Home / General Interest / Is Theresa May’s £1.6 billion fund for English towns enough to rebalance Britain’s skewed economy?

Is Theresa May’s £1.6 billion fund for English towns enough to rebalance Britain’s skewed economy?

London lucks out. Shutterstock.

English towns with struggling economies will receive £1.6 billion of funding over six years. The UK government announced the creation of the “stronger towns fund” – the lion’s share of which will be distributed to towns in Northern England and the Midlands. Critics have focused on the fund’s assumed purpose as a “bribe” to gain Labour MPs’ votes for Prime Minister Theresa May’s deal to leave the EU, and on the inadequate size of the pot.

Leaving the first criticism aside, the second certainly has some merit: £1.6 billion sounds a large sum for a single project (at least, for one outside London). But it’s a tiny amount to complete a “transformative” programme of work in many places over a number of years – especially when those places have already lost much more than that during the past decade of austerity, and stand to lose further billions in EU support if and when the UK exits the union.

The difficulties the fund will face have been foreshadowed by the poor performance of EU regeneration funds in Wales. There, £1.6 billion (plus extra funding from UK sources) has been focused on a much smaller area with a much smaller population, from 2014 to 2020. This EU funding builds on similar sized programmes running from 1999 to 2006 and from 2007 to 2013.

Yet these investments in infrastructure, productivity, skills, tourism and research and development have done little to improve the relative prosperity of the targeted area, compared to Wales as a whole – let alone the rest of the UK.

Perhaps without such funding, areas such as the Welsh Valleys in particular might have slipped even further behind. But this recent experience does call in to question whether the stronger towns fund can really bring prosperity to relatively deprived towns in England.

An unbalanced system

While the government has not yet provided much detail about the fund, it appears to rehash old approaches to regeneration, which have already proven inadequate to “rescue” the poorest places over the last decade. For instance, the fund is to be administered by Local Enterprise Partnerships (LEPs), the business-led groups that deliver economic development across England, which attracted significant criticism over their lack of efficiency, accountability and inclusiveness. Clearly, it’s worth questioning the efficiency of allocating regeneration resources to local growth coalitions such as LEPs.

Commentators have also pointed out that the UK’s deeply structurally unbalanced economic system – which overwhelmingly favours investment in London and the south east – will cause human, natural and other capital to “leak” from poor places, irrespective of the regeneration money thrown at them.

The lure of the big city. Shutterstock.

 

Logically, this benefits wealthy elites, such as property developers and the bureaucrats who administer such funds. New start-ups will leave for richer markets or be bought out; renewable power will be exploited by national or international corporations with limited local benefits; and year on year most UK regions will lose their best graduates to the south east.

From consumers to communities

Alternatives are emerging at the local level. Much is being made of the “foundational economy” approach, which aims to refocus attention on improving the everyday activities – including social care, retail, trades and manufacturing – that provide local public and private services and incomes.

The Preston model – whereby a number of public and third sector “anchor” institutions succeeded in procuring from local firms, to boost the economy – is held up as an example of what’s possible.

More radical, but wholly evidence-based critiques of regeneration strategies suggest that new approaches should pivot away from economic prosperity and toward well-being as their ultimate goal, especially if prosperity enables excessive consumption, which is a key factor in climate and ecological collapse.

 

Rather, a new model should be found (or perhaps an old one rediscovered) where individual well-being is not dependent on status symbols such as large houses, multiple cars and other consumer goods – but on better connections with family and vibrant local communities, and on having more time to enjoy them.

Any local attempts to change the system would of course be far more effective if married to a deliberate restructure of the UK’s economic system from the centre. As things stands, the large buckets of funds at the discretion of the UK government continue to be spent in ways that lock in regional inequality in production and productivity, wealth and labour migration within the UK.

For example, public spending on research continues to focus on the “golden triangle” of Oxford, Cambridge and London universities, and defence spending is similarly oriented toward the south east of England.

It’s equally as worrisome that infrastructure spending in the UK still favours London at the expense of the regions and nations – to a surprising degree. Suspicions remain – strengthened by the outcomes of big spending decisions – that the current UK government, like those that preceded it, believes that the UK economy stands or falls on the performance of London.

After all, if the £56bn high speed rail project was really to help the Midlands and North, wouldn’t they have started building at the Leeds end?

Calvin Jones, Professor of Economics, Cardiff University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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