Memorandum by nef (the new economics foundation)
(CT 14)
ABOUT NEF
nef is an independent think and do tank founded
in 1986. nef's Local and Regional Economics team focuses on research
and practical solutions that enable business and enterprise to
deliver tangible benefits to disadvantaged communities and individuals.
nef has a strong record of work on invigorating communities and
combining social, economic and environmental concerns.
THE RELEVANCE
OF NEF'S
WORK TO
THE COMMITTEE'S
INQUIRY
nef (the new economics foundation) welcomes
the Select Committee's decision to launch an enquiry into the
future of coastal towns. Coastal towns began to decline in the
1950s and now face a series of interrelated social and economic
problems that require strategic interventions to reverse their
decline and stimulate a renaissance.
In 2005, nef completed two research projects
of particular relevance to this inquiry:
— "Coasting Along: A study of
business impacts and regeneration in South East Coastal Towns"
for the South East Regional Development Agency (SEEDA).
— "Climbing the Ladder: a step
change to a thriving Hastings economy" for Hastings Borough
Council, submitted as a proposal for funding for the Government's
Local Enterprise Growth Initiative.
This memorandum features the key findings from
these reports and other areas of research that are directly relevant
to this inquiry.
OUTLINE OF
MEMORANDUM
This memorandum addresses issues 1, 4, 5 and
6 as outlined in the terms of reference of the Inquiry. We examine
the case for special initiatives to tackle the needs of coastal
towns, as outlined in point 1. The memorandum goes on to discuss
specific initiatives that we consider most likely to alleviate
the problems identified, including business-led regeneration that
encourages the start up, growth and retention of indigenous businesses.
The memorandum then examines whether there is
a case for more specific regional initiatives and considers whether
enough attention is paid to regional disparities as outlined in
point 4. This memorandum draws on specific research to consider
points 5 and 6 which address the security of funding for coastal
town regeneration and evaluate the success of RDAs and others.
nef regrets that the economic challenges facing
coastal towns do not feature in the terms of reference of this
inquiry though social, housing and environmental issues are identified.
In our view it is does not make sense to consider the social and
environmental challenges in isolation from the key economic issues
facing many Coastal Towns.
1. THE CASE
FOR SPECIAL
INITIATIVES TO
TACKLE THE
NEEDS OF
COASTAL TOWNS
1.1 The Distinctive Nature of Coastal Town
Economies
"Seaside resorts are the least understood
of Britain's problem areas. They have never received the same
attention as inner cities and rural areas"—Dr Steven
Fothergill.
1.1.1 Before we consider the case for special
initiatives it is worth outlining the nature of coastal towns
and the problems they face.
1.1.2 There are nearly 17 million people
living with 10 kilometres of the coast with no settlement in the
United Kingdom more than 70 miles from the coast. Coastal resorts
are deeply embedded in Britain's culture, history and heritage.
Britain was the first country in the world to develop a chain
of coastal towns—a move closely related to its position
as the earliest industrialised and urbanised economy and society.
Coastal towns became popular places to live and work and by the
early twentieth century provided a range of new leisure opportunities
for urban citizens (by this time there were nearly 150 resorts
with a permanent population of 1.5 million). Their subsequent
decline is closely related to the changing role and patters of
leisure in Britain's post-industrial economy and society.
1.1.3 Coastal economies have significantly
different economic ecologies and characteristics from those captured
within commonly used typologies of geographical areas ie inner
city, urban, suburban and rural typologies. This is not to deny
that there are similarities and complementarities between these
typologies, but understanding and recognising the distinctive
characteristics of coastal towns is essential to developing effective
policy solutions.
1.1.4 Coastal economies are characterised
by the following:
— The sea itself defines coastal towns'
access to local markets. The sea provides some opportunities for
employment through leisure, fishing, shipping and ports. However,
for many coastal towns, the sea forms a physical barrier to development
and is largely economically unproductive. Its main effect is as
a significant competitive disadvantage compared with inland market
towns because it reduces access to local markets and limits the
town's hinterland to 180 degrees.
