roughly the same pattern.

In short, though the authors pull back from stating the logic of their own arguments, the billions of pounds poured into regeneration activities has had the opposite result to that which was intended. It has made the poorly performing cities perform even more poorly, relatively speaking.

The figures are incontrovertible. And were confirmed by an earlier study carried out by the left-wing Joseph Rowntree Trust.

Where the research is most instructive is in seeking to find out why these efforts have failed. And here, as might be expected from a right-leaning think tank, the answer is that regeneration efforts are seeking to buck the free market and are too centrally controlled.

The first argument can be taken as a given. Population outflows from the North to the South tell their own story, while as the UK's economic interests turn to mainland Europe the South East has an obvious geographical advantage.

It is the criticism of centrally planned initiatives that puts some new and rather innovative thinking on the table. Having looked at cities around the world, from Warsaw (a failure) to Hong Kong (a success) the conclusions are stark.

In terms of results..."What we have found, time and time again is that the degree of flexibility accorded to local areas matters". Needless to say, regeneration in Britain is the most tightly centralised of anywhere on earth.

Having demolished the myths peddled by various politicians and local development agencies, the report seeks to offer solutions. And this is the weakest part – academics trying to develop economic solutions.

The big idea is that vast amounts of industrial land in the South should be rezoned for residential development, thus allowing northerners to move where the growth is and at the same time pushing up the price of industrial land to make southern companies move north, thus giving jobs to those who remain.

It is a tabloidesque interpretation of this idea that has taken all the publicity. Which is unfortunate, as it has allowed those responsible for these policies to avoid the central issues highlighted in the reports: regeneration does not work. It only has a chance of working if it is controlled locally.

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