ippr north

Community Kitty

The government has just launched a consultation on a strategy to roll out participatory budgeting across England by 2012, as part of the empowering agenda for communities.  This is both interesting and welcome.  For those that haven’t come across it, the model of participatory budgeting was first developed in Brazil – city of Porto Alegre to be precise – as a mechanism through which communities can engage directly with the local authority budgeting process.  This original experiment was partly about a desire to deepen democracy, and partly about the need to open up the budget process to combat corruption and patronage.

Whatever the original rationales, in Porto Alegre increased public participation in decision-making was certainly an outcome – it is estimated that 18% of the population took part in budget setting meetings over a five year period in the 1990s.  That’s pretty remarkable when you consider the turnout for local elections in England is often only around 30%.

In England a number of participatory budgeting pilots have been underway over the last few years – one in Hazel Blears’ home town of Salford, but also in Bradford, Newcastle and Sunderland to name some others.  An evaluation of these pilots suggests that many experiences have been very positive, but doing participatory budgeting well is resource intensive – in terms of money, council officers’ time and community development work.  This is not an argument against doing it - in fact it is right that we should invest in our democracy, and many techniques to increase participation are costly, especially if you’re targeting the most excluded individuals or the groups which traditionally have low interest in community engagement (e.g. youth).  I raise this issue merely to make the point that participatory budgeting is not some sort of easy option or silver bullet and will add value in a combination with other mechanisms aimed at enhancing participation.

In fact, doing participatory budgeting badly could be worse than not doing it at all.  If it’s not well planned and resourced it may be hijacked by small but vocal groups to further the interests of the few.  If it’s not seen to be a fair process it could serve to increase community tension, whereas there is some evidence to suggest that when done well participatory budgeting can have a positive impact on community cohesion.

Another big question about participatory budgeting is how central it is to council activity.  On launching the consultation Hazel Blears referred to participatory budgeting as providing ‘community kitties’ to areas.  This may simply be because the phrase ‘participatory budgeting’ is not the most accessible.  But a ‘community kitty’ to me suggests a small pot of additional money.  While divvying this up may offer some benefits, participatory budgeting is meant to be more ambitious than this, dealing with mainstream budgets in education, social care, and so forth, and involving communities in the hard decisions that have to be made between competing priorities.  It is participatory budgeting of this scale that would be truly ambitious and empowering.

The morning after

People have laid claim to the best hangover cure for as long as I can remember. Whether it is an arcane remedy passed down through generations or a new-age cocktail of herbs and berries, we all have methods that we swear by. Following the announcement of a 6% tax increase on booze – with future escalator supplements of 2% for the next four years – in this week’s Budget, it looks like we can all look forward to fewer hangovers. Looking at the bigger picture, however, is the forecast for the UK economy clouding over?

Earlier this decade the Nobel Prize winning economist Joseph Stiglitz reflected on the excesses of economic growth in 1990s America. He argued that Americans staggered through this decade, punch drunk on the affluence generated through unprecedented post-war economic growth. He was critical of the absence of long term financial planning, and predicted that the cost of this would be borne sooner rather than later. He was correct; attempts to maintain growth since the turn of the century have been dominated by a collection of regressive tax cuts that have succeeded first and foremost in deepening America’s social divisions.

In retrospect, maybe we experienced a similar period of growth in the UK at the beginning of this decade. At the time it felt normal, I don’t think many people felt like they were getting rich overnight or living ostentatiously. But looking back this was a strong period of growth, and there are now attempts to develop political capital by suggesting that the Government should have put money aside during this time.

Ultimately I tend to think that a hangover is best dealt with in one of two ways. You either go back to bed or you get up and get on with it. The first option isn’t palatable for the British economy, the second is the reality. The predictions for the future are not for recession and not for a terminal slowdown. This budget reflects that; it isn’t radical and will have a small impact on everyday life; the rest is down to us.

An attitude problem

Here’s a shocking statistic: in the UK, in 2005/06, more than one in five children are living in poverty (according to DWP data).

And here’s another one that some of you may find even more shocking: according to the recently published British Social Attitudes (BSA) report, 34% of you will think this is an inevitable part of modern life, and 27% of you will think that poverty is due to laziness or lack of will power (presumably on the part of the parents, rather than the children themselves).

This marks a considerable shift in opinions, as in 1986 only 19% thought poverty was due to laziness and lack of will power. According to the BSA report, this shift in views has occurred alongside declining support for redistribution of income from the better off to the less well off (down from nearly 47% in 1995 to 34% now).

This creates something of a policy problem for a government that has pledged to eradicate child poverty by 2020, as the redistribution of income is a key policy lever for reducing poverty.

ippr north is just one of several organisations in the North East of England that is involved with the Government Office for the North East’s plans to drive forward the eradication of child poverty in the region. While a number of the key policy instruments - such as tax and benefit levels - rest with central government that is not to say there is nothing that can be done at regional and local levels.

