Tuesday 17 July 2012

City Regions to widen Wales GVA gap?

I don’t share the near-unanimity with which the report of the Task and Finish Group on City Regions (available here) seems to have been greeted, but then I’ve never particularly been one for going with the consensus.  When I read the report, it reminded me rather of the saying that I remember once seeing on the back of a box of England’s Glory matches – “he drew an unwarranted straight line all the way across from an invalid premise to an unjustified conclusion”.
My biggest problem is that the report starts from the clear beliefs that, firstly city regions work and that secondly, there is a critical mass which makes them work (although the basis for placing that critical mass at any particular level is not obviously evidenced).  Any failed attempt at a city region is then ascribed to ‘parochialism and tribalism’ (evidence in support of that, beyond anecdote, once again not being entirely obvious), and any success by cities which are not ‘city regions’ is explained by saying that “some [cities] are perfectly capable of thriving economically without recourse to the concept”
But if not all cities need the concept, and if some of those that do adopt it fail anyway, where is the hard evidence that says the concept ‘works’ and can thus be applied successfully elsewhere, or that identifies in advance which cities need the concept and which do not?  'Knowing' that the concept works and then dismissing any counter instances looks more like an act of faith than evidence-based policy making.  Correlation and history aren’t the same thing as cause and effect.  And without satisfactorily evidencing the basic premise, it’s hard to accept the conclusions drawn from it.
Even where success is demonstrated, the report highlights the different things which different city regions have done to achieve their success.  It surely has to be at least possible that it is those particular approaches which have led to the success, not to the fact that they were undertaken by something called a city region.  Perhaps the same approach by a smaller city, or by a larger nation would have been equally successful.
For sure, there are statements such as “OECD research has shown that the common feature of poorly performing areas is a population with a high proportion of low qualifications”.  But which is the chicken and which is the egg?  Is the area performing poorly because of low skills or have all the highly skilled people left because of the poor performance?  The answer to that question is highly relevant to Wales, many parts of which lose their most highly-educated young people; but if the exodus follows poor performance, then increasing skill levels won’t necessarily improve performance.  Indeed, if it leads to a larger exodus, it could even make things worse.
Then we have the statement, with which I have no quibble at all, that “in Wales, our cities generate only 33% of our income/wealth which is significantly the lowest proportion of all UK nations and regions”.  Where I would quibble, though, is with the very next sentence, “It is a reasonable assumption that this is a key factor in explaining Wales’s relatively weak performance on productivity and average wages.”  I’m not at all convinced that one flows from the other.  If a smaller percentage live in cities, then cities will generate a smaller proportion of income and wealth; that's simple artithmetic.  What matters is not what proportion of Wales’ wealth comes from cities, but what the total level, and level per head, of that wealth is.
So, I’m not convinced.  I am concerned, however, at some of the policy suggestions which stem from this report, given my doubts about the premise.  Take, for instance, this sentence from recommendation number 20: “if city regions are the engines of growth, they must be the principal beneficiary of transport, housing, inward investment and funding”.  Am I alone in seeing something of a chicken-and-egg argument here as well?  If the only way that the city regions are going to provide the growth is by diverting investment from the rest of Wales, then isn’t it just possible that it’s that concentration of investment which makes the difference rather than the establishment of the region per se?
It’s a statement backed up by a not particularly subtle suggestion that the EU funding being allocated to the parts of Wales which are designated as being the poorest should be spent in a way which maximises the benefit to those areas considered the richest.  That sounds like a sort of inverted Robin Hood approach to economic development in Wales.  And it seems calculated to lead to a situation where the GVA gap between England and Wales is reduced, but at the expense of increasing the GVA gap between different parts of Wales.  It’s a Cardiff- and Swansea-centric approach which mirrors on a Welsh scale the London-centric approach which many of us have railed against for decades.
As if to, albeit unintentionally I suspect, underline that point, Rhodri Morgan said this in his column in Saturday’s Western Mail: “it doesn’t make sense to tell potential punters exactly where within the city-region you want them to put their new jobs.  Keep it simple.  Just come to Wales.”  And if I substitute ‘the UK’ for both ‘city-region’ and ‘Wales’, doesn’t it still say much the same thing?  If we want to see more geographical equality across Wales, we won’t get it by putting all our eggs in the Cardiff-Swansea baskets.


Nigel Bull said...

Ten out of ten and a gold star for your latest piece. When I first read of this new way of looking at our problems, I tried, I really tried to think of the positives of the new approach. I am so fed up of finding fault in just about all I see coming from the Eli Jenkin Think Tank, and here was another with glaring faults. I want the WA to succeed so much, it hurts me physically when I see such ill considered PR hype as a way to tackle our very serious, imbedded problems. This ill conceived analysis will not only fail to succeed, but will also mean any diminishing chance of success will be pushed further back into an ever receding future.
Putting it simply, will spending less on Merthyr and more on Cardiff mean more chance of an increase in gross inward investment? Perhaps, but what it will not do is increase the investment in Merthyr per sea, which has such deep seated problems that it requires sums of the same order that persuaded GP's that they did not want to work out of hours to make meaningfull change for the better! Multiply the problems of Merthyr by that of every Post-Industrial town in Wales you get the magnitude of the problem.
We are currently building (and filling) factory units on green field sites to the South of Cardiff which are adding to the serious transport problems that make expensive electrification urgent and travelling to work from Brynmawr etc a nightmare. Now we want this policy writ large!
The reality is that this flawed initiative is about all we are going to get in the current (and long term!) economic climate. The applause it received was deafening in its.........silence, so we are not the only doubters. Perhaps with luck it will wither on the vine. Either way, I don’t see the radical thought required to make the changes we need. That said, I would as a start, settle on the Heads of the Valleys road becoming a dual carriageway along its whole length NOW. This together with a range of rate free clean factory units promoted by an energetic, well financed WDA raised from the grave could be a start. With this and a toll-free Severn crossing we might have a chance in turning with the aid of a barrage, the tide. I am not holding my breath!

Nigel Bull

John Dixon said...


I didn't find the silence so deafening at all. One only has to look at the provenance of the report to understand that the concept is already central to the thinking of many in the Welsh establishment. Whether openly, or by stealth, I suspect it's going to happen. And that fact was underlined by much of the reaction to the rail announcement - such as the calls for Cardiff, Swansea, and Newport to now receive further investment in new housing, superfast broadband etc. in order to 'make the most of' the new rail links. "To he who has, it shall be given", as it were.

I agree with you on Severn Tolls (and am still not sure how some people's long-standing opposition to tolls seems to have turned into support for tolls to fund infrastructure) and on the WDA; but not on the barrage.