University debate highlights the challenges facing the Liverpool city region Bill Gleeson reports
Local Enterprise Partnerships (LEP) have been designed by the government to be private sector led. The idea is that private businesses will lead sub-regional economic development.
However, a question mark hangs over whether the private sector can deliver such economic development – and even whether it sees itself as having such a role.
It’s a role made all the harder in the face of huge government spending cuts and a huge reduction in the amount of money the Merseyside sub-region receives from Europe’s economic and social regeneration funds. The ability of the private sector to lead the regeneration of the Liverpool city region was the subject of a debate at the University of Liverpool this week.
One of the key speakers at the debate, Can the Private Sector Deliver? was the former chief executive of the Mersey Basin Campaign and visiting professor at the University of Liverpool, Walter Menzies. He was joined by Rod Holmes, the project director who oversaw the construction of Grosvenor’s £1bn Liverpool One shopping development, and who recently stepped down as chairman of The Mersey Partnership.
This week’s debate was the first to be staged by the university in its series of debates entitled Policy Provocations.
Prof Menzies said: “The economy is the wholly-owned subsidiary of the environment. This was true when Liverpool was the epicentre of the first region in the world to industrialise on a revolutionary and unprecedented scale – when the River Mersey enabled Liverpool to become the second city of the British Empire. It is true now in 2012 when the Liverpool economy is again in rapid transition.
“A prosperous future for Liverpool can be achieved only through sustainable development. This demands the rejection of ‘business as usual’ and the radical prospect of Liverpool, Manchester and Warrington working with – rather than against – each other.
“Growing inequalities destabilise our society and increase its inefficiency. We have experienced value destruction and economic devastation on an epic scale as a result of feral bankers, city boys, failed regulation, and rogue economics.
“The response continues to be institutional paralysis. Whitehall is hopelessly compartmentalised – Lord Heseltine has described the departmental silos as ‘functional monopolies’. The government machine churns out what Professor Alan Harding, at Manchester’s Institute of Political and Economic Governance, has described as ‘place blind policies’. Then there is the abject failure of Westminster to see beyond London as the centre of the universe, the north as failing colonies, shopping as the new shipping, and a total lack of vision right across the political divide.
“The Sustainable Development Commission has sketched out 12 steps towards a sustainable economy. Others, such as the New Economics Foundation, are actively exploring viable alternatives to rogue capitalism. Beyond any doubt, however, is the overwhelming evidence from that relentless economic growth is inversely related to satisfaction or happiness. Economic growth is not synonymous with prosperity. The North West of England, for example, does not need to emulate South East England to become ‘prosperous’. Our development trajectory must be smart and sustainable.
“In the 19th century, in the city’s glory days, Liverpool businesses were global in reach and Liverpool businessmen had big ambitions for their city. Look no further than this university and the contribution of men like Leverhulme who founded the first town planning school in the world here – Civic Design.
“Now we are told that the city has become over dependent on the public sector, many businesses are sub-offices of London, the US, or further afield and strategic decisions are made elsewhere. We are told that entrepreneurs must shape the future – the Apples and Googles that began in suburban garages.
“So can the private sector deliver? Not on its own is the answer. Enlightened government, strong regulation, a vibrant and dynamic third sector all have a part to play.”
Prof Harding compared progress in Manchester to that seen in Liverpool. He said: “I think that the private sector has been very important to the reinvention of Manchester. The one thing Liverpool needs to emulate is the continuity and drive of Manchester’s city leaders in connection with business.
“What we are after is sustainable, job-rich economic growth for our cities.
“There’s been lots of initiatives. There’s been an endless list of acronyms. The outcomes of these initiatives have been extremely patchy.”
Prof Harding cited Canary Wharf as an example of massive regeneration in East London. However, he pointed out that its original private sector developer went bust and the transport infrastructure and land remediation was carried out by the public sector. Back in Liverpool, he pointed to the regeneration of the Albert Dock, which was financed with £8 of public money for every £1 of private sector investment.
Commenting on the Albert Dock, Prof Harding said: “Is it a success? Yes. Was it private sector lead? I wonder.”He said geography had to be taken into account when analysing the extent to which the private sector had lead job creation and economic growth in Britain’s cities during the economic boom years between 1992 and 2007.
He said: “There’s only one region that had more private sector job creation than public, and that was London.
“In all regions in the north there were more public sector jobs than private.”
He accepted that other cities, such as Manchester and Leeds and places close to London like Reading and Milton Keynes, had also seen significant private sector growth, but nothing like on the scale of London, which was ten times greater.
He added: “The losers have been places like Stoke, Birkenhead and Bradford.
“We are not good as a country at creating private sector jobs. It’s very patchy.”
When it comes to the impact of the private sector on sub-regional economies, Prof Harding said the whole concept was up against the problem of the “delocalisation of business”. Many corporate head offices are no longer located in the cities where the businesses they run were originally founded.
Prof Harding said the coalition government’s Regional Growth Fund, Enterprise Zones and LEPs provide evidence that the government is looking for new mechanisms to get the private sector to take leadership of the economic development of our cities. He described the government’s new City Deals as much more interesting.
He added: “We have seen more intervention through this route than the others. We need to ask a couple of things. How much difference between places are we prepared to tolerate? We don’t want them to be too different.
“Are we able to think how we can reconfigure our municipal institutions so we can begin to fashion them into something that can transform our cities?”