One of the priorities the group has highlighted is public perceptions of child poverty. A problem today is that the paths of the very rich and the very poor in our society rarely cross. We suspect that if there were better public understanding of what child poverty in UK in the 21st century looked like, then perhaps public attitudes would change.

A cautious New Year to you all!

We enter the New Year with a cautious tone running through many economic predictions. Figures released in the US last week showed a downturn in fortunes in the US. One thing that 2007 taught us was that changes in the economic conditions in faraway places can impact a lot closer to home; I’m sure we’re all more familiar with the US sub-prime mortgage market than we were this time last year.

Yet despite this cautious outlook, according to new research from Oxford Economics, people in the UK are now wealthier than their American counterparts for the first time since the 19th century. During the last 15 years, the UK has overtaken many of its competitors and now boasts a GDP per head of £23,500 per year. This, coupled with the much-heralded sixty quarters of uninterrupted economic growth, paints a far more positive picture.

Looking forward, though, our average GDP per head will only ever tell part of the story. The nature of an average is that some people will fall above that line and some people will fall below it. The way wealth is distributed in the UK is something that concerns some more than others, but reflecting on what has caused our economic growth over the last few years – and importantly the undesirable consequences that have materialised – will help us in the future. We’re not alone in having this debate now; Germany is currently reflecting on the impact strong economic performance has had on residents there.

Working in partnership

Earlier this week the LGA and the Government signed a concordat setting out the relationship between central and local government. I was unsurprised that this seemingly bureaucratic act slipped below the radar of most of the media, but it could prove important: it establishes a framework of principles for how central and local government will work together.

Setting out clear rights and responsibilities for central and local government, which could be beneficial for democracy, the agreement clarifies the relationship between the two tiers of government. For central government it states the right to set national policies, including minimum standards of services. But also the responsibility to work with councils, consulting and collaborating with them in the exercise of these rights, while continuing to remove obstacles which prevent councils from performing their role.

The concordat underlines the important role that local authorities play at the level of government closest to citizens, setting out their right to address the priorities of their communities, and their responsibility to provide leadership that is accountable, visible and responsive to their communities.

It also refers to their responsibility to work in partnership with the other local public sector bodies, business and the voluntary and community sector. Given ippr north research into the functioning of sub-regional partnerships, we are especially interested in what it has to say about partnership working.

The recent Local Government and Public Involvement in Health Act placed a duty on local organisations (such as key quangos and public sector bodies) to co-operate with local government, moving local authorities towards being the fulcrum of local democracy and decision-making in their area. The concordat may well help to cement this role as it acknowledges that effective partnership working will require major changes in behaviour and practice from central government departments, their agencies, government offices, councils and local partners. This recognition of the need for cultural change is welcome.

While the concordat may mark another step on the road to decentralisation within England, at the end of the day it is likely to be these cultural factors rather than bureaucratic documents that are the key to success.

Marching forwards

It feels as if the North East is slightly under assault at the moment as major organisations within our region have been at the centre of media storms, ‘disk-gate’ looks like a story which will run and run while we all hope NR manages to stabilise as around 6,000 jobs in the region rely upon the business.

While issues such as these often become politicised it makes it all the more important that the North East’s policy is driven by evidence and not just opinion. This month we’ve been releasing the results of two major projects which provide a good example of how to move forwards.

Along with Centre for Cities we reviewed Newcastle City Council’s performance against OECD recommendations and criticisms from last year, based around the city-region’s economy and lack of leadership. Amongst other things we found that the city had to find a bigger role for business leadership and improve a fragmented regional transport system.

There is a need for leadership and shared focus, the time for territory and tribalism is over, with higher expectations demanding sharper and more strategic alliances between local, regional and national players. We must also look to pull in more high value public sector jobs.

The latter point is also reinforced in our latest research The Northern Economy in the Next Decade which will lay down a blueprint for the region for the next 10 years. For more information on any of our work email north@ippr.org

A new capital city?

Last week I appeared on BBC 5 Live’s Victoria Derbyshire show to discuss a theoretical northern capital. This is of course in an alternative universe, and it was decided to consider how this could work if we moved the capital to Haltwhistle, which happens to be the geographical centre of Great Britain.

The show was great fun, Terry Christian also appeared as the ‘northern’ voice and was especially good value. I was there to discuss the logistics behind the idea. While we obviously aren’t advocating moving England’s capital city it was very interesting how much ‘blue sky’ thinking can actually translate into real policies and ideas.

What we can say is that the UK is an over-centralised nation.  For example in the USA, broadly speaking, functions are spread around the country – government (Washington), finance (NY) and high-tech (LA).  While in the 1980’s the Italian Stock Exchange was moved from Rome to Milan. The city has changed markedly from being viewed as an industrial centre to now making its mark as a cultural and fashion centre internationally.

