UK regional policy, in an EU context - 2 A short history of UK regional planning

2 A short history of UK regional planning

2.3 UK regional policy, in an EU context

In the UK, the origins of regional policy/inter-regional planning date back to the depression years of the 1920s and 1930s, when there was government intervention to aid a few particularly depressed areas. Over the next 40 years the scope and content of the UK policy widened until the 1970s when it was paral- leled and then to a large extent replaced by the rapid evolution of the supra- national EU regional policy. This brief examination of UK regional policy starts from a discussion of the nature of UK problem regions, and the goals and over- riding strategy of the policy to help them. This is followed by a review of the range of operational measures to implement the strategy. The UK discussion concludes with an appraisal of policy performance, before an outline of the EU regional policy context.

2.3.1 Problem regions and the goals and strategy of UK regional policy

Regional variations are found in all countries. Many of these, such as culture and language, can be a source of strength and regional identity, but others may be indicators of deep-seated problems. Traditionally in the UK, and in many other countries in Europe and beyond, it has been possible to identify a range of problem region types including:

• Underdeveloped regions: such as the Highlands and Islands of Scotland, and the Massif Central in France, which are sparsely populated, heavily depend- ent on primary activities (farming, fishing, forestry, mining and quarrying), with poor accessibility and services. They normally suffer from high unemployment rates and out-migration of the young and skilled.

• Depressed industrial regions:such as South Wales, Merseyside, Central Scot- land and Tyneside. From this initial listing it can be seen that such regions have been/are widespread in the UK. They suffer from the decline of key industries, such as coal-mining, shipbuilding, textiles and iron and steel and the lack of new growth industries. The poor industrial structure is often associated with a poor physical environment. As a result the regional economic base is unable to utilise regional resources to the full, and the regions suffer from the usual symptoms of high rates of unemployment and out- migration, and low activity rates, growth rates and levels of income.

• Pressured/congested regions are in many respects the reverse of the other problem regions. While they have low unemployment rates, high income levels and attract in-migrants, they also face some of the costs of success.

These include environmental problems, commuting and congestion costs and high factor costs, including land, housing and labour, all of which may lead to a declining quality of life. The Barlow Commission recognised the existence of these problems in the South East of England as early as 1940.

There are of course other taxonomies of problem regions. From a North Amer- ican perspective Jane Jacobs (1984), for example, identified seven regional types (including transplant regions, supply regions, etc.). Klaassen (1965) employed a more dynamic approach, using a criterion such as changes in relative rate of regional income, to divide regions into those moving up and those moving down.

In the UK the rate of unemployment has been a particularly significant and often emotive indicator of regional problems over many decades. It was rates as high as 20 per cent to 30 per cent in some of the old traditional industrial areas, and as high as 10–15 per cent in the prosperous South East, which triggered action in the depression years. Table 2.1 provides a mid-period summary of a set of interde- pendent indicators, which suggests that the UK can be divided into a set of prosperous central regions surrounded by a set of problem regions. Yet such a broad division hides many variations, and even the most prosperous regions have problem pockets, and vice versa.

A short history of UK regional planning 25

Table 2.1Some indicators of UK problem regions – mid 1960s RegionAverageActivityPercentageUnemploymentNet totalrateschange inaveragemigration weekly(male andemploymentannualaverage householdfemale)(61–66)percentageannual income(June(65–71)flow (67–68)1968)TotalMale(000s) as a(61–66) percentage of UK Northern Ireland8548.97.0 Scotland9656.4+1–23.9–38.8 Wales9047.1+3–13.8 North9151.8+2–14.1 Yorkshire and Humberside8856.1+3+22.3 North West9658.1+1+02.6 South West9647.0+6+42.5+24.8 UK100 (£29.1)56.2+4+22.3+15.7 West Midlands10560.2+6+52.0 East Midlands9756.3+6+41.9 East Anglia9748.5+13+112.0+11.9 South East11259.7+5+41.5+20.8 Sources:Family Expenditure Survey; Abstract of Regional Statistics; The Intermediate Areas; Cmnd. 3998 (Appendix C).