— Many coastal towns are characterised
by poor transport infrastructure (both road and rail) which reinforces
their peripherality and isolation, particularly off-season, from
the local, regional and national economy. This hinders businesses
that are dependent on efficient logistics to access local, national
and international markets. Moreover, it can cause problems for
efforts to promote tourism. This is illustrated by Bexhill-upon-Sea,
home to the state of the art De La Warr Arts Centre. It takes
longer to travel from London to Bexhill by train today than it
did one hundred years ago; it is actually quicker to travel from
neighbouring Hastings to Paris via the Eurostar than it is to
London.
— Coastal towns often have ageing and
uneven population structures as a result of their attractiveness
as retirement venues and to middle aged in-migrants attracted
to job opportunities, good climate, high quality of life and relatively
low property prices.
— Job markets are characterised by
low wages, low skills and seasonality concentrated in the service
sector. They tend to have higher turnover rates and do not provide
attractive long term prospects for young people. This has two
key impacts: money flows into the local economy are relatively
low; and the young and ambitious tend to leave to seek more diverse
and better job opportunities.
— Job density represents the ratio
of total jobs to working-age population and is a good proxy for
the health of a local economy. National comparators underline
the seriousness of the issue for some coastal towns, with Hastings'
under-performing Gateshead at 0.78, Sheffield at 0.8, Wolverhampton
at 0.79 and Burnley at 0.75.
— There are high rates of unemployment
and economic inactivity in coast towns. Three quarters of the
seaside resorts in one major study had unemployment rates higher
than adjacent areas. In many coastal towns, for example, Hastings
and Thanet, there are substantial concentrations of people who
are economically inactive, have long-term sickness and are benefit
claimants. One quarter of the working population in Hastings is
economically inactive.
— Significant informal or black economies
are often present in coastal economies. No significant studies
exist of the size of the informal economy in coastal areas. However,
economic analysts estimate that there is relatively large informal
economy in the hotel, restaurant and entertainment sector with
cash-in-hand and undeclared income playing a large role.
— Coastal towns have large stocks of
poorly maintained private sector properties. The change in the
tourist market has meant the wholesale closure of bed and breakfast
outlets often clustered in streets adjacent to each other and
the seafront. The properties often remain vacant or converted
into unlicensed Housing in Multiple Occupation. With poor maintenance
entire streets and neighbourhoods can take on the characteristics
of slums, affecting property values and making the resorts less
attractive to residents and visitors.
— Coastal towns have fragile small
business sectors with start-up rates, as measured by VAT registration,
typically well below the regional average and business density
rates are low.
— Educational attainment is often particularly
poor. In Hastings, the proportion of school leavers with GCSEs
grades A to C in 2003-04 was 38.8%, 7.3% below the average for
Neighbourhood Renewal Areas and 14.9% below the national average.
In one of the Super Output Areas (SOAs) in Hollington Ward, only
12.5% achieved this standard.
— The impact of poor educational achievement
is particularly acute in coastal town areas as it leaves the local
population ill-equipped to compete for the best jobs against better
qualified in-migrants attracted to the area by high quality of
life and relatively low house prices. Instead they are "trapped"
in the low skill/low wage/seasonal economy. Moreover, it serves
to reinforce the low aspirations and inter-generational poverty
and dependence.
1.2 Initiatives and approaches to tackle coastal
town problems
1.2.1 Prioritise the support of indigenous businesses
over inward investment
1.2.1.1 The traditional economic development
approach has been to focus on attracting inward investment. However,
in view of the distinctive characteristics of coastal economies
outlined in section 1.1 of the report, specifically their peripherality
and poor transport infrastructure and connectivity, focusing on
large scale inward investment is not appropriate for many coastal
towns and resorts.