In the UK, overheating in the South impacts on quality of life issues, notably in London. Boosting the economic performance of less prosperous regions in the UK would make it easier for the South East to cope with the problems that current levels of relative economic prosperity pose such as congestion and affordable housing.

ippr north will shortly be publishing A Northern Economic Agenda which will set out how best to revive the economies of the North. One of our key recommendations will be that more high-end jobs in the public sector should be relocated to the North. While over 7,000 of these have been moved already, most of these jobs have been low and medium qualified positions. We would argue that while the North of England has a strong heritage of heavy industry and an abundance of contact centres, there is currently a deficit in high-skilled jobs, which also means the region’s existing academic potential is not being tapped.

So although moving the capital to Haltwhistle may be a pipedream, a rebalancing of policies to ensure sustainable growth benefits all our regions should not be.

A welcome dose of Euro-realism

Last week, I went to Brussels to attend one of the grandest events in the EU calendar: the Open Days – European Week of Regions and Cities. The city was alive with dozens of events representing the views and experiences of scores of countries and hundreds of regions and cities, both within the EU and beyond (including Russia, Brazil and China). There’s such a range of events, ideas and policies on offer at these things it’s difficult to know where to start.

Plenty caught my eye, ranging from cross-border co-operation initiatives and health through to PPP in transport, skills, science and innovation. It was a fascinating experience. On the one hand, there’s a lot of lessons learned that we could take home with us; on the other, there are also plenty of opportunities to share our own British models overseas (Demos, for example, have recently been working in France). So, we’re now brainstorming to see how we can use our experience and expertise to contribute to pan-European policy-making.

It was also heartening to see another ‘launch’ that was taking place in Brussels last week – the North East England Office has re-opened with new, impressive premises and equally impressive and energetic staff. This is a pleasing move forward: regions like the North East may still struggle to utilise the EU, but they are gradually moving beyond their traditional role as recipients/consumers of structural funds, and are taking other opportunities provided by the EU more seriously.

This includes all sorts of joint initiatives with regions in other countries that face similar challenges. Hopefully this will unlock vital funding for things such as energy saving measures, infrastructure projects, skills enhancement, and science and entrepreneurship.

Let’s hope this re-opening to Europe will bring new prospects and opportunities to the region. Certainly, we’re keen to step into this field, which has sometimes been unjustly ignored or condemned. In the UK, even the EU’s fans tend to be struck by regular bouts of Euro-pessimism, we hope to bring a bit more Euro-realism to the debate at the regional level. After all, the reality is that we are going to be members of the EU for the foreseeable future, so we need to make the most of the chances it brings…

The Spending Review

Now there is time to reflect on Alistair Darling's CSR, after the initial media rush and comment on headline grabbing topics such as inheritance tax (read my thoughts here), non-doms, and capital gains tax, it's interesting to focus on the areas which cross-over into ippr north's work and recommendations.

Of particular interest to me, as it ties heavily into our work around A Northern Economic Agenda, was the Government's approach to Public Service Agreements (PSAs).  For the uninitiated, PSAs (of which there are 30) set out the Government's 'key priority outcomes' for the next spending round and are underpinned by Delivery Agreements with the relevant departments. 

Unlike previously, when PSA targets had been assigned to specific departments, from now on they will be delivered jointly by all responsible departments (with occasional, entirely reasonable exceptions).  This is a welcome step in ensuring strategic, cross-departmental work and may even give greater flexibility to local service providers.

One of these targets aims to 'Improve the economic performance of all English regions and reduce the gap in economic growth rates between regions'.  This is underpinned by an increased number of measurements including growth rates of Gross Value Added per head (GVA – an economics tool to measure output), GDP per head compared to the average from the 15 old EU member states, GVA per hour, and – importantly for the North East – regional employment rates.

This approach gives a far truer picture of disparities and is in line with our recommendations this summer. We also recommended a change in the headline aspiration as we believe Government should be aiming to reduce the absolute gap in economic output between regions, rather than just slowing the relative gap in regional growth rates as the current PSA target specifies.  If this is not tackled we may end up with some regions improving performance, but forever lagging behind others.

Equalities combined...

Today sees the launch of the Equality and Human Rights Commission which combines the work of the Commission for Racial Equality (CRE), Disability Rights Commission (DRC) and Equal Opportunities Commission (EOC) into one.  The new commission also takes responsibility for strands on sexuality, religion and age, better to work the differing ‘strands’ into one integrated approach.

This is of particular interest to me as earlier this year I chaired a seminar in conjunction with them (as part of a wider review involving ippr) looking at the challenges they face (ippr north also held two events in the North West looking at the equalities agenda on gender and local government).  For me there were two elements to the seminar discussion which stood out, both difficult, but due consideration.

Firstly, tackle the media head on and really challenge the seemingly constant stream of messages attacking the Human Rights Act.  It is not a ‘terrorist’s charter’ or ‘political correctness gone mad’. Speaking of PC, one seminar attendee made the very good point that we need to come up with a message or slogan as inherently positive and strong, as PC is now (wrongly) tarred with negative connotations.

Secondly, we must challenge the dynamic that it is up to the minority to ‘fit in’ with the majority.  A key element in securing this may well be the idea of a seventh strand which ensures everything is mainstreamed through HR, thereby strengthening their work.  We wish it well.