The identification of problem regions may not in itself justify the case for policy intervention. If the variations in prosperity prove self-righting over a short period of time, there might be little cause for intervention, although there could still be considerable distress in the intervening period. However, regional differences are often deep-seated, as has been the case in the UK, and there have been strong manifest economic and social reasons, and more latent political reasons, for intervention. Economic reasons relate to the under-utilisation of scarce resources in the depressed industrial and underdeveloped regions and the over-utilisation in the pressured regions; social reasons include a contribu- tion to a goal of social equity of opportunity and quality of life. However, the political goal can be particularly persuasive. If neglected for some time, depressed areas may vote against the government and, in more extreme cases, may develop nationalist/separatist tendencies.

Regional differences in prosperity, particularly as reflected in the supply and demand for labour, can be addressed in two main ways – by ‘taking the work to the workers’ through an industrial location policy, or by ‘taking the workers to the work’ through a labour migration policy. For various social and political, but also economic, reasons the policy of industrial location has been dominant in the history of UK inter-regional planning and in most other countries. The social and political reasons are clear – migration can drain the very lifeblood of a community and generate strong political feelings. But migration may also bring costs to the migrant in terms of the cost of living in the prosperous region, and to that region in terms of providing the necessary infrastructure. There will also inevitably be a ‘hard core’ of unemployed who, for various family/personal/

skill reasons, will not migrate. This does not mean that the alternative strategies are mutually exclusive and indeed, throughout the history of the UK industrial location policy, there have invariably been some small but significant measures to encourage labour migration – reflecting the fact that there are some areas where the costs of moving in industry may be just too high – although for political reasons the fact is not much emphasised.

2.3.2 The operational measures to implement UK regional policy

UK regional policy grew out of the untold misery and hardship of life in the problem regions in the 1920s and 1930s. It was during this inter-war period that the strategy emphasis was initially more on moving the workers to the work. In the immediate post-war years (1945–1951), the new Labour Government introduced many of the long-standing elements of the industrial location/assisted areas policy. Some measures fell into abeyance during the Conservative Government period of the 1950s but, reflecting the political nature of this policy area, came to the fore again in the 1960s with the return of a Labour Government. The 1960s were in many respects the heyday of UK regional policy – with support also from the Conservatives.

From the mid 1970s onwards, the UK policy began to provide more of the backcloth to the increasingly well-resourced EU policy, rather than the driving A short history of UK regional planning 27

policy in its own right. The Thatcher Conservative Government of the 1980s/1990s was also the period of dismantling and privatisation of previously government-based activities in the UK. Some of the main operational measures of UK regional policy are now briefly discussed – including the delineation of assisted areas, measures to encourage industry to move to these areas, measures directed at the mobility of labour, and other general measures.

The delineation of assisted areas

The Special Areas (Development and Improvement) Act, 1934, was the first UK legislative measure affecting the distribution of industry. Four quite limited spatial areas – Clydeside, West Cumberland, the North East coast of England and South Wales – were designated to receive assistance to help to attract expanding industries. However, the symptoms of the regional problems disap- peared during the Second World War, but the deep-seated problems remained.

The Royal Commission on the Distribution of the Industrial Population (HMSO 1940) produced a visionary report showing, inter alia, the connections between the problems of congested conurbations and the depressed regions. It also paved the way for an expansion of regional policy. Under the Distribution of Industry Act, 1945, the Special Areas were expanded and renamed Develop- ment Areas. Following further tinkering of legislation in the 1950s, the Devel- opment Areas in 1960, delineated almost exclusively by the criterion of unemployment, covered slightly less than 20 per cent of the UK area, with a population of about seven million. By 1972, this simple ‘blanket approach’ had been replaced by a more sophisticated hierarchy of Special Development Areas, Development Areas and Intermediate Areas, based on multiple criteria including unemployment, and covering more than 50 per cent of the country and including a population of approximately 25 million. Special Development Areas were those areas suffering from the worst problems of industrial decline – many as a result of a decline in the coal-mining industry.

The start of the Thatcher Years in 1979 signalled an end to the advance of the map of regional aid. The Assisted Areas coverage was rolled back from 40 per cent of the working population in 1979 to 25 per cent in 1982, and in 1984 the three-tier system became two-tier, with just Development Areas and Inter- mediate Areas. The two-tier system continued through into the Blair Years of the 1990s/2000s, with ‘tier 1’ assisted areas covering about five million people in Merseyside, South Yorkshire, Cornwall and West Wales and the Welsh Valleys, and ‘tier 2’ assisted areas covering a further 11.5 million people mainly in northern industrial areas. Figure 2.2 illustrates the changes over time in the map of UK assisted areas.