1.2.1.2 This is underlined by the experience
of Thanet which invested significant resources in an inward investment
strategy in the 1990s. The strategy had to be abandoned due to
lack of take-up. nef would recommend that the focus of a business-led
regeneration strategy should be creating and retaining a resilient
business base by incubating and growing indigenous business.
1.2.1.3 It is not proposed that all inward
investment strategies should be shelved. The benefits of a number
of large companies bringing investment and job opportunities to
an area, and ensuring a balanced business ecology made up of small,
medium and large companies, should not be discounted. However,
inward investment should not be pursued at the expense of locally
grown enterprise and more realistic assessments are needed of
its likely success.
1.2.2 Ways to nurture indigenous business growth
1.2.2.1 Indigenous business growth can be
achieved through two complementary strategies.
1.2.2.2 The first focuses on identifying
and retaining key "anchor" businesses. This can be achieved
by implementing appropriate after-care strategies to support local
businesses, for example, by identifying follow-on accommodation
and maximising their impacts through promoting local supply chain
linkages, high local employment and high local purchasing.
1.2.2.3 The second way to nurture indigenous
business growth is to focus support on the micro, small and medium-sized
businesses. Research by nef conducted in four towns in the South
East of England[5]
quantifies for the first time the importance and value of key
business sectors to the local economy. The research found that
SMEs in the four coastal towns are contributing over £350
million per annum in direct local impacts. The impact of micro-businesses
is particularly noteworthy but is not included in standard data
on business as most micro-businesses have a turnover below the
VAT threshold which is often the starting point for data collection.
nef found that the combined impacts of all micro-businesses were
over half of the total business contributions to the local economy
in the four coastal towns.
1.2.2.4 Other sized firms are also important.
The average economic impact on its local area of a medium sized
enterprise can be up to £500,000, underlining the importance
of retaining and nurturing these firms.
1.2.2.5 There are a significant range of
barriers to growing businesses. Initiatives to nurture indigenous
growth must focus on helping these key businesses to overcome
local barriers. In its research on coastal towns, nef has identified
the following barriers:
— Skills shortages and skills mismatches
make recruitment particularly difficult. High value add businesses
face particular difficulties as better opportunities and higher
wages elsewhere lead to the out-migration of key groups, for example,
graduates.
— The 180 degree hinterlands of coastal
towns, proximities to "Areas of Outstanding Natural Beauty"
where no development is permitted (eg Worthing, Eastbourne and
Hastings) and the low financial returns on developable land have
led to a "market failure" in the provision of business
premises, particularly starter and incubation units.
— Business trade is limited to local
markets. Peripherality and poor transport force many businesses
to focus on trading locally, limiting their growth and expansion
prospects as they miss the opportunities available in the wider
sub-regional markets.
1.2.2.6 One example of a successful indigenous
growth strategy is Worthing First. The scheme is an effective
business-led economic partnership with the involvement of all
the main business support umbrella organisations. It is led by
business and focuses on developing practical solutions to key
local business priorities including workforce development and
recruitment, barriers to business growth and physical infrastructure.
1.2.3 Integrating Physical and Social/Economic
Regeneration
1.2.3.1 There has been significant and welcome
investment during the last few years by English Heritage, RDAs
and private sector partners to improve the physical infrastructure
of coastal resorts. Improvements include seafront and retail developments,
and iconic cultural and leisure institutions. However, these improvements
need to be integrated into a strategic approach along with programmes
that tackle social and economic regeneration.
1.2.3.2 In the absence of a clear vision
and commitment to integration there is a danger that such physical
regeneration will not bring opportunities to the most disadvantaged
communities and may in fact "superserve" the less needy,
thereby widening the gap between the "haves" and "have
nots". This is not inevitable. Avoiding such an outcome means
addressing the deeply rooted problems of high rates of economic
inactivity, poor educational outcomes and inadequate skills sets
which are key barriers to disadvantaged local residents.
