A Better Stronger Towns Fund

Power To Change’s Vidhya Alakeson and Jack Hunter from IPPR North discuss the Stronger Towns Fund.

On the 4th March, as Brexit negotiations reached fever-pitch, Theresa May announced that the £1.6 billion Stronger Towns Fund (STF) was to be “targeted at places that have not shared in the proceeds of growth in the same way as more prosperous parts of the country”.

The Government’s intention for the Stronger Towns Fund is to build more economically prosperous towns. Specifically, it intends that the STF will be used to “create new jobs, help train local people and boost economic activity – with communities having a say on how the money is spent”.

But, as yet, there are few details about what the STF will look like. We know that a total of £1 billion will be allocated from 2019 to 2026. More than half this share (£583 million) will go to towns across the North of England with a further £322 million allocated to communities in the Midlands. Another £600 million will be available through a bidding process to communities in any part of the country.

At the time, the announcement was met with widespread criticism, particularly in terms of the level of funding available, the proposed method of distribution and its announcement within the wider context of the Brexit negotiations.

Some of these criticisms are perhaps misplaced. For example, some compared the size of the Stronger Towns Fund to that of the EU structural funds in the UK, which is misleading – given that it doesn’t take into account the Shared Prosperity Fund, which is the government’s intended replacement for EU funds and which will be substantially larger than the Stronger Towns Fund (although there are very valid concerns about the scope, scale and timing of the Shared Prosperity Fund itself).

Some, however, are more valid. In particular, and despite some of the government rhetoric that accompanied its announcement, the STF cannot reasonably be expected be transformative on its own.

This is because:

  • The Stronger Towns Fund is relatively small. For example, the allocation for towns in the North West of England is £281 million, spread over seven years. This means that any one town might expect only a few million pounds a year.
  • It comes against a context of austerity and 50 years of economic change that has eroded the civic and social infrastructure in many towns.
  • Its likely impact will also be shaped by the eventual design of the Shared Prosperity Fund, which is also in development.

 

But despite this, there are still opportunities for a well-designed Stronger Towns Fund to make a tangible difference to the areas that it is intended to support.

There is also a sizeable evidence base of learning from the successes, and failures, of previous schemes. A well-designed STF could draw upon this learning and, despite the limitations inherent in its design, be used to experiment with new ways of working at the local level, and to catalyse wider systems change.

In this blog, we set out what an effective Stronger Towns Fund would look like. We draw upon discussions at a roundtable held in Wigan in June 2019, with stakeholders drawn from across civil society, the public sector and academia.

What should the objectives of the Stronger Towns Fund be?

The Stronger Towns Fund is explicitly focused on towns where levels of productivity, household income and skills are low, and where deprivation is high.

In this, it marks a radically different approach to the government’s principal approach to economic development, which has (through the industrial strategy, and the Northern powerhouse agenda, for example) focused primarily on boosting GVA and productivity through investment in skills and transport infrastructure, targeted at sectors identified as ‘high growth’.

If the STF is to have its desired effect, the main objective should be to build the foundations for healthy local economies, by investing in the wider determinants of growth.

There is a strong body of evidence (here for example, or here) which demonstrates the importance of investment in social infrastructure in helping to provide the conditions for a flourishing economy.

As such, and given the time frames and the scale of the funds available through the STF, there is an economic case for focus investment on improving people’s health and wellbeing, as a necessary foundation of a successful local economy in the long-term. Many deprived areas are characterized by low levels of social capital, poor health and multiple social exclusions. Without investment to address these issues in the first instance, schemes to raise employment and productivity will pass these areas by.

The government has effectively acknowledged the importance of well-being and social capital as a foundation for economic growth, as has the Bank of England. And there is evidence of positive links between increasing rates of social capital and economic growth and sustainability.

This means making the STF about boosting participation rather than just employment. There are many people for whom getting a job is likely a long-term ambition, rather than a realistic or desirable outcome from a policy intervention. Instead, a more appropriate aim is to build community and social capital by including more people in the lives of their town, whether that’s through employment, volunteering, or other forms of social participation. Over time, this can lead to higher levels of sustainable job creation, but it can help people feel more included, involved and in control of decisions affecting their local area.

Finally, an objective of the STF should be to catalyse long term change – the STF should be used to generate the conditions for wider systems change that can make a lasting difference beyond the scope of the scheme itself.

Lessons from previous area-based initiatives

This type of approach, which could be broadly characterised as community economic development (CED), is by no means new. In fact, there is a considerable weight of evidence from previous schemes, which could be drawn upon that could inform the design of the STF.

The most pertinent example, the New Deal for Communities (NDC) Programme, was designed to be one of the most intensive and innovative area-based initiatives ever introduced in England. Over 10 years from 1998, the fund was intended to help transform 39 areas in England which were considered to be ‘deprived’ based on the Index of Multiple Deprivation (IMD).  The NDC Programme was focused on achieving improvements in three people-based outcomes: education, health and worklessness and three place-based outcomes: crime, community and housing and the physical environment.  39 NDC Partnerships were established, each with approximately £50m in funding.

