Presentation by Professor Andy Pike at the Economic Development Association Scotland (EDAS) and Scottish Local Authorities Economic Development Group (SLAED) conference, Aberdeen, December 1st 2016

1. Key issues in economic development
EDAS and SLAED Conference, Aberdeen, 1 December 2016
Andy Pike
Henry Daysh Professor of Regional Development Studies
andy.pike@ncl.ac.uk

2. Outline
• What’s it all for? New economic development priorities
and paths
• Changing rationales for policy intervention
• Institutions and governance
• Deals and deal-making
• Austerity and the new municipal entrepreneurialism
• Economic development futures…

3. What’s it all for? New economic
development priorities and paths

4. Spatial disparities in the UK in context, 1995-2012
Source: Cambridge Econometrics

5. Divergent growth amongst major UK cities, GVA
per capita 1981-2013 (PUAs)
10
15
20
25
30
35
40
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
GVAperCapita(£000s)
London
Edinburgh
Bristol
Leeds
Cardiff
Glasgow
Manchester
Liverpool
Nottingham
Birmingham
Newcastle
Sheffield
Source: Cambridge Econometrics

6. Divergent Growth amongst Major UK Cities,
Employment, 1971-2013 (1971=100)(PUAs)
60
70
80
90
100
110
120
130
140
150
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Employment1971=100
Bristol
Cardiff
Nottingham
Edinburgh
Leeds
London
Manchester
Sheffield
Newcastle
Glasgow
Birmingham
Liverpool
Source: Cambridge Econometrics

7. “…need to rebalance the economy across sectors and
areas in order to spread wealth and prosperity around
the country” (Theresa May, Speech to the
Conservative Party Conference, 5 Oct 2016)

8. Evolving geographies and institutions…

9. The
‘hourglass’
labour
market
Source: UKCES (2014) The
Labour Market Story: An
Overview, UKCES: Rotherham

10. Inclusive growth

11. Changing rationales for policy intervention

12. Conventional – correcting market failures
• Efficiency
• Equity

13. New and emergent rationales…
• Economic potential and revenue streams
• Low skills equilibrium
• Co-ordination failures
• Resilience
• ‘Industrial strategy’
• Demand complementarities

14. Demand and supply-side
Supply-side
Production
Push
Aggregate supply
(Dis)connecting
Demand-side
Consumption
Pull
Aggregate demand
(Mis)matching

15. Institutions and governance

16. Multiple and competing goals of
decentralisation

17. Source: Pike, A. (2010) Understanding and Measuring the Governance of Local Development Policy, OECD: Paris.
Forms of decentralisation
Centre
Region
Powers Resources
Reserved
Shared
Decentralised
Central control
Negotiated
Regional discretion

18. Average number of metropolitan governance bodies
created or reformed in OECD countries per decade
Source: Kim, S-J., Schumann, A. and Ahrend, R. (Forthcoming) “What governance for metropolitan areas?” OECD
Regional Development Working Papers, OECD: Paris.

19. Share of metropolitan governance bodies active
in policy field
Source: Ahrend, R., Gamper, C. and Schumann, A. (2014) “The OECD metropolitan governance survey: a
quantitative description of governance structures in large urban agglomerations” OECD Regional Development
Working Papers, No. 2014/04, OECD: Paris.

20. Pendulum swings
in economic
development
governance in
England

21. Evolving economic development
landscape in England
Source: NAO (2014)

22. Deals and deal-making

23. City Deals

24. Waves 1, 2 and 3…
Source: Deputy Prime Minister’s Office and Cabinet Office
Wave 1 Wave 2 Wave 3…
Greater Birmingham The Black Country Glasgow and Clyde Valley
Bristol Region Bournemouth Aberdeen
Greater Manchester Brighton and Hove Inverness
Leeds City Region Greater Cambridge Cardiff Capital Region
Liverpool City Region Coventry and Warwickshire Stirling
Nottingham City Region Hull and Humber Edinburgh?
Newcastle Region Greater Ipswich Tay Cities?
Sheffield City Region Leicester and Leicestershire Swansea Bay City Region?
Milton Keynes
Greater Norwich
Oxford and Central Oxfordshire
Thames Valley Berkshire
Plymouth
Preston and Lancashire
Southampton and Portsmouth
Southend
Stoke and Staffordshire
Sunderland and the North East
Swindon and Wiltshire
Tees Valley

25. City Deal
geographies,
2016
Source: O’Brien, P. and Pike, A. (2016) ‘Deal
or no deal?’ Governing urban infrastructure
funding and financing in the UK City Deals,
Draft Paper, CURDS, Newcastle University

26. Population in City Deal ‘areas’, 2016
32,128,398, 51%
30,622,502, 49%
City Deal areas Rest of GB
Source: O’Brien, P. and Pike, A. (2016) Deal or no deal? Governing urban infrastructure funding and financing in the UK City Deals, Draft
Paper, CURDS: Newcastle University.

27. Gross Value Added (GVA) of City Deal ‘areas’, 2016
675,648, 45%
816,815, 55%
City Deal areas Rest of GB
Source: O’Brien, P. and Pike, A. (2016) Deal or no deal? Governing urban infrastructure funding and financing in the UK City Deals, Draft
Paper, CURDS: Newcastle University.