2. EXAMINATION
OF THE
CASE FOR
SPECIFIC REGIONAL
INITIATIVES AND
CONSIDERATION OF
WHETHER ENOUGH
ATTENTION IS
PAID TO
REGIONAL DISPARITIES
2.1 The case for specific regional initiatives
2.1.1 There is a clear pattern of spatial
disadvantage emerging in our regional economies as a result of
the decline of coastal towns. In the South East there is an increasing
gap in economic performance between the coastal strip and the
rest of this fast growing economy; this contributes to unbalanced
and unsustainable growth and huge regional disparities. For example,
business density in Hastings is low at 21.3 businesses per 1,000
of population compared with the South East average of 40 and the
national average of 30.
2.1.2 This unbalanced growth is unsustainable
with overheating in some areas putting pressure on infrastructure,
housing, and congestion while the coastal fringe faces low growth,
few job opportunities and high levels of economic inactivity.
2.1.3 Disadvantage and deprivation is concentrated
to an unprecedented extent along the South East's coastal strip.
SEEDA reports that nine out of ten of the South East's most deprived
wards are in coastal towns or cities. Moreover, half the population
of Thanet and Hastings are living in areas of high deprivation.
Particularly disturbing is evidence of deeply entrenched intergenerational
poverty.
2.2 The level of attention paid to regional
disparities
2.2.1 Unlike other declining areas, such
as industrial steelmaking and coalmining towns, coastal towns'
decline has been largely unrecognised for the best part of 40
years. However, as John Walton argues, trends of decline were
identifiable by the end of the 1960s and actually began in the
1950s.[6]
This accelerated through the 1960s and 1970s as package holidays,
cheap airfares and "guaranteed sunshine" became more
popular. In 1968, 75% of all holidays were taken in the United
Kingdom. By 1999, the numbers had declined to 44% and the number
of seaside visits had dropped to 22 million from 32 million between
1980 and 2005. However, this decline had little impact on policy
priorities over this period.
2.2.2 Arguably, recent years have brought
more focus to regional disparities and the existence of significant
socio-economic challenges in the UK's coastal towns. However,
the problems remain and the level of attention currently falls
short of what is needed to redress years of neglect.
3. THE FUTURE
SECURITY OF
COASTAL TOWN
FUNDING
3.1 A brief history of coastal town regeneration
and funding
3.1.1 Coast town decline has been largely
ignored when compared with other geographies of decline and deprivation
as mentioned in section 2.2. The warning signs of economic decline
and deprivation were slow to be recognised and coastal towns were
overlooked as areas requiring regeneration funding.
3.1.2 Though there were isolated local initiatives,
they were piecemeal, and until 1999 seaside towns were not eligible
for European Union structural funding. This was a major disadvantage
given such funding's availability to other areas facing similar
levels of structural economic change.
3.1.3 Moreover, the British Resorts Association
(BRA) argues that struggling resorts did not receive central government
funding in the same way as the inner cities. This is borne out
by the spending of the two major sources of government regeneration
funding: the Single Regeneration Budget (SRB) and the Neighbourhood
Renewal Fund (NRF).
3.1.4 The BRA noted: "Regrettably access
to SRB funding is severely limited. Few resorts currently qualify
for assistance and where they do, tourism related issues often
fail to be recognised as meeting the socio-economic criteria necessary
to access funding".
3.1.5 Coastal resorts received less than
5% of funding in SRB Rounds 1 to 3 and less than 3% in Round 4.
Finally, in 1998, the criteria were broadened with coastal towns
specifically targeted and 44 bids were awarded to regenerate coastal
towns.
3.1.6 The creation of the RDAs helped focus
attention on coastal towns and some, for example SEEDA, have targeted
declining coastal towns through their Regional Economic Strategy
and Area Investment Frameworks. However, few resorts are included
in the 88 areas that receive Neighbourhood Regeneration Funding.