Evaluations of the programme (for example here) found that it had delivered positive change and in many cases made significant benefits to deprived neighbourhoods during the investment period. There was a strong emphasis on engaging with local communities, which was associated with positive outcomes.

However, although tangible benefits were observed, ultimately the overall impact of even a relatively well-resourced scheme such as the NDC was rather limited against the wider context of the systemic issues in the local economies. In addition, the legacy of the programme was much harder to identify. Sustainability was built in at a relatively late date, with the consequence that its lasting impact was “less robust than many partnerships would wish”.

Wider evidence from evaluations of other schemes supports this. For example, a recent review by the Community Wealth Alliance found that the success factors in neighbourhood-based regeneration initiatives included greater resident control, long-term investment, flexibility in approach, the development of an asset base in the community, and attention to legacy.

What lessons for the Stronger Towns Fund?

Drawing upon our discussion, as well as evaluations of previous schemes, we set out the following 5 principles for a Stronger Towns Fund that is designed to meet the objectives presented above regarding well-being, participation and long-term change.

Five principles for a Stronger Towns Fund:

  1. Locally-led and locally-owned

Local control and ownership of schemes was consistently identified as an important step towards a successful scheme that has a lasting and impactful legacy.

Previous schemes have tended to be reluctant to hand over real power to communities – and that this has undermined well-intentioned programmes that have, as a consequence, resulted in projects that were neither desired nor valued by the people they were intended to help.

Allowing for local ownership will have consequences for the governance of any local scheme. For example, while involvement of the Local Enterprise Partnership (LEP) will be important to ensure integration with wider economic strategies, they might not be best placed to lead on this – particularly given that they have to date had little or no focus at the neighbourhood or community level. As Locality have argued in the context of the Shared Prosperity Fund, the government could consider whether it might allocate funds to “community-led partnerships”, comprised of community organisations, residents, local businesses and councils, built around a shared vision for their area.

Involving residents and community groups is essential but it requires resource to make this effective. Drawing on lessons from the NDC, locally-led schemes should ensure time and resource are invested in training for community representatives, and on building and demonstrating resident representation.

  1. Flexible and open-ended

As a centralised pot of funding, where a government department in Whitehall is ultimately responsible for the design of how funds should be spent, there is a substantial risk that the Stronger Towns Fund is too restrictive to be useful.

To mitigate against this, the government should build in the maximum amount of flexibility into the design of the STF, including allowing local areas to set their own outcomes, in order to maximise community control and community buy-in (and therefore legacy), as well as ensuring that any money is spent in a way that is most likely to make a tangible difference to the communities that it is  intended to benefit.

Flexibility also allows for a more joined-up approach with regard to schemes that are already in place, including EU funded programmes. Evidence from previous work (such as CLES 2017) found that a key feature of successful schemes is that they are integrated with and build upon existing local plans, in order to deliver wider benefits.

  1. Integrated into wider economic strategies

Successful previous schemes were outward looking and aligned to wider strategies. This avoids duplication, or contradiction, as well as securing buy-in from wider stakeholders.

This is important because, as set out in IPPR North’s report on City Systems, the economies of most smaller towns and cities do not operate in isolation. Instead they exist in complementary relationships with neighbouring urban areas, including large cities, that surround them.

Integration with sub-regional economic development will be particularly important given the Local Industrial Strategies which are currently being developed across the country.

  1. Open to experimentation and knowledge sharing

The problems that the Stronger Towns Fund is intended to address are deep-rooted and systemic in nature. Fixing them will require a radical rebalancing of power and funds on a long-term basis, in order to rebuild social and civic infrastructure that has been left to decline.

On its own, the STF will clearly not solve these problems. However, an open-ended and highly flexible fund, even a small one, could potentially allow local areas to experiment with new approaches to designing local systems, to trial ways of tackling local economic challenges or to test innovative programmes from further afield. This requires flexibility and even bravery on the part of the government – there will be failures as well as successes. But this approach potentially allows for the greatest value from a small pot of cash – particularly if there are opportunities to share learning and exchange knowledge from experiments across different areas.

  1. Concerned with long-term legacy from the outset

Many large-scale schemes that invested substantial sums in deprived areas over many years have painfully little legacy to show for it.

Previous schemes have tended to gravitate towards the creation of physical infrastructure as a suitable legacy of investment – but in some cases this has been problematic, leading to the creation of under-used facilities with high management costs. Instead, legacy should be considered in the round – in terms of the lasting impact on local systems and on social and civic infrastructure as well as (or even instead of) new or renovated buildings.

In order to do this, we consider it essential to give communities meaningful control, and to build into the design of any local programme how it will work towards a successful and lasting legacy from the beginning.

We believe that the Stronger Towns Fund represents a real opportunity to trial a different approach to area-based regeneration. With our five principles built into it from the outset, it could help to reconstruct the social and civic infrastructure, and the capacity for community control and leadership, upon which strong local economies are built. This will need imagination and political will – but this is much more likely to deliver long term results and a lasting legacy.

With thanks to all participants at our roundtable in Wigan. The views expressed in this blog are our own.