Measures to encourage industry to move to the assisted areas

The Barlow Report, and the legislation of the 1940s, pioneered a ‘carrot and stick’ approach to encourage the movement of industry. The stick approach

Orkney Islands Shetland

Islands

Newcastle upon Tyne

Cockermouth

Skelmersdale

Nottingham Birmingham

Bristol London Inverness

Glenrothes

Livingston Glasgow

Leeds

Manchester Colwyn Bay

Plymouth Cardiff

Development areas Special development areas Intermediate areas

Northern Ireland

Overspill town where development area benefits are available

New towns where special development area benefits are available

Departments of Industry Offices Ministry of Commerce Office Northern Ireland

Belfast

Figure 2.2 The changing map of UK assisted areas (1978 and 2007). (a) Assisted Areas in 1978.

Tier 1 Tier 1 (see Note) Tier 2

Note - Highlands & Islands will have coverage until 31 December 2010, at which point this status will be reviewed by the European Commission

Figure 2.2 (b) Proposed Assisted Areas in 2007–2013. (Source:DTI (2007).)

involved the use of controls on the location of both manufacturing and office development. Industrial Development Certificates (IDCs), introduced in1947, required a certificate for any application for a manufacturing development in excess of a certain size. By granting or refusing the certificate in pressured regions, governments sought to channel development to problem areas. The IDC size level varied from as low as 1000 square feet in the South East and other pressured regions under Labour in the 1960s to over 50,000 square feet and almost irrelevance in the 1980s/1990s. Office Development Permits (ODPs) were the equivalent for the much more growth significant office devel-

A short history of UK regional planning 31 opment sector. These were introduced in 1965 to seek to divert office growth from the South East and from some parts of the English Midlands. Again the controls varied in strength of application according to government policies, and again were eroded during the 1980s/1990s.

The carrot element of regional policy has been a more consistent element continuing, albeit in a much reduced fashion, through to the present day. It has involved the use of positive financial incentives to attract industrialists to the scheduled areas. The expenditure on such incentives averaged more than £1 billion a year from the mid 1960s to the mid 1980s, and peaked at more than £2 billion in the mid 1970s (all figures at early 2000 prices) but by the early 2000s was down to no more than £400 million. The main type of assistance was in the form of subsidies (grants, loans and tax allowances) to a firm’s capital costs.

Regional Development Grants (RDGs) were particularly important through much of the period, in that they provided clear grants to firms moving to the assisted areas, for expenditure on new buildings and machinery, at standard rates (e.g. at 22 per cent in Special Development Areas). In addition, discre- tionary assistance, in the form of loans and various other grants, was available from the 1970s in the form of Regional Selective Assistance (RSA). It is the latter which has survived through to the 2000s. In addition to this capital cost support, there have also been examples of subsidies to labour costs, for example, through the Regional Employment Premium (REP) introduced in 1967, which provided per capita subsidies towards labour costs in the Development Areas and Special Development Areas.

Measures directed at labour mobility, and other more general measures

Through much of the history of UK regional policy, Government grants have been available for re-training of workers in the assisted areas, and for transfer to the more prosperous areas – with key worker/resettlement schemes providing grants towards such costs as moving home and settling in. The focus on the skill base in the problem regions has grown over time with some shift in the nature of regional policy towards a more supply-side emphasis (Regional Studies Association 2001). This recognises the importance of renewing both the physical and human capital in the weaker regional economies.

There have been initiatives over time to seek to improve the inferior economic capital (e.g. roads, industrial sites) and social capital (e.g. hospitals and schools) of assisted areas. A more recent structural initiative to partly co-ordinate such initiatives at the regional level was the introduction of the nine RDAs in England in 1999. This followed some success with earlier development agency initiatives in Scotland, Wales and Northern Ireland (see Chapter 6). Their responsibilities were assembled from various activities of central government – the regional operations of English Partnerships (which can trace its lineage back to the 1930s), the regional operations of the Rural Development Commission, and the Single Regeneration Budget (SRB). The combined budget of the RDAs was £1.7 billion in 2003–2004, with a per

capita skew in funding towards the RDAs covering the North West, North East and Yorkshire and Humberside. With these resources, the RDAs repre- sent an important regionally-based approach to regeneration and economic development for each English region. (They are discussed further in Chapters 4, 5 and 8.)

