The Chamberlain News

Prestige or Priorities – City Centre Development Debate

As part of a new academic study on industrial policy, well known Aston academic David Bailey suggests city centre development in Birmingham has been at the expense of key services. He makes his case here, whilst later Patrick Willcocks will argue the ‘glamour’ projects have driven jobs – and we need more, not less of them.

One of the somewhat under-reported findings of the hard-hitting Kerslake report was his recommendation that regeneration in Birmingham “must take place beyond the physical transformation of the city centre… the council needs to engage across the whole city, including the outer areas”.

And in particular, he identified the £188m cost of the Library of Birmingham as a major contribution to the Council’s debt problem. While Kerslake doesn’t explicitly state this, it should be noted that this borrowing was being undertaken at the same time that social services were being under invested in.

Evidence on the latter point comes from the 2014 Le Grand Report which reports a “long standing under-investment in children’s services”.

It seems that public funds were being diverted from critical services such as social services into a city centre vanity project. This isn’t new: the focus of successive leaders in Birmingham over several decades has been to focus on city centre glamour projects.

The OECD in 2007, for example, noted that:

[when a] shift of policy planners’ interest from long term capacity building programmes to short-term gain is accompanied by actual diversion of public resources to short-term promotional goals, as was illustrated in the case of Birmingham… the detrimental effects on the city’s long-term competitiveness would not be negligible” (Territorial Review on Competitive Cities).

This OECD report also noted that competitive local economies need to nurture fundamental strengths over the long-term, and that “attractive physical environments created by prestigious developments can contribute to it, but… a ‘one club’ approach cannot achieve this goal”.

Sadly, our political leaders have indeed been ‘one trick ponies’, and for a long time. Kerslake’s comments on the council pouring cash into city centre projects while residents in poor out of town neighbourhoods are left without jobs or skills, is just the latest example.

Back in the mid 1990s, it was argued by a range of academics and the OECD that the substantial local authority funds used to build the ICC were in part diverted from front-line services such as education and housing that were needed by the city’s most disadvantaged communities.

For example, during the construction of the ICC and NIA (over 1986 to 1992), the city council spent £120 million less on housing than the average for all local authorities in England (Loftman and Nevin, 1996). In addition, Birmingham revenue spending on education in 1990/91 was £46m less than that recommended by government (OECD, 2007).

The result? A consequence of this underinvestment in front-line services was Birmingham’s “categorisation as a ‘weak’ council by the Audit Commission, especially in respect of housing and children’s social services” (Barber and Hall, 2008).

As I’ve often noted, the ‘re-imaging’ of cities has been a key theme of city leaders’ ‘place-marketing’ efforts, framed by a wider competition between cities for investment. And while recognising the efforts, and benefits, of policy makers to improve their urban environments, we need to recognise that this race for mobile investment is risky.

Indeed, as several academics have stressed, this ‘competitiveness’ drive brings with it the dangers that policy serves external actors and not local communities, fosters a zero-sum ‘arms race’ of competitive subsidies, fuels speculative development which fails to address underlying economic problems, and fosters a narrow focus on a location’s assets rather than development.

It seems that the opportunity costs of public funds being used to prop up such prestige projects in Birmingham over many years has been lost investment in areas such as housing, education and social services.

It really is time for a change.

Professor David Bailey works at the Aston Business School.