For example, Thanet which includes Margate, despite acute economic
and social need, is not eligible.
3.2 The security of future funding
3.2.1 nef's broader work has demonstrated
that regeneration funding entering disadvantaged areas often "leaks"
out of an area as money goes to firms and organisations with insufficient
local employment, supply chain linkages or business networks.
Care should be taken to build local capacity and to ensure that
money entering an area achieves maximum impact in creating and
retaining wealth locally.
3.2.2 Part of successful regeneration is
to encourage local enterprise in order to provide long-term benefits
to the community through their local presence.
3.2.3 The time horizons for coastal town
regeneration must be realistic and funding should respond to medium
to long-term needs. Given the embedded nature of many of the issues
outlined in 1.1.4 above, flexible funding is required with security
for the long-term to encourage local partners to cooperate and
act strategically.
4. THE SUCCESS
OF RDAS
AND OTHER
BODIES IN
SUPPORTING AND
DEVELOPING THE
ECONOMIES OF
COASTAL TOWNS
4.1 As mentioned in 3.1.6, the creation
of the RDAs helped focus attention on coastal towns and some,
for example, the South East of England Development Agency, have
targeted declining coastal towns through their Regional Economic
Strategy and Area Investment Frameworks.
4.2 However, a key issue for RDAs is whether
they have the correct skillsets and staff capacity to adopt an
appropriate strategic and leadership role in this area of policy.
Much of their focus has tended to be delivery oriented. The tendency
has been for RDAs to expand and increase the number of programmes
they deliver without the complementary support to ensure that
all interventions are strategic and joined up. This is often not
the choice of the RDAs themselves as they have been faced with
legacy programmes and new delivery commitments.
4.3 There is also evidence of a "command
and control" model from Whitehall, with any spending over
£10 million needing to be approved, leading to long delays.
There is also the need to seek approval of three year corporate
plans and presentation according to strict DTI criteria. One RDA
spent £500,000 on producing a corporate plan in DTI format,
though it did not fully meet regional priorities or the needs
of regional partners and a second report had to be produced for
its own purposes.[7]
4.4 When looking at the local level, key
players in coastal town regeneration should be local authorities
in order to ensure that policy interventions aimed at business
are joined up with other regeneration initiatives and related
issues such as planning.
4.5 The record of Local Strategic Partnerships
is patchy at co-ordinating and joining up regeneration. A recent
government review of the National Strategy for Neighbourhood Renewal
noted "Local Strategic Partnership performance is highly
variable and among them there is insufficient strategy to meet
the challenges of deprived areas." The report was also highly
critical of LSPs' capacity to work with businesses on key issues.
4.6 Given the statutory and resource limitations
of RDAs, much of the delivery of coastal town regeneration should
be through sub-regional and local levels.[8]
4.7 Government Office has no clear role
in delivering change in deprived areas. Government Office could
have a clearer role in administering initiatives and managing
change. Their regional role can cause confusion about who is the
accountable body for creating a regional strategy and responsibilities
are sometimes unclear.[9]
5. CONCLUSION
5.1 The Committee's inquiry is timely as
the specific challenges facing coastal towns are becoming increasingly
recognised and action is required. The Cabinet Office Strategy
Unit, in its strategic audit of the UK in 2005, identified coastal
towns as the only significant new areas of deprivation. There
is a clear case for urgent access to tackle the causes of decline
and deprivation in the UK's coastal towns.
5 CLES submission to ODPM Select Committee on Coastal
Towns. Back
6
The British Seaside: Holidays and Resorts in the Twentieth
Century, JK Walton (2000). Back
7
House of Commons Public Account Committee, Success in the
Regions (2004). Back
8
DTI-Guidance to the RDAs on Regional Strategies. Back
9
Improving the prospects of people living in areas of multiple
deprivation in England, Cabinet Office/OPDM 2005. Back
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