2.3.3 An appraisal of policy performance

The comprehensive aim of regional policy has been to right the regional imbal- ance, yet after almost 80 years of intervention we still have major differences in regional prosperity. Indeed the Blair Government has a current Public Services Agreement target (PSA 2) to make sustainable improvements in the economic performance of all regions by 2008, and over the long term reduce the persistent gap in growth rates between regions (initially over the period 2003–2012, against a baseline of the period 1990–2002). This relates in particular to the gap in Gross Value Added (GVA) per capita between the Greater South East (GSE) regions (East, London and South East) and the remaining English regions. However, such a summary hides more than it reveals, and the appraisal of performance demands more digging. As regional policy has had no specific end date, performance must be assessed on the basis of trends in various indicators, such as unemployment, migration, income, public and private invest- ment, and the number of jobs created. The first and last of these indicators are taken as indirect and direct measures of policy effectiveness.

The trend in unemployment is still a very popular indicator. The severity of differences in regional employment has varied according to the nature of the national economy and to structural shifts in that economy. The collapse of much of the UK manufacturing employment in the early 1980s widened the North–South divide; but the recession of the early 1990s which hit the services sector more, and the boom years of the early 2000s, tended to narrow the unemployment divide. Regional differences in claimant unemployment have narrowed, but much of the fall in unemployment has been due less to the unemployed moving into work and more to their movement into inactivity – with the numbers claiming sickness-related benefits far outstripping those claiming unemployment-related benefits. This shift into inactivity has been proportionally greatest in the traditionally high unemployment regions (Martin and Sunley 1999; Fothergill 2001). Hidden unemployment is thus a major issue. Trends in employment also reveal an uneven pattern across the country. Figure 2.3 shows that the south and east of the country have led the growth process.

Overall there has been a long-running scepticism about the effectiveness of traditional regional policy; but it would be unfair to say that regional policy has failed. Measuring the direct impact of policy on jobs created is complex, but some of the key exponents of measurement (e.g. Moore et al.1986; Taylor and Wren 1997) indicate that the carrot and stick measures of the 1960s/1970s may have created over 600,000 jobs in the assisted areas of the North, Scotland,

Wales and Northern Ireland. However, there has been recognition of the need for change and to attune policy to intra-regional as much as inter-regional variations, to the evolving knowledge economy and to a mix of top-down and bottom-up approaches. UK regional policy must also be seen in the wider EU regional policy context.

2.3.4 The EU regional policy context

Chapter 13 provides a fuller discussion of contemporary EU regional policy than the brief historical note here. Suffice to say, at this stage, that EU regional policy is a very important policy area, which now accounts for almost 50 per cent of the EU budget spend. The aims are similar to those for national regional policies, as noted in the communiqué on the key 1972 Common Market Summit – ‘The Heads of State or Government agreed that a high priority should be given to the aim of correcting in the Community, the structural and regional imbalances which might affect the realisation of Economic and Mone- tary Union.’ EU regional policy has grown in strength over the last 30 years, partly as a counter to the centripetal economic market forces flowing from the move to a Single European Market. Regional differences in prosperity in the EU have far outstripped those in the UK, and can be as great as 6:1 for indicators such as Gross Domestic Profit (GDP) per capita.

Besides providing a wealth of documentation on EU regional issues, and seeking to co-ordinate a disparate set of national regional policies in the Member States, the EU, through the EC Regional Policy Directorate, seeks to substantially A short history of UK regional planning 33

East Anglia South West

East Midlands Northern Ireland South East

West Midlands Wales Scotland Yorks-Humberside North West North

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

130

120

110

100

Figure 2.3 Divergent regional employment evolutions: 1975–1999 (1975 = 100).

(Source:RSA (2001).)

Dalam dokumen Regional Planning-John Glasson and Tim Marshall (Halaman 45-55)