28. New funding per capita (£) in City Deals, 2016
800
556
385
346
145
60 53 51 34 26 23 3 3
0
100
200
300
400
500
600
700
800
900
Source: O’Brien, P. and Pike, A. (2016) ‘Deal or no deal?’ Governing urban infrastructure funding and financing in the UK City Deals,
Draft Paper, CURDS, Newcastle University

29. Governance models in the City Deals
Governance Example
Elected Mayor Liverpool City; Bristol City
Combined Authority West Yorkshire (Leeds City Region)?
Elected ‘metro mayor’ and
Combined Authority
Greater Manchester; Sheffield City Region?;
Liverpool City Region; North East/North
Tyne?; Tees Valley; Greater Birmingham and
Solihull
Private sector-led Nottingham
Source: Authors’ research; Marlow, D. (2012) City Deals – Implications for Enhanced Devolution and Local Economic Growth, Policy
Briefing, LGiU: London.

30. 38 (Final)
Devolution
Deal
Proposals,
Sept 2015
Source: Local Government Chronicle

31. Funding,
powers and
responsibilities
in Devolution
Deals

32. • Local-centre conduit
• Local ‘empowerment’, central delegation
• Local-centre quid pro quo
• Vision and strategy-making
• Encouragement and promotion of
innovation
• Project and programme integration and
outcome focus
• Local governance reform device
‘Deals’ and ‘deal-making’ -
positives

33. • Austerity backdrop, the fiscal squeeze and capacity
constraints
• Asymmetric information
• Centre as supporter and appraiser
• Negotiating power resides centrally
• Lack of accountability, transparency and scrutiny
• Uneven outcomes of political haggles
• Slippage from announcement to implementation,
innovation diluted
• Limited evaluation
‘Deals’ and ‘deal-making’ -
negatives

34. Austerity and the new municipal
entrepreneurialism

35. Source: National Audit Office (2014) Financial Sustainability of Local Authorities, NAO: London
Change in Local Authority spending power
and Government funding, 2010/11-2015/16

36. Temporality Type Examples
Established,
‘Tried and tested’
Newer,
Innovative
Taxes and fees Special assessments; User fees and tolls; Other taxes
Grants Extensive range of grant programmes at multiple levels
Debt finance General obligation bonds; Revenue bonds; Conduit
bonds
Tax incentives New market/historic/housing tax credits; Tax credit
bonds; Property tax relief; Enterprise Zones
Developer fees Impact fees; Infrastructure levies
Platforms for institutional investors Pension infrastructure platforms; State infrastructure
banks; Regional infrastructure companies; Real estate
investment trusts
Value capture mechanisms Tax increment financing; Special assessment districts;
Sales tax financing; Infrastructure financing districts;
Community facilities districts; Accelerated development
zones
Public private partnerships Private finance initiative; Build-(own)-operate-(transfer);
Build-lease-transfer; Design-build-operate-transfer
Asset leverage and leasing
mechanisms
Asset leasing; Institutional lease model; Local asset-
backed vehicles
Revolving infrastructure funds Infrastructure trusts; “Earn Back” funds
Funding and financing practices

37. Changes in % of taxes raised locally, 1975 and
2012

38. Tax and Spending in UK Cities 2013/14 (£billion)
134.6
19.8
9.5
12.5
8.8
14.2
19.7
98.2
30.6
18.6
22.7
15.1
23.4
30
0
20
40
60
80
100
120
140
160
London Manchester Liverpool Newcastle Sheffield Glasgow Birmingham
Taxes generated Public spending
Source: Centre for Cities (2015) Mapping Britain’s Public Finances, London, Centre for Cities.

39. Economic development futures…

40. Growing Places Fund allocations per capita by
LEP area, 2012
Source: Author’s calculations from CLG data
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
ThamesValleyBerkshire
WestofEngland
Coventry&Warwickshire
Cheshire&Warrington
SheffieldCityRegion
Swindon&Wiltshire
Gloucestershire
GreaterManchester
Hertfordshire
Oxfordshire
Leicester&Leicestershire
Cumbria
EnterpriseM3
Lancashire
NorthEast
LiverpoolCityRegion
TeesValley
HeartoftheSouthWest
Dorset
BlackCountry
Derby,Derbyshire,…
TheMarches
Buckinghamshire
SouthEast
LeedsCityRegion
CoasttoCapital
Cornwall&theIslesofScilly
GreaterCambridge
Solent
GreaterBirmingham&…
NewAnglia
SouthEastMidlands
StokeonTrent&…
Worcestershire
Humber
GreaterLincolnshire
Northamptonshire
York&NorthYorkshire
London

41. Greater Manchester: from ‘cost centre’ to ‘net
contributor’ to the national economy
£-
£5
£10
£15
£20
£25
£30
2008 2009 2010 2011 2012 2013 2014
£bn
Total GM spend (incl. proportion of national spend) Total GM Tax income
Source: Greater Manchester Combined Authority and Greater Manchester LEP

42. Multi-actor and multi-level governance
Global — WTO, World Bank
Supranational — EU, NAFTA, ASEAN
National — Nation-states
Sub-national — Regions, City-regions
Sub-regional — Cities, Localities
Community, Neighbourhood

43. Acknowledgements
This research has been undertaken in collaboration with David
Bailey (Aston University), Emil Evenhuis (Cambridge University),
Ben Gardiner (Cambridge Econometrics), Louise Kempton,
David Marlow, Ron Martin (Cambridge University), Anja
McCarthy, Peter O’Brien, Andrés Rodríguez-Pose (LSE), Peter
Sunley (Southampton University), John Tomaney (Bartlett
School, UCL) and Peter Tyler (Cambridge University).
Structural Transformation, Adaptability and City Economic Evolutions