Hyper, pessimistic activism

I’m going to be appearing on the BBC1 TV programme ‘The Politics Show South East’ on Sunday 14th February.  I’ve been invited on to discuss the role of regeneration spending in seaside towns, for an article that has been prompted by the publication of the Centre For Cities ‘Cities Outlook 2010′ report.

The Centre for Cities are a think-tank who investigate economic development issues with a focus on British cities and they publish an annual ‘Cities Outlook’ report which sets out the performance and prospects of the UK’s 64 main cities.  Their latest report was published a couple of weeks ago.

Like everything in this field at the moment, it makes for quite depressing reading.  Unemployment has risen to around 8%.  Retail, financial services and construction are the hardest hit sectors so far, all of which are key aspects of city economies.  The centre forecasts that it will take around 5 years for employment to return to pre-crisis levels.  We can add to this by noting that there is probably still some way to go before we hit the bottom of the unemployment curve.  With cuts still to come to the public sector and the commercial property market due to underperform significantly this year it is likely that unemployment will reach 10% by the end of the year, before it begins to pick up again in 2011.

A Key focus of the report is on what they describe as “public sector cities”, those urban centres whose recent growth has involved the re-location or creation of large numbers of public sector jobs.  As we all know, the pain of this crisis is going to be felt most strongly by the public sector. The Government is now taking steps to address the budget deficit produced by the bailouts of the banking sector and the programme of quantitative easing that is still ongoing, and necessary to keep the hyper-capitalist juggernaut rolling.  The graph below, taken from the report, places cities into categories of vulnerability according to their exposure to the effects of public sector cutbacks:

From a seaside perspective, the two cities that jump out  here are Brighton and Hastings seperated by only35 miles of coastline, but representing the most insulated and the most exposed groups of cities in terms of the risks associated with the coming cutbacks.

Brighton has seen highest contribution of any city in the country from the private sector to job creation -70.4% of all recent new jobs have been in the private sector, with a 20.8% growth in job creation since 2008,  and also the 6th highest rate of new business creation in the country.  Hastings, 39th on the list in terms of private sector contribution, saw a net loss of 0.3% of jobs in the same period.  In Hastings, only 57.5% of new jobs have been created in the private sector.

Hastings is the 2nd highest ranked city for earnings growth in the country, but 63rd in terms of average income, suggesting that the job creation is still taking place in the lower reaches of the earning scale.  This is supported by the city’s occupation of 58th place in the rankings for knowledge economy jobs (9.7% of the workforce), comparing poorly to Brighton in 10th place with 23.2%.  This contrast in the skills and profile of the two neighbouring cities is also reflected in the percentage of high skills (NVQ4+) in the local labour market:  Brighton is 6th on the list with 38.1% and Hastings is 40th with 22.5%.

It is clear from data like this that Brighton has a built-in resilience to the kind of economic shocks that Hastings is particularly exposed to in the current climate.  Brighton has been undergoing a renaissance since the early 1990s, with the regeneration of the town facilitated by good transport links to London, a growing creative industries sector and high levels of entrepreneurship.  Hastings, however, is still struggling to deal with the repercussions of the restructuring of the tourism industry following the recessions of the late 1970s and early 1980s.    As the report says, “Many of the cities that have been hit hardest are places still suffering from the legacy of industrial restructuring and previous recessions”. 

The regeneration of Hastings, which has recently embraced the cultural route to redevelopment, has been extensively supported by the public sector, notably the local authority and SEEDA, the regional development agency.  One of the reasons that the economic impacts of regeneration are so difficult to pin down in the short-medium terms is the effect of increasing public spending on job creation.  Major regeneration projects require investments in human, as well as physical capital, and these projects create employment by virtue of their existence.  Increasing the capacity of the local public sector to deliver change and bringing new facilities and projects online, often means increasing the size of publically subsidised sectors through the creation of new agencies, administrative structures and individual posts.  This growth in local employment is now at risk.

It would seem that Hastings, which has seen huge public sector investment over the last 5 years, is now in a precarious position.  No doubt, without the massive government interventions that the city has benefited from, Hastings would be in a far worse position.   Assuming that the funding continues to flow, the regeneration of the Harbour area and the presence of the new Jerwood contemporary art gallery will help to drive tourism in Hastings and begin to create secondary employment in the accommodation, catering and other tourism services sectors.  The real question for Hastings is can it weather the storm of the coming period of public-sector cuts without losing momentum? 

The reinvention of Brighton has been high-profile and dramatic; a more dramatic commercial-sector crash may have (and still might) jeopardise its future sustainability.  If public sector investment can be maintained in Hastings then this will help to maintain local development capacity and enable the city to push on with its ambitious plans when we come out of the other side of this crisis. Eventually, the public investment will begin to lever in private money and the city can look forward to the development of a more balanced economy.  If momentum is lost in Hastings it may never catch up with its more glamorous neighbour. 

The Centre for Cities report emphasises that the recovery, when it comes, will be uneven.  This will be no less true for our seaside towns.  In the south-east alone, the development of formerly bustling resorts is a patchwork of public, private, charitable and organic approaches to regeneration.  There will be winners and losers in the competition to become the next Brighton, but it appears that the city that has provide a template for so much current thinking about seaside cultural development will be on top for some time to come.